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Thursday, August 26, 2010
Monday, March 8, 2010
Tuesday, October 6, 2009
getting to know you?
how time passes so fast when you're busy. weekends flew past me ;P
chance upon this article in business times about matching clients to their investment portfolio. it generally shows how mismatch most people are, i.e. people with low risk actually buying high risk products! accordingly to the article, having knowledge to products does not necessary means you are gear towards high risk investment. worth a read at your own time (:
Wed, September 30, 2009,
Getting to know all about you
Risk profiling is a standard and important part of the 'know your client' process but arguably, too little thought and resources are invested into the design of the questionnaire, reports GENEVIEVE CUA
IN THE aftermath of the damage wrought by the financial crisis, the accusation most often hurled at bankers is that they had pigeon-holed clients into the wrong risk profile.
That is, clients were ushered into investments that were allegedly a poor match with their actual risk appetites.
Risk profiling is a standard and important part of the 'know your client' process, regardless of a client's net worth. But arguably, too little thought and resources are invested into the design of the questionnaire - typically a cursory five-question exercise. Do risk profilers actually give a fair picture of your risk appetite?
Barclays Wealth has tapped psychometrics - a blend of statistics and psychology - to develop a risk profiler that it hopes will lead to meaningful discussions on risk preferences and portfolio allocations. The exercise should ultimately help clients to stay on track through fair and foul winds.
Barclays Wealth director (investment and product office) Greg Davies says: 'Classical finance says tell me your level of risk tolerance and I'll put you on the efficient frontier that maximises return for a level of risk. It assumes that once you invest in a rational and optimal portfolio, you're able to stick with it . . . You invest, fall asleep and wake up 10 years later to get the benefits. But that doesn't happen.'
In reality, investors have 'emotional interactions' with their portfolios, thanks to easy access to portfolio valuations as well as media bombardment, he says. 'It's not just about the end goal. It's about the journey. The journey is extremely important. Not only is it capable of making you happy or miserable;
but if you are emotionally involved with the journey, you're also liable to making short-term decisions that are harmful to your long-run financial goals.'
Investors are their own worst enemy
There is a wealth of data showing that investors are their own worst enemy. US-based Dalbar, which has tracked the effects of investor behaviour on portfolios for some 15 years, finds consistently that investors in equities, bonds or asset allocation funds fail to beat inflation as emotions cause them to buy high and sell low.
Barclays' new tool comprises two sections. The first is a series of 36 questions that Dr Davies reckons should take five minutes to complete. The second comprises standard questions on one's objectives, financial circumstances and assets, as well as liquidity needs.
The result is a profile of a client along six dimensions of risk. These are: risk tolerance, which refers to the long-term rational trade-off between risk and return; composure or one's emotional reactions to uncertainty; market engagement; perceived financial expertise; delegation, which reflects the desire to reduce the effort of financial decision making by taking advice; and belief in the skill of investment managers.
'The test tries to measure how much you can psychologically cope with downside risk over the long term,' says Dr Davies.
With this profile, it is then possible to put together a portfolio with allocations that take into account where the investor stands along the six dimensions. This is in contrast to the normal 'pigeon-holing' approach where most clients end up with a 'moderate' risk level even if their reactions to short-term fluctuations and investment horizon may be on opposite ends of a scale.
'You can have as much brain power put into a better asset allocation but unless you help clients stick with that portfolio, it's not going to do them any good.' The goal is to try to smoothen the path for investors so that they can achieve their goals and suffer less emotional trauma along the way.
As an example, a hypothetical client who scores very lowly on composure could be recommended a relatively higher allocation into absolute return strategies. One's score on the market engagement dimension - which measures the degree to which an individual is comfortable with risk in financial markets - is linked to one's allocation to cash and liquid assets. A low score suggests that one is likely to avoid financial markets, and hence the portfolio could be structured to limit negative surprises.
The tool has been rolled out in Europe and the US and has just been launched in Singapore. To date, between 3,500 and 4,000 clients have used it.
Falling short of the standard
In a newsletter, Optimal Behaviour, Dr Davies points out that it is mandatory in Europe to assess clients' risk preferences. But there is no guidance on how to assess risk appetite accurately. 'Accurate measurement requires a carefully designed, objective and statistically robust risk tolerance questionnaire using established psychometric techniques. The overwhelming majority of risk tolerance questionnaires used by banks simply do not meet these standards, and frequently fall foul of pitfalls long known to experimental psychologists. And yet they satisfy the regulatory requirements.'
He says that questions to assess risk tolerance must be free of 'confounding factors' - which are incidental factors that can cause the risk tolerance score to be systematically biased upwards or downwards.
Risk tolerance should not be confused with investment objectives. Factors such as annual income requirements, time horizon and liquidity requirements are not psychological factors, says Dr Davies. Risk tolerance, if properly measured, is quite stable. 'It's not that investment objectives should be ignored, but rather that they should be considered separately from risk tolerance.'
A second principle is not to confound risk attitude with other personality dimensions. For instance, health risks, participation in dangerous sports or taking risk in a gambling environment are unrelated to financial risk attitudes.
Knowledge of finance or investment or mathematical ability should not feature in risk profilers. 'It is equally important that a measure of risk tolerance reflects an investor's innate ability to cope with future risks, rather than their reactions to past investment performance.'
----------------------------------
ps. always make sure you know what you're buying! investment is good only if it's made wisely and with appropriate considerations. DO NOT jump into investments. what can go up can come down. know your own risk and you're one step closer to smart investment (:
chance upon this article in business times about matching clients to their investment portfolio. it generally shows how mismatch most people are, i.e. people with low risk actually buying high risk products! accordingly to the article, having knowledge to products does not necessary means you are gear towards high risk investment. worth a read at your own time (:
Wed, September 30, 2009,
Getting to know all about you
Risk profiling is a standard and important part of the 'know your client' process but arguably, too little thought and resources are invested into the design of the questionnaire, reports GENEVIEVE CUA
IN THE aftermath of the damage wrought by the financial crisis, the accusation most often hurled at bankers is that they had pigeon-holed clients into the wrong risk profile.
That is, clients were ushered into investments that were allegedly a poor match with their actual risk appetites.
Risk profiling is a standard and important part of the 'know your client' process, regardless of a client's net worth. But arguably, too little thought and resources are invested into the design of the questionnaire - typically a cursory five-question exercise. Do risk profilers actually give a fair picture of your risk appetite?
Barclays Wealth has tapped psychometrics - a blend of statistics and psychology - to develop a risk profiler that it hopes will lead to meaningful discussions on risk preferences and portfolio allocations. The exercise should ultimately help clients to stay on track through fair and foul winds.
Barclays Wealth director (investment and product office) Greg Davies says: 'Classical finance says tell me your level of risk tolerance and I'll put you on the efficient frontier that maximises return for a level of risk. It assumes that once you invest in a rational and optimal portfolio, you're able to stick with it . . . You invest, fall asleep and wake up 10 years later to get the benefits. But that doesn't happen.'
In reality, investors have 'emotional interactions' with their portfolios, thanks to easy access to portfolio valuations as well as media bombardment, he says. 'It's not just about the end goal. It's about the journey. The journey is extremely important. Not only is it capable of making you happy or miserable;
but if you are emotionally involved with the journey, you're also liable to making short-term decisions that are harmful to your long-run financial goals.'
Investors are their own worst enemy
There is a wealth of data showing that investors are their own worst enemy. US-based Dalbar, which has tracked the effects of investor behaviour on portfolios for some 15 years, finds consistently that investors in equities, bonds or asset allocation funds fail to beat inflation as emotions cause them to buy high and sell low.
Barclays' new tool comprises two sections. The first is a series of 36 questions that Dr Davies reckons should take five minutes to complete. The second comprises standard questions on one's objectives, financial circumstances and assets, as well as liquidity needs.
The result is a profile of a client along six dimensions of risk. These are: risk tolerance, which refers to the long-term rational trade-off between risk and return; composure or one's emotional reactions to uncertainty; market engagement; perceived financial expertise; delegation, which reflects the desire to reduce the effort of financial decision making by taking advice; and belief in the skill of investment managers.
'The test tries to measure how much you can psychologically cope with downside risk over the long term,' says Dr Davies.
With this profile, it is then possible to put together a portfolio with allocations that take into account where the investor stands along the six dimensions. This is in contrast to the normal 'pigeon-holing' approach where most clients end up with a 'moderate' risk level even if their reactions to short-term fluctuations and investment horizon may be on opposite ends of a scale.
'You can have as much brain power put into a better asset allocation but unless you help clients stick with that portfolio, it's not going to do them any good.' The goal is to try to smoothen the path for investors so that they can achieve their goals and suffer less emotional trauma along the way.
As an example, a hypothetical client who scores very lowly on composure could be recommended a relatively higher allocation into absolute return strategies. One's score on the market engagement dimension - which measures the degree to which an individual is comfortable with risk in financial markets - is linked to one's allocation to cash and liquid assets. A low score suggests that one is likely to avoid financial markets, and hence the portfolio could be structured to limit negative surprises.
The tool has been rolled out in Europe and the US and has just been launched in Singapore. To date, between 3,500 and 4,000 clients have used it.
Falling short of the standard
In a newsletter, Optimal Behaviour, Dr Davies points out that it is mandatory in Europe to assess clients' risk preferences. But there is no guidance on how to assess risk appetite accurately. 'Accurate measurement requires a carefully designed, objective and statistically robust risk tolerance questionnaire using established psychometric techniques. The overwhelming majority of risk tolerance questionnaires used by banks simply do not meet these standards, and frequently fall foul of pitfalls long known to experimental psychologists. And yet they satisfy the regulatory requirements.'
He says that questions to assess risk tolerance must be free of 'confounding factors' - which are incidental factors that can cause the risk tolerance score to be systematically biased upwards or downwards.
Risk tolerance should not be confused with investment objectives. Factors such as annual income requirements, time horizon and liquidity requirements are not psychological factors, says Dr Davies. Risk tolerance, if properly measured, is quite stable. 'It's not that investment objectives should be ignored, but rather that they should be considered separately from risk tolerance.'
A second principle is not to confound risk attitude with other personality dimensions. For instance, health risks, participation in dangerous sports or taking risk in a gambling environment are unrelated to financial risk attitudes.
Knowledge of finance or investment or mathematical ability should not feature in risk profilers. 'It is equally important that a measure of risk tolerance reflects an investor's innate ability to cope with future risks, rather than their reactions to past investment performance.'
----------------------------------
ps. always make sure you know what you're buying! investment is good only if it's made wisely and with appropriate considerations. DO NOT jump into investments. what can go up can come down. know your own risk and you're one step closer to smart investment (:
Thursday, October 1, 2009
children's day!
Children's Day!!! (: happy children's day to all!
medical insurance will be the topic this morning. was just running through a medical insurance for a friend the other day. looking through the benefits, all seems well until the terms deductibles and co-insurance appeared!
i must say, medical insurance (e.g. HealthShield/ PruShield) are all very good and essential plans. why? 1st they can be paid by your medisave, 2nd it provides coverage for hospital bills!! and you know hospital bills nowadays just gets higher and higher.. no matter how much medisave you have, it might not be enough to pay for your hospital bills, instead, taking out a small percentage to get this medical insurance will really help in the long term.
back to my story.. hmm . oh ya deductibles and co-insurance.. for medisave paid medical insurance products, all comes with these 2 clauses, a deductible of about $1k to $3k and co-insurance of approximately 10%. What does this means? basically, for you will be liable to pay for the deductible amount or your complete hospital bill whichever is lower.
example. deductible is $1k. hospital bill is $800, thus you cannot claim insurance but instead would need to pay for the $800 completely.
but if your hospital bill is $2k, you would need to pay the deductible of $1k and the reminding $1k is claimable. THEN comes in the co-insurance part.
if the bills is higher than the deductible amount, you will also need to pay 10% of the amount reminding. taking back the same example above. after paying for deductible, you would still need to pay 10% of $1k = $100. Thus the actual insurance claim amount will be $900.
it is important that such clauses are made known to you. do not assume insurance is able to cover the full amount at any point of time. also some plans have a limit on the total claimable amount. do check. there are other insurance plans available with can be bought to cover the deductibles and co-insurance. that means you would basically need 2 plans, 1 bought using medisave to cover your main hospital bills and 2 bought using cash to cover for the deductible and co-insurance. if both plans are purchased, you can be assure than you have your hospital bills covered COMPLETELY! (:
time to start the day! cheers! enjoy children's day to all the children out there!!
medical insurance will be the topic this morning. was just running through a medical insurance for a friend the other day. looking through the benefits, all seems well until the terms deductibles and co-insurance appeared!
i must say, medical insurance (e.g. HealthShield/ PruShield) are all very good and essential plans. why? 1st they can be paid by your medisave, 2nd it provides coverage for hospital bills!! and you know hospital bills nowadays just gets higher and higher.. no matter how much medisave you have, it might not be enough to pay for your hospital bills, instead, taking out a small percentage to get this medical insurance will really help in the long term.
back to my story.. hmm . oh ya deductibles and co-insurance.. for medisave paid medical insurance products, all comes with these 2 clauses, a deductible of about $1k to $3k and co-insurance of approximately 10%. What does this means? basically, for you will be liable to pay for the deductible amount or your complete hospital bill whichever is lower.
example. deductible is $1k. hospital bill is $800, thus you cannot claim insurance but instead would need to pay for the $800 completely.
but if your hospital bill is $2k, you would need to pay the deductible of $1k and the reminding $1k is claimable. THEN comes in the co-insurance part.
if the bills is higher than the deductible amount, you will also need to pay 10% of the amount reminding. taking back the same example above. after paying for deductible, you would still need to pay 10% of $1k = $100. Thus the actual insurance claim amount will be $900.
it is important that such clauses are made known to you. do not assume insurance is able to cover the full amount at any point of time. also some plans have a limit on the total claimable amount. do check. there are other insurance plans available with can be bought to cover the deductibles and co-insurance. that means you would basically need 2 plans, 1 bought using medisave to cover your main hospital bills and 2 bought using cash to cover for the deductible and co-insurance. if both plans are purchased, you can be assure than you have your hospital bills covered COMPLETELY! (:
time to start the day! cheers! enjoy children's day to all the children out there!!
Tuesday, September 29, 2009
F1!!!!
so sorry for not updating recently. had been too tied up by F1. i must say: IT HAD BEEN A FUN AND HAPPENING AND EXCITING WEEKEND!!!!!!!
a GREAT team at turn 19L with a WONDERFUL mentor too! (: i'm so wear out by it but i enjoyed it! haha talking about contradiction yeah.
just completed another appointment yesterday. explained to her the policies she had purchased previously and we spoke about some insurance issues, updating her about some changes (esp. on the beneficiaries portion). guess this is known as servicing ya. its really nice at times cause some of them, do not have much education and thus do not really read much english. in contrast, all policies they purchase and related letters they received are all in english! they are dependent on the agents to really give them a clear picture of what they are buying and the contents of the regular letters they received from the insurance companies! I must say, agents play a VERY important role in giving clear, accurate and honest explanations about insurance.
with this, i urge all agents to go call up clients whom you had not met for more than a year, its time to just pop by and give them a good update. remember, its not all about sales, but its all about helping your clients!
cheers!
a GREAT team at turn 19L with a WONDERFUL mentor too! (: i'm so wear out by it but i enjoyed it! haha talking about contradiction yeah.
just completed another appointment yesterday. explained to her the policies she had purchased previously and we spoke about some insurance issues, updating her about some changes (esp. on the beneficiaries portion). guess this is known as servicing ya. its really nice at times cause some of them, do not have much education and thus do not really read much english. in contrast, all policies they purchase and related letters they received are all in english! they are dependent on the agents to really give them a clear picture of what they are buying and the contents of the regular letters they received from the insurance companies! I must say, agents play a VERY important role in giving clear, accurate and honest explanations about insurance.
with this, i urge all agents to go call up clients whom you had not met for more than a year, its time to just pop by and give them a good update. remember, its not all about sales, but its all about helping your clients!
cheers!
Tuesday, September 22, 2009
Chingay 2010!
received this email today ;P
interested parties feel free to join in ya (:
PAYM @ CHINGAY PARADE SINGAPORE 2010
- Be Part of the PAYM Float Contingent “Harmony in Diversity”
Chingay Parade Singapore 2010 is coming soon and the People’s Association Youth Movement (PAYM)
is now recruiting performers for its very own Float Contingent!
Showcasing Asia in wondrous ways beyond your wildest imagination…
Themed ImaginEast, Chingay Parade 2010 will be held on 19 and 20 February 2010 and will see a total of 6 performing segments along the new route as we move over to the F1 Pit Building for the FIRST time! Be Part of the Excitement and be dazzled at Chingay 2010!
Energy Blast!
PAYM will be forming a 300-strong float contingent for the Grand Finale segment for Chingay 2010 called "Harmony in Diversity". This will be the GRANDEST Finale in Chingay’s long history! The PAYM Chingay Float 2010 will showcase a new dimension of height, as some of our performers execute exciting gravity-defying acts. The PAYM Float will also incorporate the novel use of drums and ladders. These drums reflect all the different ethnic groups in our society whilst the ladders signify progress and continuous strive upwards. Let YOUR ENERGY set the stage ablaze!
Recruitment is NOW ON for enthusiastic and energetic YOUths as performers of the PAYM Chingay Float 2010! NO pre-requisites (such as dance background) are required as training will be provided for you to learn the steps and the coordination as a contingent. In case you are concern about the height element, no worries, we have got other performing roles minus the height. =)
The tentative training & performance schedule (subjected to further confirmation) is as follows:
Training: Saturday sessions 28 November 2009 5, 12, 19 December 2009 2, 9,16, 23, 30 January 2010 6(am session), 13 February 2010 Wednesday evening sessions 6, 13, 20, 27 January 2010 | Rehearsals @ F1 Pit Building: Full Dress Rehearsals: 6 (pm session), and 18 February 2010 Combined Rehearsals: 2 sessions to be confirmed. (One between 2 - 5 Feb 2010, and one between 7 - 12 Feb 2010) Performance: Chingay Preview – 19 February 2010 Actual Chingay Parade – 20 February 2010 |
To register, please complete the Registration List in the following attachment:
<< PAYM Chingay Float 2010_Volunteer Registration Form>>
On the 1st training day, we will require you to complete an indemnity form. We will follow-up on this at a later date.
Please send the completed Registration List to Miss Eileen Goh at paym.chingay@gmail.com by Friday 30 October 2009, 5pm.
For further enquiries, please feel free to contact
Mr Kenneth Wong, Member of the Organising Committee of PAYM @ Chingay Parade 2010, at wongchongwai.kenneth@gmail.com
Mr Kenneth Wong, Member of the Organising Committee of PAYM @ Chingay Parade 2010, at wongchongwai.kenneth@gmail.com
Join us now for a memorable experience with People's Association Youth Movement @ Chingay 2010 and together, we will make another success story for PAYM @ Chingay Parade 2010!
Monday, September 21, 2009
hari raya!
to all Muslim readers, Hari Raya Puasa! (:
really enjoy holidays, seeing everyone dress up, looking great and enjoying the day. It really brings out the joy in everyone!
once again, here i bring you some updates from the insurance industry.. not so much of an update but instead, i think its a promotion (:
few weeks back, AIA launched a coverage for H1N1. a quick summary of the benefits:
1) Providing H1N1 compliments cover of 12mths protection against Influenza A (H1N1) virus infection. Free with any purchase of selected life/health policy.
2) Valid till 8Nov09
3) 3 types of benefits depending on the corresponding plan purchased. benefits covered are
a) death benefit (ranging from 10K to 50K)
b) daily hospital income benefit ($50/day max 15 days)
a snapshot of the corresponding plans,
interested to get coverage for h1n1? contact your respect agents today! (note that in this case, its AIA thats offering the plans)
meanwhile, enjoy the holidays!! cheers!
ps. where's my green packet?? hmm.....
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