By: Riccardo Fontanella, Head of Technical Marketing, Alexander Forbes Investments
Riccardo Fontanella, Head of Technical Marketing, Alexander Forbes Investments, is available for interviews on Multi-management.
Everyone’s savings journey is different, with unique circumstances, needs and aspirations. Yet, there exists a shared commonality when it comes to managing one’s investments and savings – it is not getting any easier.
The reality is that carefully overseeing your savings is challenging today. The investment industry is constantly shifting and evolving at warp speed. Taking care of your money and other assets requires navigating an increasingly complex landscape. The pressures and challenges brought about by volatile markets and changing regulation have greatly shifted the requirements of investments and their ability to deliver on their objectives.
In the pursuit of taking the hassle out of investments, there is a growing interest in multi-managed solutions across the broader market, globally. These solutions combine several asset managers, across different markets, asset classes, and investment philosophies into one portfolio to better manage investment risk and smooth out your investment returns. The growing popularity of multi-managed solutions makes sense for several reasons:
- The choice paradox: too much choice is not always a good thing
Keeping up with the complex and ever-changing investment world is overwhelming. With more and more riding on each decision and each decision getting harder and harder to make, what’s the right choice? South Africans, like other investors globally, are simply overwhelmed by investment choices. Too much choice and complexity can compromise decision-making and lead to poor outcomes. It seems that the answer is not having more options to choose from but rather being better at choosing.
Multi-management means delegating day-to-day operational and investment management decisions to industry experts who manage and monitor your investments in real time. Using the insights and expertise surrounding each core area of investment management, a team of professionals is dedicated to making sense of this complex world, and exercising good judgements and quick decisions on your behalf.
- A tall order: the heavy burden of day-to-day priorities
Work, family and everyday responsibilities constantly demand their share of time and energy. This can make staying on top of your savings and investments an extra burden.
Multi-managed solutions can help lighten the load by making investments easier. Ready access to the investment-related resources, structures and processes of a packaged multi-managed portfolio mean that your savings are one less thing to worry about, enabling you to focus more on what matters most.
For financial advisers and trustees of retirement funds, multi-managed solutions can also offer the advantage of time well spent. By untangling complexity, easing administrative burdens and providing a complete governance framework, multi-managed solutions could improve the value that wealth partners and fiduciaries deliver to their clients. The less time spent thinking about how to build, manage and monitor portfolios for the future, the more time there is to sharpen focus on clients’ long-term goals and short-term pressures.
- The governance gap: solving the governance puzzle
A good governance structure around your investments is like a jigsaw puzzle. It consists of several pieces – investment management, operational management, market awareness, regulation and risk control – that need to be joined together to form a complete governance system. Investors are increasingly searching for a dynamic solution that rests with a safe pair of hands, allowing them to sleep well at night because they know it’s all been taken care of.
Multi-managed solutions can offer investors a high-quality governance framework built up from having the right people, processes and systems in place to successfully manage your savings and investments. Solving the governance puzzle requires looking at the big picture, so having the professional focus of an integrated governance network for your investments can go a long way in bettering your investment outcomes.
- Managing expectations: the real costs of emotional investing
Poor investment decisions undermine good investment returns. The rate of return earned on investments is important, but only in the context of keeping investors invested and confidently on track to reaching their investment objectives by not letting their emotions win over reason.
Multi-managed solutions aim to manage savings and investments in a way that is tied to expectations and comfort levels. This is done by bringing the best asset managers together and balancing their strengths to find the right complementary blend of skills that work for you across all market conditions.
A well-thought-out process for identifying the right asset managers and a demonstrable capability of blending them together can help produce smoother, competitive return streams for investors relative to other market-linked portfolios. This is because the poor performance of one investment is compensated for by the good performance of other investments in the multi-managed solution.
A portfolio solution
Multi-managed solutions provide investors with a unique opportunity to address the complexity, concerns and anxiety surrounding the management, oversight and performance of their savings and investments.