Retirement Planning vs Post Retirement Investing Very often a question is asked “Does retirement mean only an attempt to meet expenses and manage cash outflow?” Traditionally, most senior citizens only aspire to have retirement plans that process to manage expenses and contingencies which is nothing but capital protection as the centrepiece of an investment plan. However, they should also aim to grow their money in the safest manner. Let’s look at how we can enable this opportunity. Over the years age-based investing has become an efficient way for financial services companies to place investments options. We have a large base of Retirees & Pensioners as our Clients with a long standing banking relationships. The foundation of our Wealth Proposition is our Asset Allocation Model which is pillared on matching Client Risk Rating (CRR) with Product Risk Rating (PRR). With the evolution of Wealth Management Business Unit we have realised a key distinction between Post Retirement Planning & Post- Retirement Investment. The average age profile of our clientele is 50-55+; but our Risk profiling tells us another story. Approximately 47% of our Clients fall in the Risk Profile of Aggressive to Very Aggressive.
We will first showcase Risk Profiling and the role it plays in Asset Allocation and then address the myths surrounding age-based investing. Client Risk Profiling Risk profiling is at the core of Wealth Management business. Risk profiling helps to understand how much risk an individual investor can take in order to achieve certain financial goals. It also enables the Wealth Managers to better understand and further advice the Investor based on his/her financial requirements. Investor’s goals, time horizon, liquidity needs, and risk aversion, are the key elements assessed by a Wealth Manager while suggesting suitable investment options and/or building efficient long-term investment strategies for investors. Risk Profiling is based on two pillars of Wealth Management i.e. “Risk & Return”. It is a method to determine the optimum level of risk an investor is willing to take after considering his/ her Risk Willingness (based on his/her Goal), Risk Appetite and Risk Tolerance.
Risk Willingness : A study of the Investors Financial Goals and the Time Horizon to achieve the desired returns in future
Client Risk Profiling
Risk Appetite: The degree of financial risk one can afford to take to achieve your goals. It is determined by the Investors current financial situation such as his/her earning stability, number of dependents, net-worth & cashflow situation. Risk Tolerance: The degree of risk an investor is actually comfortable with. This is a subjective & behavioural aspect of an investor and can be judged by historical track records and investment patterns.
42
Second Innings | Apr.19 To Jun.19 & Jul.19 To Sep.19.
