English to German Bus/Financial Investment / Securities

Process to apply investor offering in client portfolio

 Step 1: ***Identify client objective functions***
• Investment objectives
 What level of total return are they looking for?
• Is this realistic and commensurate with the risk they are willing to take (see below)?
 Should we be seeking income or capital growth, or both?
• This needs to align to both liquidity (spending) and tax requirements
• Risk tolerances
 Is the investor willing to take risk?
• Willingness would link to such things as: Personality type, prior experience of risk taking, an understanding of the proposed product, source of existing wealth, investment horizon etc.
• For example: A young, confident and successful individual in the finance industry who has inherited a large sum of money would likely have high willingness to take risk, whereas a conservative retiree who built up their wealth over 40 years running their own small business might exhibit risk-averse behavior
• An advisor needs to conduct a risk-assessment (normally a questionnaire) to determine willingness
 Does the investor have the ability to take risk?
• Ability is easier to quantify than willingness.
• Ability would exist where the existing portfolio is sizeable (relative to liabilities and beyond liquidity/spending needs), and where the investment horizon is long-term
• For example: An investor in retirement with a small portfolio and large mortgage does not have much ability to take on risk
 To take on risk, both moderate/high willingness and moderate/high ability must exist
• Portfolio constraints
 Be aware of any constraints which would limit the client’s willingness or ability to utilize:
• Derivatives
• Leverage
• Short sales
 Ethical preferences – e.g. the investor may want to invest in companies with quality corporate governance, and avoid tobacco or gambling stocks


 Step 2: A deeper dive to better understand the client
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 Step 3: Assess market intrinsic value vs. observed market prices
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 Step 4: Check investment management tool box to align client mandate, market view and suite of available (existing or newly created) structured products
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 Step 5: Make a firm recommendation to client, communicate with client and revise proposal based upon feedback, execute trade suitable for client and monitor performance
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