Celebrity Life

For more than 30 years, “Heavenly King” Aaron Kwok has been entertaining audiences in Hong Kong, Asia and around the world and entrusting HSBC to look after his wealth. Recently taking on the lead role of HSBC Jade Ambassador, Kwok is a genuine fan of the bank’s latest four wealth services: Wealth Portfolio Intelligence Service (WPIS), Wealth Financing Solutions, Legacy Planning Solution and International Accessibility.

“HSBC has been there for me when I needed them, whether it be financial planning for my family, international banking services or personalised support for my car-collecting hobby,” says Kwok, who also appreciates the personal service that comes with being an HSBC Jade client. “My HSBC Jade Director is very pleasant, approachable and thoughtful.”

With a dedicated HSBC Jade Director who serves as a personal financial advisor and relationship manager, HSBC Jade clients can enjoy the unique benefits of the award-winning Wealth Portfolio Intelligence Service (WPIS), an all-in-one risk-analysis, portfolio-management and transaction-service analytical investment tool.

“All HSBC Jade Directors receive rigorous training, have a clear understanding of investment and financial-management knowledge and know the latest market information,” says Brian Hui, Head of Customer Proposition and Marketing, Wealth and Personal Banking, Hong Kong. “They will analyse the client’s investment portfolio, and provide full and comprehensive financial-management advice according to different needs and requirements.

“Our HSBC Jade Directors also conduct frequent training seminars with other overseas Jade Directors to ensure that there is best-practice sharing, and to continuously add value to their financial-management and market knowledge.” WPIS enables a better understanding of clients’ portfolios across a wide range of assets, using risk analytics and stress tests, and supported by their dedicated HSBC Jade Director’s insights and expertise. HSBC WPIS won top honours as the Wealth Management Platform of the Year at the Asian Banking & Finance Retail Banking Awards in 2019.

Whenever the need for capturing opportunities arises, HSBC Jade offers two wealth-financing solutions – Wealth Portfolio Lending and Unit Trusts Investment Financing – to give clients greater financial flexibility to meet their increasingly complex lending and investment needs.

Wealth Portfolio Lending – commonly known as Lombard Lending and traditionally available only to Private Banking clients – offers HSBC Jade clients a readily available credit facility of up to HK$40 million, depending on the collateral value of their eligible assets, and can be used for most purposes with very few restrictions. The wide range of assets includes time deposits, bonds, equities, and unit trusts, which are eligible for obtaining the credit facility.

With no fees or interest until drawdown, clients can meet their personal goals or other liquidity needs immediately without disrupting long-term strategies. They can access these funds for a variety of requirements, such as tax payments, property purchases, financing a business or studying overseas, without the need to liquidate.

HSBC Jade clients can also make use of Unit Trusts Investment Financing^ to enhance potential returns with additional leverage for purchasing a diverse array of open-end funds such as equity dividend, fixed-income and income-driven multi-asset funds. Clients will have access to a loan facility once they open and transfer assets to an Investment Financing account.

Both wealth-financing solutions offer clients more flexibility and wealth-growth opportunities, provided that relevant risks such as interest rate risk and liquidity risk are being considered. HSBC Jade Directors will explain the risks involved in wealth-financing and help clients select suitable products with the right level of risk tolerance.

The Jade Global Generations Universal Life Insurance# solution lets clients plan and invest flexibly for their family’s future. It can be customised to meet a wide range of needs to safeguard clients’ loved ones across multiple generations, and provides a choice of policy currencies and currency switch, and change of life-insured for multi-generational planning; clients can also nominate a charity to give a charitable gift.

Moreover, clients in Hong Kong, mainland China or Singapore can enjoy the same Jade status benefits on a comprehensive range of products and services with the HSBC Jade Passport, without any local-account minimum requirements. Clients also have access to HSBC Jade Centres, as well as HSBC Jade exclusive products, preferential rates and an enhanced level of services in these three markets.

“As I travel around the world because of my job, with the HSBC Jade Debit Card I don’t need to exchange the local currency in advance, and if I need a lot of local money I can go to a Jade Centre in that country, such as Canada/US, and get it with no handling charges,” says Kwok.*

“There was a time that I needed to sign a very important agreement in Shanghai, so I contacted my HSBC Jade Director in Hong Kong, who then managed to obtain support from the HSBC Shanghai team to assist me with some arrangements.

“The HSBC Shanghai team soon arrived at the convention centre in Shanghai and helped me to sort out everything. I really appreciate the promptness and can feel the infinite support from them. It’s great that HSBC can help me whenever I need it."*

hsbc.com.hk/jade/

^Investment involves risks. Unit Trusts are investment products and some may involve derivatives, and are not equivalent to time deposits. There would be a higher level of risks and potential greater losses if you decide to use any loan amount for reinvestment. The information provided does not constitute any form of solicitation/recommendation of any investment products or lending products.

#Jade Global Generation Universal Life is a universal life insurance plan underwritten by HSBC Life (International) Limited (“HSBC Life”), a company incorporated in Bermuda with limited liability. It is not equivalent to a bank deposit or savings. Policyholders are subject to credit risk of HSBC Life. Early surrender may be subject to significant charges and proceeds received may be much less than the premium paid. HSBC Life is authorised and regulated by the Insurance Authority to carry on long-term insurance business in Hong Kong SAR. The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) is an insurance agent of HSBC Life. The plan is a product of HSBC Life but not HSBC and it is intended only for sale in the Hong Kong SAR. For monetary disputes arising between HSBC and you out of the selling process or processing of the related transaction, HSBC will enter into a Financial Dispute Resolution Scheme process with you; however any dispute over the contractual terms of the product should be resolved between HSBC Life and you directly.

*Providing service to HSBC clients outside Hong Kong is subject to applicable legal and regulatory requirements, and terms and conditions. The availability of such service will depend on the particular circumstances.

Investment involves risks. Terms & Conditions apply to the abovementioned services. To borrow or not to borrow? Borrow only if you can repay!

The post Aaron Kwok on HSBC Jade’s Bespoke Wealth Management Solutions appeared first on Prestige Online - Hong Kong.

Private equity represents the last resort for weary investors seeking superior, better-than- market returns in today’s bubbling bull market. High prices and low fixed-income yields are so crippling and scary that they must assume high risk through derivatives or structured financial products. Warren Buffett remarked that he can’t find any cheap stocks. Unfortunately, private equity is the most difficult asset class where individual investors can achieve success.

Portfolios need to diversify beyond passive assets, such as exchange-traded funds (ETFs) and other index-tracking vehicles. And everyone wants enhanced returns. Rabid day traders empowered by an army of robotic internet trading platforms moving in and out of liquid markets need to balance their portfolio with long-term investments. Since the 2008 global financial crisis, participating in private-equity and venture-capital funds that invest in technology start-ups is a risky stab at achieving absolute returns – that is, returns that aren’t correlated or tied to passive indices. The ultimate goal for a fund is to find the next Facebook, for example, and make 100 times your original investment in three to five years.

Easier said than done. Harvesting the illiquidity premium – the “private” aspect of unlisted investments – is one of the most difficult challenges in finance. Private equity represents the most labour-intensive investment- management exercise. It requires skills beyond finance to seed, guide and then harvest returns through an IPO or sale or merger.

Investors are highly dependent upon their asset managers, who must marshal a wide array of talents, from finance and technology to determine industry trends. It’s much more daunting than for traditional mutual-fund managers. These alternative assets cover a wide range of both obscure and familiar strategies, from hedge funds to private equity and venture capital. Indeed, the strategies of this asset class can be as obscure as betting on the outcome of merger and acquisition situations, technology start-ups, environmental lawsuits, bankruptcies and restructurings. Deciding which management team can create a successful portfolio in five years is an almost impossible task. Uncertainty of outcome means private equity is also the most expensive asset class, charging around 2 percent per year and a 20 percent incentive fee.

Unless you’re active, knowledgeable and connected in the private-equity business, you’re highly dependent on recommendations from your private banker and wealth manager. If you aren’t a valued ultra-high-net-worth investor, you can’t access top venture-capital or private- equity funds. The demand for proven, successful investment managers is so high that they can pick and choose whose money they accept. Top funds usually turn away investors.

Finding, cultivating and developing the right team and individuals is as hard as assembling a cast for an award- winning movie. It’s not as simple as other areas of banking, where any MBA can process loans. And teams often fall apart for a variety of reasons, leaving their investors with a dissolute management. Translating and visualising the next trend in technology or product development requires both wild creativity and disciplined skill sets. If success were as easy as hiring people with corporate backgrounds, then every successful fund would be staffed by former IBM or Hewlett-Packard employees.

Today’s highly regulated banks are limited as to which private-equity firms qualify to be marketed to their private banking clients. Most of the offerings comprise firms with long track records and established management teams.
No wealth manager wants to be sued for introducing clients into a new fund that suddenly fails. Yet first-time funds featuring people who’ve previously worked together can spin great returns in an untested field.

Research studies have objectively shown that the best private-equity returns across sectors are usually generated by investment bankers instead of management consultants. About 70 percent of private equity returns can be attributed to the entry or buying price of an asset followed by its IPO or sales exit. Investment bankers are trained and experienced at timing markets and negotiating favourable terms. So, believe it or not, “buying low and selling high” is more important than discovering the “new, new thing”.

For example, a common theme in the market over the last several years was investing in funds that developed student housing in cities with numerous colleges and universities. It’s been heavily sold to retail and high-net- worth clients. Unfortunately, units of some of these funds have failed to perform, making them difficult to liquidate. The manager can’t produce enough cash to satisfy unit holders who want to sell. Too many sellers seek an exit, all at the wrong time. And herein lies the investment dilemma for private-equity investors – you need to cope with the lack of liquidity and hope that your manager can generate enough returns to justify this risk.

Investing in publicly listed, private-equity management firms like Softbank or Blackstone is an alternative that offers liquidity. But you risk high market valuations and should carefully study that their management teams’ performance incentives are aligned with outside investors. As in any risky endeavour, the key is discerning what you want and what you want to believe.

The post The Perils of Private Equity Investing appeared first on Prestige Online - Hong Kong.

“Everyone wants to go to heaven, but no one wants to die” is the common lament of private bankers and wealth managers about the contradictory demands of their clients.

Since the 2008 global financial crisis and the current post-Covid period, volatility, risk, returns, expectations and lofty financial market bubbles continue to defy each new high. Wealth advisers are increasingly forced to redefine their roles and find new ways to explain (or not) how they can help you navigate today’s markets.

Expensive equity valuations since 2009 are a regular reason deterring investors from investing in equities. From its March low the S&P 500 jumped by 60 per cent and the Nasdaq index by 75 per cent. Both indices reached their record highs despite a Covid pandemic that continues to plague the global economy and impact corporate earnings. Global gross domestic product and corporate earnings aren’t expected to recover to pre-pandemic levels until late 2021 or even 2022. This perplexing divergence of economic and corporate fundamentals versus the performance of the equity markets creates doubts on valuations and the sustainability of this rally.

High- and ultra-high-net-worth individuals and family offices must continue to seek returns and yields in a market pressuring diminishing returns as global equity markets become overpriced and squeeze out less value by the month. They also must contend with their understanding of volatility versus risk. Markets are volatile in the way they change unpredictably. But investors must clearly understand their personal and family goals and how their entire strategy needs to protect their downside risk.

[caption id="attachment_212489" align="alignnone" width="1024"] Investors must clearly understand their personal and family goals and how their entire strategy needs to protect their downside risk. (Image: Michelle Henderson/ Unsplash)[/caption]

And while the pandemic has changed the way all of us communicate and socialise, it has also forced a rethink about how bankers and clients mutually learn, understand and manage investment goals and relationships. The long client lunches and presentations have given way to teleconferencing apps on desktop and mobile devices as the means for building trust. Today’s video technology represents a vast improvement, but no one knows if it may only be a temporary or tolerable substitute for face-to-face meetings.

Private bankers are increasingly in the business of offering advice across a number of wealth-related areas, such as trusts, succession and long-term portfolio planning. Online brokerages and chatrooms do a cheaper job at stock picking, speculation and other execution needs. Steering clients away from a short-term transaction and trading-oriented relationship with private banking – a particularly bad investment habit in Asia – has started to influence the new generation of wealth that’s studied finance and understands the importance of disciplined, long- term portfolio diversification.

Building a strategic concept of investment and the world takes years; it actually requires a reasonable knowledge and grasp of non-financial topics such as history, economics, culture and politics. You have to create and consume intellectual capital at the same time in order to learn from your investment successes and failures.

Wealth advisers dislike committing or discussing investment scenarios beyond basic lessons about the importance of diversification. Telling a client to sell everything leaves the bank’s relationship manager with a client with no reason to buy anything. Yet investors want to discuss doomsday outcomes these days.

[caption id="attachment_212490" align="alignnone" width="1024"] Wealth advisers dislike committing or discussing investment scenarios beyond basic lessons about the importance of diversification. (Image: Bruce Mars/ Unsplash)[/caption]

For the first time outside of a world war, a macro shock outside of our ecosystem could be the driver of change. It could lead to more geopolitical conflict, something we couldn’t anticipate. When the public markets force a correction, the hedge funds and mutual funds will see their overall portfolios decline, causing their illiquid investments in tech companies instantly to become a larger percentage of their overall portfolio than originally targeted.

At that point, expect many of them to withdraw from markets, focus on shoring up their public stock positions and perhaps even seek liquidity for their illiquid private equity and venture capital investments.

The flight of public market investors would kill the billion-dollar late-stage funding rounds for “unicorn” tech companies, but could also affect earlier funding rounds that are critical to smaller tech start-ups. Start-up companies face the greatest risks, as well as high-burn-rate companies that assume there’s a lot of cash available for high-spending, high-growth enterprises.

This ominous environment means crypto or virtual currencies haven’t lost their speculative and conspiratorial appeal. The dystopian prospect of some “great reset” is like an eerie trumpet call over a lost battlefield. Financial apocalypse usually involves the collapse of fiat currencies and the emergence of some form of cryptocurrency.

[caption id="attachment_212492" align="alignnone" width="1024"] When it comes to private banking, establishing a close, communicative and transparent relationship with your financial adviser helps both parties fully understand what constitutes your best interests. (Image: Macau Photo Agency/ Unsplash)[/caption]

Yet government agencies regulate them as assets or securities because, legally speaking, only countries and governments can issue currencies. While cryptocurrencies provide speculative opportunities, they’re too volatile to fulfil the two key roles of a currency: acting as a store of value and medium of transfer to buy and sell goods and services.

Today’s particularly hazardous and distended market demands an investor who can assimilate contradictory points of view in finance, economics and geopolitics and synthesise them into a clear but flexible decision.

Private bankers claim they’re incredibly client-focused, but what this usually means is that their employees are top-notch professionals and deliver competent client service. This doesn’t mean that the clients’ interests necessarily come first. And that is where establishing a close, communicative and transparent relationship with your financial adviser helps both parties fully understand what constitutes your best interests.

(Main and featured image: Rawpixel)

The post Everything You Wanted to Know About Private Banking But Were Afraid to Ask appeared first on Prestige Online - Hong Kong.

“Everyone wants to go to heaven, but no one wants to die” is the common lament of private bankers and wealth managers about the contradictory demands of their clients.

Since the 2008 global financial crisis and the current post-Covid period, volatility, risk, returns, expectations and lofty financial market bubbles continue to defy each new high. Wealth advisers are increasingly forced to redefine their roles and find new ways to explain (or not) how they can help you navigate today’s markets.

Expensive equity valuations since 2009 are a regular reason deterring investors from investing in equities. From its March low the S&P 500 jumped by 60 per cent and the Nasdaq index by 75 per cent. Both indices reached their record highs despite a Covid pandemic that continues to plague the global economy and impact corporate earnings. Global gross domestic product and corporate earnings aren’t expected to recover to pre-pandemic levels until late 2021 or even 2022. This perplexing divergence of economic and corporate fundamentals versus the performance of the equity markets creates doubts on valuations and the sustainability of this rally.

High- and ultra-high-net-worth individuals and family offices must continue to seek returns and yields in a market pressuring diminishing returns as global equity markets become overpriced and squeeze out less value by the month. They also must contend with their understanding of volatility versus risk. Markets are volatile in the way they change unpredictably. But investors must clearly understand their personal and family goals and how their entire strategy needs to protect their downside risk.

[caption id="attachment_212489" align="alignnone" width="1024"] Investors must clearly understand their personal and family goals and how their entire strategy needs to protect their downside risk. (Image: Michelle Henderson/ Unsplash)[/caption]

And while the pandemic has changed the way all of us communicate and socialise, it has also forced a rethink about how bankers and clients mutually learn, understand and manage investment goals and relationships. The long client lunches and presentations have given way to teleconferencing apps on desktop and mobile devices as the means for building trust. Today’s video technology represents a vast improvement, but no one knows if it may only be a temporary or tolerable substitute for face-to-face meetings.

Private bankers are increasingly in the business of offering advice across a number of wealth-related areas, such as trusts, succession and long-term portfolio planning. Online brokerages and chatrooms do a cheaper job at stock picking, speculation and other execution needs. Steering clients away from a short-term transaction and trading-oriented relationship with private banking – a particularly bad investment habit in Asia – has started to influence the new generation of wealth that’s studied finance and understands the importance of disciplined, long- term portfolio diversification.

Building a strategic concept of investment and the world takes years; it actually requires a reasonable knowledge and grasp of non-financial topics such as history, economics, culture and politics. You have to create and consume intellectual capital at the same time in order to learn from your investment successes and failures.

Wealth advisers dislike committing or discussing investment scenarios beyond basic lessons about the importance of diversification. Telling a client to sell everything leaves the bank’s relationship manager with a client with no reason to buy anything. Yet investors want to discuss doomsday outcomes these days.

[caption id="attachment_212490" align="alignnone" width="1024"] Wealth advisers dislike committing or discussing investment scenarios beyond basic lessons about the importance of diversification. (Image: Bruce Mars/ Unsplash)[/caption]

For the first time outside of a world war, a macro shock outside of our ecosystem could be the driver of change. It could lead to more geopolitical conflict, something we couldn’t anticipate. When the public markets force a correction, the hedge funds and mutual funds will see their overall portfolios decline, causing their illiquid investments in tech companies instantly to become a larger percentage of their overall portfolio than originally targeted.

At that point, expect many of them to withdraw from markets, focus on shoring up their public stock positions and perhaps even seek liquidity for their illiquid private equity and venture capital investments.

The flight of public market investors would kill the billion-dollar late-stage funding rounds for “unicorn” tech companies, but could also affect earlier funding rounds that are critical to smaller tech start-ups. Start-up companies face the greatest risks, as well as high-burn-rate companies that assume there’s a lot of cash available for high-spending, high-growth enterprises.

This ominous environment means crypto or virtual currencies haven’t lost their speculative and conspiratorial appeal. The dystopian prospect of some “great reset” is like an eerie trumpet call over a lost battlefield. Financial apocalypse usually involves the collapse of fiat currencies and the emergence of some form of cryptocurrency.

[caption id="attachment_212492" align="alignnone" width="1024"] When it comes to private banking, establishing a close, communicative and transparent relationship with your financial adviser helps both parties fully understand what constitutes your best interests. (Image: Macau Photo Agency/ Unsplash)[/caption]

Yet government agencies regulate them as assets or securities because, legally speaking, only countries and governments can issue currencies. While cryptocurrencies provide speculative opportunities, they’re too volatile to fulfil the two key roles of a currency: acting as a store of value and medium of transfer to buy and sell goods and services.

Today’s particularly hazardous and distended market demands an investor who can assimilate contradictory points of view in finance, economics and geopolitics and synthesise them into a clear but flexible decision.

Private bankers claim they’re incredibly client-focused, but what this usually means is that their employees are top-notch professionals and deliver competent client service. This doesn’t mean that the clients’ interests necessarily come first. And that is where establishing a close, communicative and transparent relationship with your financial adviser helps both parties fully understand what constitutes your best interests.

(Main and featured image: Rawpixel)

The post Everything You Wanted to Know About Private Banking But Were Afraid to Ask appeared first on Prestige Online - Hong Kong.

The investment quality of professional sports has become uncertain and volatile.

First they tell you it’s a business, not a sport. Then when you agree it’s a business, they call it a sport. For decades, professional sports franchises used to be recognised as a reliable long-term investment and an ideal private-equity asset class for ultra-high-net-worth diversification. Recent events have revealed how social media innovations have spawned an entirely new and unpredictable set of risks that threaten their value.

The data points to a grave prognosis. The NBA is suffering the most. In the US, according to Gallup, the percentage of people with a positive impression of sports has declined by 30 points over the past year from +20 to -10 nationwide. NBA first-round playoff viewership ratings plummeted 27 per cent, a 40 per cent drop since 2017-18. A Harris Poll observed that 38 per cent of sports fans explained that the NBA being “too political” is the reason why they’re watching fewer games. That represents a precipitous fall since last summer.

And the NFL is not immune from the social media-driven fan backlash. Sunday Night Football ratings fell by 28 per cent. Fans in attendance are openly booing players. A stunning collapse. Fans appear to be losing interest in sports.

[caption id="attachment_211699" align="alignnone" width="768"] (Image: Stephane Coudassot/Unsplash)[/caption]

The NFL and NBA are among the most popular sports leagues in the social media universe. Their content represents leading feeds on Twitter and Instagram. And yet despite their proven position in public, their ratings continue to plummet.

But not all leagues are waning. The UFC (Ultimate Fighting Championship) is experiencing strong gains. Despite basketball playoffs being played on a daily basis, NBA playoff viewership has declined from 2.39 million average viewers in 2019 to 1.68 million in 2020 – a 30 per cent decline. Meanwhile the UFC’s four preliminary fight cards since its emergence from Covid-19 have generated an average of 1.17 million viewers across ESPN and ESPN+. That’s an increase of 30 per cent compared with the viewership of pay-per-view preliminary fights in 2019. Average UFC ratings are trending upwards at a time when the NBA’s are shifting downwards.

More people should be watching pro-sports since many are homebound during the pandemic. Despite the re-opening of cinemas, attendance is falling, as box-office numbers have demonstrated. While it appears that fans resent the direct engagement of players and teams in social justice issues, greater technological forces are at work which may change the very idea of how professional sports are valued and governed.

Professional sports leagues have historically generated healthy, long-term private-equity returns – they’ve been a source of smart diversification for billionaire investors and syndicates. It’s a reputable private-equity class that allows owners a high-profile, celebrity status. They are also platforms for philanthropy and community affairs.

For example, Joseph Tsai, co-founder of Alibaba, is estimated to have paid US$3.3 billion for the Brooklyn Nets and Barclays Center. The previous owner, Mikhail Prokhorov, invested and spent about US$1.5 billion nine years ago. So doubling your money in nine years is a respectable return on a private, billion-dollar investment.

[caption id="attachment_211700" align="alignnone" width="1024"] (Image: JC Gellidon/ Unsplash)[/caption]

Recent events have pushed owners to decide if they’re investing in a sport, a social organisation or a business in the post-pandemic and Black Lives Matter era. Then are the players actually business partners with the owners who provide all the capital? Owners could have disagreed with player demands to support Black Lives Matter, but at a high cost. The business schism between owners and players threatens to destroy or split the league and make pro sports an unattractive investment.

The outcome for the sport as a business has impaired or confused corporate governance within the NBA as owners have been subverted. Their commissioners are supposed to work for the owners, not the players. Unless this division is resolved, the league’s corporate mission, message and product will be irrevocably divided. Fans will be confused and seek alternate and substitute forms of entertainment.

Players used to audition for teams. Now teams audition for players. The emerging ownership-player-fan relationship model may look nothing like the traditional one. Post-pandemic, league revenues may fail to recover and severely impact their social and financial model.

Social justice is only a current topic in this sports revolution. Technology’s relentless role in subverting and disintermediating established groups and relationships is unpredictable and unstoppable. It empowers and consumes everyone in its path. Social media and mobile computing have opened the door for anyone to either broadcast within their social silo or to the outside world.

Twitter was initially called text messaging for people without friends. But why make friends when you can build a following – and change your world? It’s emerged as an unavoidable platform for the liberation of one and many. And this version of disintermediation is pernicious, because it takes on a life of its own, tearing apart a global brand, a jointly shared common community product such as sport, as frustrated fans retreat into their own social media silos.

This story first appeared on Prestige Singapore

(Main and featured image: Bertrand Gabioud /Unsplash)

The post What You Should Know About Investing in Professional Sports Franchises appeared first on Prestige Online - Hong Kong.

The pandemic has triggered massive changes in investor-adviser relationships that we’re only just beginning to understand.

How high-net-worth individuals and family offices work with their financial advisers to protect and grow their money after Covid-19 is today’s most pressing issue. The pandemic will be remembered as a near cataclysmic, black-swan event that continues to shake global economies, markets and industries in ways that are still being worked out. The effects of human isolation have both worsened and changed how people relate to each other and make investment decisions.

Private wealth managers say that extended periods of restricted personal interaction and communication among family members can exacerbate existing tensions about estate succession and wealth management. Mega-rich family dynasties can quickly descend into a showcase for dysfunction, highlighting the witless cruelty of the entitled and the pathetic emotional inadequacy of the endlessly spoiled. The scheming and backstabbing between monstrous and self-entitled family members can become exposed for all to see, as if it was all in a television soap opera. As Tolstoy said in his novel Anna Karenina: “Happy families are all alike; every unhappy family is unhappy in its own way.”

Governance in a sprawling family office risks being largely based on family relationships rather than institutional policies. A private banker once told me that he asks his wealthy clients, “What is your relationship with your money?” Because how you relate to your money says a lot about your personality, and ultimately decides how succession and management conflicts will be resolved.

[caption id="attachment_210883" align="alignnone" width="1024"] (Image: Liv Bruce/ Unsplash)[/caption]

For families, the weakness is that most decisions are undergirded by emotion – and that’s unpredictable and undemocratic as a basis for a family’s long-term investment policy. The gut rules as its own tyrant. It doesn’t have to account for itself any more than divine inspiration can be questioned by believers. It’s not open to contradiction because it’s entirely personal. All decisions must flow from the instincts of the singular leader. So everyone must accommodate themselves to unpredictability. And when you’re rich, whatever you say is considered wisdom. Engaging in realistic and critical thinking is a lot more complex and challenging than resorting to clichés.

Governance risks lurk in the market for family-owned, public companies. Activist funds and proxy advisory firms hunt for opportunities to exploit the impaired structures and weakened valuations of family- owned businesses trying to appoint unqualified second- or third- generation descendants as top managers. Balancing the interests of professional managers and the desires of the next generation is an ongoing family risk. Young people love risk because they can’t imagine the consequences, while the older generation love building golden tombs and sealing the rest of the family in with them.

The pandemic has highlighted the importance of sustainability and the fragility of our entire ecosystem and relationships. Never lose sight of the primacy of preserving capital, downside protection and the importance of sustaining a collective and disciplined succession process. Building and maintaining a formal family-governance and individual portfolio-management policy requires effort, especially in a time when normal communication methods are impaired.

Many clients have been forced by the pandemic to remain at home. Travel, in-person meetings and socialising have largely ceased. While videoconferencing capabilities have existed for a long time, they were never the first choice for communication. Now with the pandemic in full swing, it has become a major lifeline, offering an opportunity to improve the dialogue and relationship between clients and their financial advisers.

Advisers have observed how commonplace mobile video-conferencing technology allows them to devote more time to clients because their daily work routine has become disintermediated. At the same time, clients want to be better informed and comforted about their investments and the markets in such an uncertain period.

[caption id="attachment_210884" align="alignnone" width="1024"] (Image: Stephen Dawson/ Unsplash)[/caption]

The pandemic ironically represents a unique opportunity for high-net-worth individuals and wealth managers to better understand each others’ goals and services.

Carefully discerning how you and your family’s life and investment objectives change over time and market conditions has never been more important. You need to maintain discipline to cultivate and maintain long term goals. Ignore short-term, emotional, reactive trades trying to catch opportunities in a volatile market. However, investors at all times need to fully understand their personal tolerance for risk and expectations of returns.

Despite resistance to change, there is little doubt the post-Covid world will offer a significantly different operating and living environment. Human communications and how technology is used to establish and maintain relationships are undergoing profound changes that have not yet been determined. That more people are more comfortable with working from home will alter the nature of the workplace.

Nonetheless, the post-Covid financial world will still demand some sort of one-on-one, relationship-driven nature in wealth advisory. Consuming information and planning portfolios entirely online has always been possible, but now mobile applications have made it more accessible and conventional. However, clients also need to experience a level of investment intimacy, sympathy and personal service, too.

The digitalisation of financial services has been reshaping the traditional banking landscape for years. But the pandemic has forced all participants to further redefine how humans interact with technology. Innovations may reduce the need for regular face-to-face engagements and force a redefinition of what constitutes a financial relationship and how people make investment decisions.

This story first appeared on Prestige Singapore

(Main and featured image: Shutterstock)

The post How to Manage Your Finances After Covid-19 appeared first on Prestige Online - Hong Kong.

There’s a good reason the lexicon refers to apex happenings, events or organisations as setting the “gold standard”. Gold holds its own for multiplicitous reasons: as a luxury good, an investment, a reserve asset and, increasingly, as an indispensable technological component. It’s highly liquid, no one’s liability, carries no credit risk, is scarce and historically it preserves its value over time. The Chinese in bygone dynasties espoused the efficacious nature of gold and even considered it offered "immortality".

When it comes to contemporary finance and dynamising your portfolio, gold may be a less-frequented commodity, but it’s an asset that repays investor loyalty like few others.

There’s a quartet of ways in which gold works for you as an investor: it generates long-term returns; acts as a diversifier and mitigates losses in times of market stress, provides liquidity with no credit risk and can also improve overall portfolio performance.

The World Gold Council estimates that adding between 2 and 10 percent in gold to a hypothetical US pension fund average portfolio over the past decade would have resulted in higher risk-adjusted returns.

Economic expansion is good news for gold, as periods of growth are supportive of jewellery, technology and long-term savings. Conversely, risk and uncertainty also works in gold’s favour, as market downturns often boost investment demand for gold as safe haven.

Last year, gold had its best performance since 2010, rising by 18.4 percent in US-dollar terms. It also outperformed major global bond and emerging-market stock benchmarks over the same period. In addition, gold reached record highs in most major currencies except the US dollar and the Swiss franc. Investor appetite for gold was apparent throughout the year, as seen by strong ETF flows and robust central-bank demand.

But what about the start of the new decade and beyond? Despite the global pandemic and COVID-19, gold was – until recently – one of the few assets with positive returns this year. It was up 10 percent on the year as of March 9, more than any other major asset class.

But setbacks in its performance aren’t without precedent. Gold experienced pullbacks at the onset of the global financial crisis, too, falling between 15 and 25 percent in US-dollar terms a couple of times during 2008. But by the end of that year, gold was one of the few assets – alongside US treasuries – to post positive returns.

Investors face an expanding list of challenges around asset-management and portfolio construction. Among them are low interest rates, which may push investors to seek riskier assets at elevated valuation levels and, for US pension funds in particular, may increase the value of liabilities, possibly reducing their funding ratio. Other concerns will be continued financial- market uncertainty, ranging from geopolitical tensions to expectations of diverging global economic growth and an increase in asset volatility.

Faced with the above, gold is not only a useful long-term strategic component for portfolios, but also one that’s increasingly relevant in the current environment.

David Tait, chief executive officer at the World Gold Council, commented: “The retail gold market is healthy, with gold being considered a mainstream choice. But what really excites me is the untapped part of the market: those people who’ve never bought gold but are warm to the idea of doing so in the future.

“Two issues need to be addressed to engage with these potential gold buyers: trust and awareness. This market can flourish if we can build trust across the broad spectrum of gold products being sold, and raise awareness around the positive role gold can play in protecting people’s wealth.”

Buying and Investing in Gold

Once you take the decision to buy or invest in the precious metal, which declension best suits your needs?

Physical Gold Bars

Small bars and coins have accounted for two-thirds of annual investment gold demand and around one quarter of global gold demand over the past decade. Demand for diamond bars and coins has quadrupled since the early 2000s, and the trend covers both the East and the West. New markets, such as China, have been established and old markets, including Europe, have re-emerged.

Gold-backed EFTs

Physically backed gold exchange-traded funds (ETFs), exchange-traded commodities (ETCs) and similar funds account for approximately one-third of investment gold demand. These funds were introduced in 2003, and, as of March 2016, they collectively held 2,300 tonnes of physical gold on behalf of investors around the world.

Allocated Gold Accounts

Bullion banks offer their institutional or high-net-worth customers allocated gold accounts consisting of gold deposits and resembling currency acounts. The holder of an allocated account is the legal owner of a specific quantity of gold. Bullion banks also offer unallocated accounts. In an unallocated account, a customer does not own specific bars or coins, but has a general entitlement to a set amount of gold. The investor is not the legal owner of any physical gold.

Internet Investment Gold

Or go digital with your gold investment. An increasingly common way of accessing the gold market is Internet Investment Gold (IIG). It allows investors to buy physical gold online, have it stored in professional vaults and take possession of it should the need arise. As such, IIG offers investors a highly convenient way to benefit from outright ownership of physical gold.

Gold Derivatives: Futures, Forwards and Options

Investing in derivatives requires more knowledge of financial securities than other forms of investing and may not be suitable for all investors. Derivatives trade over-the-counter and on exchanges. Those traded in such a way settle in a central clearing house that matches buyers and sellers. Over-the-counter (OTC) varieties have more flexible structures but include additional counterparty risk.
Investors could buy into gold-mining companies. Such stocks may correlate with the gold price. However, the growth and return in stock depends on the expected future earnings of the company, not just on the value of gold. So whichever declension of investment you take, let your future be one long golden moment.

The post Shine On: Why You Should Start Making Gold Part of your Investment Portfolio appeared first on Prestige Online - Hong Kong.

According to island property broker, Farhad Vladi, few people can withstand the longing for their own private piece of land in the midst of vast oceans or an idyllic lake, far from the confinement of the rest of the world.
And he should know. For 40 years, Vladi has been the go-to deal-maker for movie stars, football heroes, tycoons and other well-heeled clients in search of their water-bound paradise, either permanent or temporary. He can even help them sell when they tire – or are forced to retire – from the castaway crew. Over the years, Vladi has sold more 2,650 islands.

[caption id="attachment_206807" align="alignnone" width="1643"] Pumpkin Key, Florida; Vladi Private Islands[/caption]

The quote above is taken from the opening lines of the Vladi Private Islands’ website, which is dedicated to this specialist corner of the realty sector. The Hamburg-based company also has offices in alifax, anada, and Wellington, New Zealand – both locations are close to significant numbers of desirable island properties.
There are several other companies that specialise in obinson rusoe getaways, notably Toronto- headquartered Private Islands Online, whose gorgeously illustrated catalogues are a sheer joy to browse. International auction houses hristie’s and otheby’s also have less extensive island sites with useful information and stunning pictures.
Acquiring an island, especially in a foreign country, is not for the faint- hearted, but fortunately the digital domains of reputable brokers provide extensive, well-written information on necessary legal, financial and common-sense considerations, which inevitably differ vastly from one country to the next.
Vladi has even devised a 12-point list of crucial factors to consider, which he says enables clients to “enter transactions with their eyes wide open”. The emphasis, he says, is on habitable private islands.

[caption id="attachment_206806" align="alignnone" width="1749"] Lataro Island, Vanuatu[/caption]

Each factor is worth two points, for a maximum of points. f the score comes to less than 18 (66 percent), Vladi doesn’t recommend proceeding. If they total 12 points or less, then the property won’t even be listed on the ladi site. Briefly summarised, the most important factors are:

ONLY CONSIDER UNENCUMBERED FREEHOLD TITLE

This is one criterion where there’s no compromise, Vladi says. As the buyer, you should insist on receiving an unencumbered freehold title for the entire island against the purchase price, though sometimes the existence of a small property – such as a lighthouse – held by a third party can be acceptable. Freehold means that you own the property 100 percent.
Leasehold means that somebody else owns it, and you only have the right to use it for specific purposes and for a specific time. Moreover, you can’t insure your island against expropriation, as you don’t own it.

THERE MUST BE MEDICAL SERVICES WITHIN A 90-MINUTE RADIUS OF THE ISLAND

You should not consider buying an island from which a hospital, clinic or medical-service station cannot be reached within 90 minutes, or, even more preferable, one hour.

FAUNA AND FLORA

Buyers often underestimate the consequences of mosquitoes and sand flies. n some areas, mosquitoes need to be sprayed with chemicals, which is not good if you are allergic to the sprays. ome islands, like many in Australia, are home to highly venomous snakes. However, as only about four people die from snakebite each year Down Under, anywhere within 24 hours of a hospital is acceptably safe. Plants can present their own dangers some are toxic and others can cause allergic reactions. And yes, falling coconuts can be deadly.

[caption id="attachment_206808" align="alignnone" width="1736"] Kaulbach Island, Nova Scotia, Canada[/caption]

FOREIGN INVESTORS ARE SUBJECT TO THREE POSSIBLY LEGAL SYSTEMS:

Free market: foreign investments can be made in the country without restrictions. One can sell and buy as much as one wishes. This applies to the nited tates, anada, ermany, rance and reat Britain, to name a few. Free markets pose little concern for reselling, but investors should consult a local chartered accountant on tax issues.
Restricted market: foreigners can buy only with a government sanction, such as providing jobs. There are two groups of countries with restricted markets. For example, witerland, ew ealand and Australia have their own local market where foreigner sellers can expect to receive market prices for the property. Other countries, such as Tahiti, renada and the eychelles, require government permits for selling the property. If these are denied, sellers are often restricted to the lower prices offered by local markets.
Foreigners banned from buying: in countries such as the Philippines, Indonesia, Malaysia and others in the Asia-Pacific region, foreigners are not permitted to buy freehold land, including islands. In such countries, people are better off renting an island for their holidays and awaiting government policy to change in their favour before making an acquisition.

[caption id="attachment_206810" align="alignnone" width="1839"] Ideally, islands should be easily reachable by boat[/caption]

ACCESS

Reaching the island in all seasons and all weather is as important as being able to leave the island. heck whether the island has a natural anchorage or a small protected bay where a boat can be moored, and preferably where a path from the bay to the house can be built. Don’t consider islands subject to rough seas where no anchorage is possible (even if only for a few days each year).

[caption id="attachment_206809" align="alignnone" width="1719"] Kaulbach Island, Nova Scotia, Canada[/caption]

INFRASTRUCTURE

Your island should offer fresh water, a legal sewage system, and electricity, telephone and internet (you could perhaps do without telephone and internet, even power, but not water!).
If there’s no water and the groundwater table has sunk too deep, then a desalination system will be required (and cost up to US$50,000). Islands with their own water supply fall into a much more valuable category.

BUILDING PERMITS

Islands are in two types: developed with existing homes and undeveloped. Buyers should ask if homes were built legally and if a building permit is available to inspect. Where there’s been no building, buyers should find out whether permits are available. We strongly advise that they consult professionals, such as architects and surveyors.

THE PERFECT VILLIAN'S ISLAND

Given Vladi’s long and broad-ranging experience in island-hunting, we asked him only half in jest if he’d ever visited one that would be perfect for James Bond or a supervillian. Without pausing he suggested Dark Island, located just inside the New York State side of the St Lawrence River that forms the border with Canada. The sprawling and imposing granite othic-revival castle was built in the early 1900s by the Frederick Gilbert Bourne, the fifth president of the Singer Sewing Machine Company. The eccentric Bourne had tunnels and passageways built into the walls from where, it’s said, he could eavesdrop on his dinner guests after excusing himself from the table. Today, Singer Castle is a popular tourist destination.

The post What to Consider Before Buying an Island of Your Own appeared first on Prestige Online - Hong Kong.

In times of uncertainty, we play the long game by adding a little sparkle to our investment portfolio. CEO and Co-Founder of M&B Private Jewelers, Roi Sheinfeld, at his private showroom as he explains why there's no better time like the present to acquire precious gems.

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As we navigate through the volatile economy today, it may be time to relook at investment opportunities. And while most may argue that the best investment on earth is earth itself, we’re reminded that spicing up our portfolio and redistributing our assets will safeguard our wealth. The truth is that diamond investments have been on the rise in the recent decade, but apparently, when it comes to acquiring what Shirley Bassey claims are forever, now is the time.
CEO of M&B Private Jewelers and avid diamond collector himself, Roi Sheinfeld welcome us into his dazzling showroom in Hong Kong. We make our way into the private lounge that he and his mentor and business partner, Oren Hilel, designed to host his clients for personal viewings and design workshops, but not before we pause at every showcase to steal a look at the blinding gems in awe.
“Adding diamonds to a portfolio is a great way to diversify. Diamonds retain their value as they’ll hold for years and even decades,” the Israeli jeweller and diamond manufacturer explains. “More and more people are inclined to include diamonds as part of their investment, because not only will they be worth more than when you first purchased them, but they can actually be enjoyed in your possession, unlike other options.” By setting diamonds into jewellery, they can easily transform into wearable pieces to be enjoyed for decades. And in these worrying times, there’s a certain safe comfort that comes with the tangibility of diamonds, unlike reading stock prices on a screen.
Well, how would one go about picking up a rock or two? Roi describes the process as being quite simple, so long you do your homework. “Like buying anything, be sure to know how much you’re willing to spend and stick with it. A common misconception is that a good investment means a high ticket price. That’s not the case at all. The starting prices for some pieces begin at just a few thousand US dollars and, of course, can also go up to more than $50 million.”
Following a set amount, it’s equally crucial to ensure that you buy your diamond in a real time market value. nly through certified diamond professionals will you get the most honest price and an expert valuation. Roi recommends getting at least two opinions before the hammer comes down. “Credible jewellers will always have all the universally recognised accreditations and will most likely offer trade-in and upgrade options.”

When it comes to what to buy exactly, the options are endless. For most people, their first encounter with a diamond is the engagement ring. Traditions guide us towards the brilliant round-cut white diamond, and while the popularity of it means that it’s easy to liquidate as there’ll always be a buyer (and while “second-hand” means nothing in gem world), the value remains relatively consistent even over long periods of time.
Meanwhile, a fancy-shape white diamond (think pear shape, emerald cut, oval shape) if cut properly is considerably more unique than that of a brilliant in the same carat weight, and therefore more likely to gain value over time.
“Yellow diamonds are fun and also quite easy to find. t’s also considered an entry level in the fancy-colour world of diamonds and can be of equal value if not cheaper than white in the same size,” the diamond connoisseur explains. Of course, a lot goes into the valuable of the stone (4Cs – carat, cut, colour, clarity), but generally speaking, it’s a great piece to consider, as Roi suggests. Going beyond that is looking at rare colours – blues, pinks and the extremely rare greens most certainly come with a notorious price tag. However, since tremendous sales at auction houses they’ve become more appealing to UHNWIs.
Any investment involves extreme speculation. But getting your foot in the door is actually pretty easy, as we live in one of the heaviest diamond- trading cities in Asia. If you’re not keen on risk in a speculative economy, in no rush for returns, and like your money where you can see (or wear) it, consider diamonds your best friend.

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