Your portfolio asset allocation

[SpokaneAl]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life. Daily, monthly and even annual performance numbers spouted by the talking heads and magazine headlines are not important. What the markets are doing today will mean little or nothing in 30 years. IMO the goal is to, over the long term, increase the size of your financial pile while enjoying life.

Oh, and watch investment costs. Costs matter, especially over the long term.

Time truly is on your side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

[AyG]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

[xylophone]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

[SpokaneAl]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

Yes, perhaps I wasn't very clear. I am advocating a diversified portfolio based on no load mutual funds - ideally index funds. No one knows what the future will bring. In the US the biggest problem of up and coming retires is that they have been such poor savers over their earnings lifetime, they are in no position to retire.

You gotta start saving and investing and it needs to be a priority. If you start early time is your friend - wait a decade or two and time becomes your enemy.

Your point about future returns is sound - the more we can invest, via a diversified portfolio the better we will be. Trying to pick winning investments with much consistency is well beyond the expertise of most of us working stiffs. We should concentrate on what we know - which is usually our vocations and our family. Watch the spending, save like your future retirement depends on it - it does - and your chances of success increase exponentially.

I am only an experiment of one, but this is what has worked for me. As many found out in the tech bubble and later the housing bubble, as soon as you start believing that this time it is different, you are setting yourself up for problems. And I am sure you all have read the stuff on the danger of missing just a few great market days - timing, again is well beyond the expertise of most of us.

Establish a long term diversified portfolio and stay the course.

Sent from my iPad using Thaivisa Connect Thailand mobile app

Edited January 29, 2014 by SpokaneAl

[AyG]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

This isn't a question of one holding amongst many performing poorly. It's possible that the entire equity market has had its day. It's possible that America will disappear as a world power. In the long term everything is reduced to dust.

Over a period of decades it's important to be aware of long-term trends. Having a particular asset allocation model and rebalancing is a very good idea in the short term - but it needs to be kept under review.

[SpokaneAl]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

This isn't a question of one holding amongst many performing poorly. It's possible that the entire equity market has had its day. It's possible that America will disappear as a world power. In the long term everything is reduced to dust.

Over a period of decades it's important to be aware of long-term trends. Having a particular asset allocation model and rebalancing is a very good idea in the short term - but it needs to be kept under review.

As you say it is possible . . .

I have laid out my thoughts on investing over the next two, three, four decades or beyond. With your concerns what precisely do you recommend for that same time period?

Sent from my iPad using Thaivisa Connect Thailand mobile app

Edited January 29, 2014 by SpokaneAl

[Naam]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life. Daily, monthly and even annual performance numbers spouted by the talking heads and magazine headlines are not important. What the markets are doing today will mean little or nothing in 30 years. IMO the goal is to, over the long term, increase the size of your financial pile while enjoying life.

Oh, and watch investment costs. Costs matter, especially over the long term.

Time truly is on your side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

time is not on your side when you are older than 60 as is the majority of TV-members (according to a recent poll).

[xylophone]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

This isn't a question of one holding amongst many performing poorly. It's possible that the entire equity market has had its day. It's possible that America will disappear as a world power. In the long term everything is reduced to dust.

Over a period of decades it's important to be aware of long-term trends. Having a particular asset allocation model and rebalancing is a very good idea in the short term - but it needs to be kept under review.

It is also possible that Iran will develop a nuclear bomb and "boom"; that a meteorite strikes; that...........and everything, as you say, will be "reduced to dust".

You can only plan for your future in the world as you know it, learning from history (investments et al) and putting in place a plan which incorporates all that is known and has been learned.

In the long term (however long that is)...............who knows??

[fletchsmile]

The ongoing discussions concerning emerging markets solutions are very interesting. That said, I have different investment priorities.

After a decade or so of performing all the work necessary to determine when best to buy, and more importantly sell an individual security, I had had enough and moved totally to no load mutual funds, and slowly over time, morphed into holding the vast majority of my holdings in index funds.

So I will agree that with an emerging markets index fund in my pile, I probably have left some money on the table. However, in the last decade and a half or so I am all about the mix. I believe that for me, discipline and keeping the long view work best.

I religiously maintain my asset allocation, even as I carefully adjust it as I get older and more conservative. I re-balance when necessary and refuse to chase performance. Costs matter and my portfolio average annual expense ratio is .17%.

So, as always, the answer and the solution depends on one’s circumstances and goals. As I get older, keeping my pile is equally or more important that growing that pile. In that I am retired I now have much less interest in managing my assets day to day, but, in believing that this is not brain surgery, I see no reason to hand it over, either via active managed funds, or to a financial planner.

I keep it all in a single family of funds, am careful and disciplined about my spending and with half of our time spent in Thailand and the other half in the US, think that things have worked out pretty danged well.

Develop a long range plan, avoid jumping from one investment flavor of the month to the next, spend less than you earn and pack away the difference and you can have options and choices in life as you get older. And isn’t that really the goal for many of us?

Cheers.

I'm not sure what you mean by a "single family of funds". If you mean they are all with the same broker or fund management provider or bank or single source I would suggest a rethink.

While you may be happy with the "market risk", "credit risk" and "liquidity risk" among other risk in your portfolio, this leaves you exposed to "operational risk" including fraud, and unforeseeable acts which are not necessarily likely to happen but are always lurking even if tail events.

My view is you should never have all your money with a single bank or single provider, even if it is convenient or reduces fees etc, it is always worth spreading it around a little. You only need look at names like Equitable Life, Maddoff, MF Global, and so on and so on, or during the GFC even AAA rated banks like UBS had their tough times. The government or regulator may provide some underlying protection but it will never be absolute.

Cheers

Fletch

[Naam]

The ongoing discussions concerning emerging markets solutions are very interesting. That said, I have different investment priorities.

After a decade or so of performing all the work necessary to determine when best to buy, and more importantly sell an individual security, I had had enough and moved totally to no load mutual funds, and slowly over time, morphed into holding the vast majority of my holdings in index funds.

So I will agree that with an emerging markets index fund in my pile, I probably have left some money on the table. However, in the last decade and a half or so I am all about the mix. I believe that for me, discipline and keeping the long view work best.

I religiously maintain my asset allocation, even as I carefully adjust it as I get older and more conservative. I re-balance when necessary and refuse to chase performance. Costs matter and my portfolio average annual expense ratio is .17%.

So, as always, the answer and the solution depends on one’s circumstances and goals. As I get older, keeping my pile is equally or more important that growing that pile. In that I am retired I now have much less interest in managing my assets day to day, but, in believing that this is not brain surgery, I see no reason to hand it over, either via active managed funds, or to a financial planner.

I keep it all in a single family of funds, am careful and disciplined about my spending and with half of our time spent in Thailand and the other half in the US, think that things have worked out pretty danged well.

Develop a long range plan, avoid jumping from one investment flavor of the month to the next, spend less than you earn and pack away the difference and you can have options and choices in life as you get older. And isn’t that really the goal for many of us?

Cheers.

I'm not sure what you mean by a "single family of funds". If you mean they are all with the same broker or fund management provider or bank or single source I would suggest a rethink.

While you may be happy with the "market risk", "credit risk" and "liquidity risk" among other risk in your portfolio, this leaves you exposed to "operational risk" including fraud, and unforeseeable acts which are not necessarily likely to happen but are always lurking even if tail events.

My view is you should never have all your money with a single bank or single provider, even if it is convenient or reduces fees etc, it is always worth spreading it around a little. You only need look at names like Equitable Life, Maddoff, MF Global, and so on and so on, or during the GFC even AAA rated banks like UBS had their tough times. The government or regulator may provide some underlying protection but it will never be absolute.

Cheers

Fletch

never have all your money

i think one has to differentiate Fletch. there is "money" (cash) and there are "assets" who are on record, respectively kept, with custodians such as Euroclear et al. two risks which differ from each other like day and night.

[SpokaneAl]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

This isn't a question of one holding amongst many performing poorly. It's possible that the entire equity market has had its day. It's possible that America will disappear as a world power. In the long term everything is reduced to dust.

Over a period of decades it's important to be aware of long-term trends. Having a particular asset allocation model and rebalancing is a very good idea in the short term - but it needs to be kept under review.

It is also possible that Iran will develop a nuclear bomb and "boom"; that a meteorite strikes; that...........and everything, as you say, will be "reduced to dust".

You can only plan for your future in the world as you know it, learning from history (investments et al) and putting in place a plan which incorporates all that is known and has been learned.

In the long term (however long that is)...............who knows??

Perhaps if one holds that perspective the answer is the three Bs portfolio - invest in bullets, beans and barbed wire.

Sent from my iPad using Thaivisa Connect Thailand mobile app

[SheungWan]

If you are starting out with a few decades to go, I just don't think it matters much to worry about over/under valuations, Sharpe ratios, alpha, beta and all the rest.

Find an asset allocation, stick with it over the long term via regular contributions and re-balancing and get on with the rest of your life.

Dangerous advice. Think back to the late 1800s in America. Railroad stock was the investment to be in - and it wasn't even a bubble situation. The certificates now are largely worthless.

Later, most private portfolios were in government bonds - little or no equity exposure.

Then came the interest in equities.

For the last decade equity returns have been much poorer than in the past. Could it be that for years to come they will only average 2-3% a year, rather than the 10-12% that most of us are used to? Could there be another up-and-coming asset class that will replace it in popularity? Are equities dying?

I took it that SpokaneAl was advocating a diversified portfolio, so sure any one stock/bond in amongst hundreds if not thousands may underperform, but it will make little difference esp as the automatic rebalancing will have given a poor stock short shrift.

This isn't a question of one holding amongst many performing poorly. It's possible that the entire equity market has had its day. It's possible that America will disappear as a world power. In the long term everything is reduced to dust.

Over a period of decades it's important to be aware of long-term trends. Having a particular asset allocation model and rebalancing is a very good idea in the short term - but it needs to be kept under review.

In the long term the sun will swallow the earth and human beings will have migrated to a different galaxy. It is vaguely possible that sometime in the not too distant future outlandish observations will have had their day, but don't bet on it.

[fletchsmile]

The ongoing discussions concerning emerging markets solutions are very interesting. That said, I have different investment priorities.

After a decade or so of performing all the work necessary to determine when best to buy, and more importantly sell an individual security, I had had enough and moved totally to no load mutual funds, and slowly over time, morphed into holding the vast majority of my holdings in index funds.

So I will agree that with an emerging markets index fund in my pile, I probably have left some money on the table. However, in the last decade and a half or so I am all about the mix. I believe that for me, discipline and keeping the long view work best.

I religiously maintain my asset allocation, even as I carefully adjust it as I get older and more conservative. I re-balance when necessary and refuse to chase performance. Costs matter and my portfolio average annual expense ratio is .17%.

So, as always, the answer and the solution depends on one’s circumstances and goals. As I get older, keeping my pile is equally or more important that growing that pile. In that I am retired I now have much less interest in managing my assets day to day, but, in believing that this is not brain surgery, I see no reason to hand it over, either via active managed funds, or to a financial planner.

I keep it all in a single family of funds, am careful and disciplined about my spending and with half of our time spent in Thailand and the other half in the US, think that things have worked out pretty danged well.

Develop a long range plan, avoid jumping from one investment flavor of the month to the next, spend less than you earn and pack away the difference and you can have options and choices in life as you get older. And isn’t that really the goal for many of us?

Cheers.

I'm not sure what you mean by a "single family of funds". If you mean they are all with the same broker or fund management provider or bank or single source I would suggest a rethink.

While you may be happy with the "market risk", "credit risk" and "liquidity risk" among other risk in your portfolio, this leaves you exposed to "operational risk" including fraud, and unforeseeable acts which are not necessarily likely to happen but are always lurking even if tail events.

My view is you should never have all your money with a single bank or single provider, even if it is convenient or reduces fees etc, it is always worth spreading it around a little. You only need look at names like Equitable Life, Maddoff, MF Global, and so on and so on, or during the GFC even AAA rated banks like UBS had their tough times. The government or regulator may provide some underlying protection but it will never be absolute.

Cheers

Fletch

never have all your money

i think one has to differentiate Fletch. there is "money" (cash) and there are "assets" who are on record, respectively kept, with custodians such as Euroclear et al. two risks which differ from each other like day and night.

Yes as you say there are differences.

Custodians provide important independent controls around mutual funds and client money. Client money should be segregated and a good fund manager will use a quality custodian eg HSBC, Citi etc etc which is independent from the fund manager. If the fund manager is also a bank they should use another bank as custodian.

Euroclear is different again than the way a mutual fund custodian works.

Then you also have to look at the trading mechanisms and how investments/deals are placed.

Now if you held all your cash with UBS and your trading accounts with UBS and place all your trades thru a relationship manager at UBS, eg with Private banking you are still open to fraud risks. Even though you may have mutual funds with an independent custodian the RM could fraudulently manipulate your money and controls do get bypassed albeit rarely - not saying this happens at UBS BTW but the probability is not zero. Even if you deal online, who's to say that an RM knowing all your account and customer details doesn't collude with someone either internally in say IT or settlements or externally at the custodian? They could manipulate data routes. Then there's Hackers, client data theft etc etc

So if you trace the whole chain of events. Yes there will be often strong and even excellent controls. But you can never eliminate operational risk 100%.

Hence if you have your money in 2 or 3 different places which do not interlink in any way you are safer and much less likely to lose all your money.

Cheers

Fletch

[isawasnake]

I'm not sure what you mean by a "single family of funds". If you mean they are all with the same broker or fund management provider or bank or single source I would suggest a rethink.

While you may be happy with the "market risk", "credit risk" and "liquidity risk" among other risk in your portfolio, this leaves you exposed to "operational risk" including fraud, and unforeseeable acts which are not necessarily likely to happen but are always lurking even if tail events.

My view is you should never have all your money with a single bank or single provider, even if it is convenient or reduces fees etc, it is always worth spreading it around a little. You only need look at names like Equitable Life, Maddoff, MF Global, and so on and so on, or during the GFC even AAA rated banks like UBS had their tough times. The government or regulator may provide some underlying protection but it will never be absolute.

Cheers

Fletch

never have all your money

i think one has to differentiate Fletch. there is "money" (cash) and there are "assets" who are on record, respectively kept, with custodians such as Euroclear et al. two risks which differ from each other like day and night.

Yes as you say there are differences.

Custodians provide important independent controls around mutual funds and client money. Client money should be segregated and a good fund manager will use a quality custodian eg HSBC, Citi etc etc which is independent from the fund manager. If the fund manager is also a bank they should use another bank as custodian.

Euroclear is different again than the way a mutual fund custodian works.

Then you also have to look at the trading mechanisms and how investments/deals are placed.

Now if you held all your cash with UBS and your trading accounts with UBS and place all your trades thru a relationship manager at UBS, eg with Private banking you are still open to fraud risks. Even though you may have mutual funds with an independent custodian the RM could fraudulently manipulate your money and controls do get bypassed albeit rarely - not saying this happens at UBS BTW but the probability is not zero. Even if you deal online, who's to say that an RM knowing all your account and customer details doesn't collude with someone either internally in say IT or settlements or externally at the custodian? They could manipulate data routes. Then there's Hackers, client data theft etc etc

So if you trace the whole chain of events. Yes there will be often strong and even excellent controls. But you can never eliminate operational risk 100%.

Hence if you have your money in 2 or 3 different places which do not interlink in any way you are safer and much less likely to lose all your money.

Cheers

Fletch

I think I will wait, with great anticipation mind you, for the day I have enough money to worry about. Spreading my 100,000 baht savings into 4 independent institutions just doesn't seem reasonable at this point

Edited January 31, 2014 by isawasnake

[SheungWan]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

[SpokaneAl]

Here is one perspective on the discussion over whether to keep all of one assets with a single mutual fund family of funds.

http://www.obliviousinvestor.com/is-it-safer-to-use-multiple-fund-companies/

Prior to consolidating all our investments with a single fund family my research had led me to the same conclusion as the writer in the link above.

For me an additional issue is as I age, I want to simplify my life. Splitting our time between the US and Thailand as retired folks means other priorities besides investing. When I was younger I did as you said - funds across several companies, tracking data, etc. Now, I keep everything with Vanguard and life is easier. Additionally, I want to make record keeping and access to monies easier for my wife when I kick the bucket, as statistics say I will most likely do before her.

Lastly, IRAs and required minimum distribution issues are much simpler when everything is at one family of funds.

This does not mean I have stopped watching and tracking investments - I probably check them too much, but I always have been a bit on the anal side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

Edited January 31, 2014 by SpokaneAl

[Naam]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

what is the function of a relationship manager? what exactly does he/she manage?

[SpokaneAl]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

what is the function of a relationship manager? what exactly does he/she manage?

If they are similar to the guy I have at Vanguard, they do just as the name says - they manage the customer relationship. They handle admin issues etc.

Sent from my iPad using Thaivisa Connect Thailand mobile app

[Naam]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

what is the function of a relationship manager? what exactly does he/she manage?

If they are similar to the guy I have at Vanguard, they do just as the name says - they manage the customer relationship. They handle admin issues etc.

Sent from my iPad using Thaivisa Connect Thailand mobile app

will a relationship manager be able to handle a potential relation between me and a mia noi? if yes, how do i apply to get one assigned who also manages my wife who does not approve of a mia noi?

[SpokaneAl]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

what is the function of a relationship manager? what exactly does he/she manage?

If they are similar to the guy I have at Vanguard, they do just as the name says - they manage the customer relationship. They handle admin issues etc.

Sent from my iPad using Thaivisa Connect Thailand mobile app

will a relationship manager be able to handle a potential relation between me and a mia noi? if yes, how do i apply to get one assigned who also manages my wife who does not approve of a mia noi?

555

Sent from my iPad using Thaivisa Connect Thailand mobile app

[fletchsmile]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

Sorry to shatter your dreamworld paradise but yes an RM or any number of employees in various capacities including IT with a financial institution do have the capacity to misappropriate your funds.

It definitely happens - read many of the posts by people who who are always telling you how unsafe Thai (and other banks) are.

It is by no means a high probability or the norm, but it happens. I can also tell you that from first hand experience working in various financial institutions.

A customer is depending on the financial institutions controls (internal and external) as well as having recourse if something goes wrong. These are usually highly significant mitigants which normally make a very low probability of significant loss. What you have to bear in mind is that controls do sometimes occasionally fail, and if you happen to be unlucky that the institution fails or the party you have recourse to fails at the same time....

Nothing is zero % risk.

Cheers

Fletch

[fletchsmile]

A few basic concepts for Operational Risk 101:

It's the risk of failed processes, people and systems. It includes failure of internal controls as well as external events. It also covers internal and external fraud as well as errors again. You're looking at not just single events but also combinations of processes,people, systems (manual as well as IT), internally and externally whether deliberate or accidental.

In terms of client money and relationship managers, whether you are aware or not, financial institutions usually have to split their own proprietary money and that of clients. Believe it or not things happen and processes, people, systems, fraud, accidents, errors, internal or external, IT blips, downtime etc mean sometimes what should happen doesn't always.

But normally things run smoothly and your client money is identified separately. From there it is usually tagged or allocated a code in an IT system in a variety of different ways. It is common for a financial institution for example to split their clients according to ARM style codes (Account Relationship Manager or Account Administration Manger). This is a person or function or group that oversees the balances and accounts - don't forget much of these are just digits in an IT system. Whether you have an RM in physical reality or not and whether you use them or not, I can assure you your accounts will have identifiers/codes/tags for them to be managed electronically

Now knowing a definition of OR and even just knowing that your money is tagged or allocated a code to identify it within a system, you only have to use your imagination as to how the tag/code/allocation might go wrong, either deliberately or accidentally via human or IT.

Yes there are a whole raft of controls in place, but they sometimes go wrong. Usually other controls pick up errors and fraud etc.

Just a few examples:

Nick Leeson Barings - brought down the whole bank by setting up his own suspense style codes, and using his force of personality to override normal controls as well as lapses elsewhere in controls.

Read about MF Global. Where client money was allegedly misappropriated and mixed with client money to prop up a failing business. What you'll also see is various defendant claims such as back office or system error, rather than deliberate misappropriation. What the real story is I'll leave you to draw you own conclusions. Spin it on its head though and the defences against fraud included things back office processing, systems errors etc. These defences should you what could go wrong.

Cheers

Fletch

[SheungWan]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

Sorry to shatter your dreamworld paradise but yes an RM or any number of employees in various capacities including IT with a financial institution do have the capacity to misappropriate your funds.

It definitely happens - read many of the posts by people who who are always telling you how unsafe Thai (and other banks) are.

It is by no means a high probability or the norm, but it happens. I can also tell you that from first hand experience working in various financial institutions.

A customer is depending on the financial institutions controls (internal and external) as well as having recourse if something goes wrong. These are usually highly significant mitigants which normally make a very low probability of significant loss. What you have to bear in mind is that controls do sometimes occasionally fail, and if you happen to be unlucky that the institution fails or the party you have recourse to fails at the same time....

Nothing is zero % risk.

Cheers

Fletch

Yes, and every time I venture across the road I might get knocked over.

Thai bank risk? I can hardly sleep worrying about my 1000 baht on deposit. Maybe its time for a meeting with my RM at Krung Thai.

[fletchsmile]

Here is one perspective on the discussion over whether to keep all of one assets with a single mutual fund family of funds.

http://www.obliviousinvestor.com/is-it-safer-to-use-multiple-fund-companies/

Prior to consolidating all our investments with a single fund family my research had led me to the same conclusion as the writer in the link above.

For me an additional issue is as I age, I want to simplify my life. Splitting our time between the US and Thailand as retired folks means other priorities besides investing. When I was younger I did as you said - funds across several companies, tracking data, etc. Now, I keep everything with Vanguard and life is easier. Additionally, I want to make record keeping and access to monies easier for my wife when I kick the bucket, as statistics say I will most likely do before her.

Lastly, IRAs and required minimum distribution issues are much simpler when everything is at one family of funds.

This does not mean I have stopped watching and tracking investments - I probably check them too much, but I always have been a bit on the anal side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

I read the article you posted. Firstly I'd say that I'd expect Vanguard to have a very high level of controls, and consider the probability of you losing money thru operational risk to be very low.

Secondly I understand the warm feeling a lay person would have.

Thirdly as before no framework of controls is perfect no matter how good.

Now a light-hearted look from a perspective as a non-laymen to give a few quick points that jump out. There are some great reminders too of some of the things that could go wrong, and you are relying on Vanguard to be perfect:

- These are very carefully chosen words that the PR person uses. A lot can be read between the lines into the careful choice, to back up why I would say it is not zero risk so spread your assets.

e.g

- "extremely unlikely" - aw come on you mean it's not impossible or zero chance. Is there really room for things to happen?

- use of an independent custodian is a very good control. However, information flow in various forms for example is never perfect and 100% robust. Just a minute though: MF Global used custodians too. Unfortunately they found ways to get the custodian to reclassify client money as MF Global's money. Are your custodians infallible and with bottomless pockets for recourse?

- Generally is used a lot, eg "Federal law generally provides" - might be the usual case but obviously there are exceptions otherwise the word generally wouldn't be used. A good reminder: The fact that there are exceptions creates scenarios where either by mistake/fraud or otherwise someone might seek intentionally or not to apply an exception

- "A transfer of assets to a stable bank takes place within 48 hours". Nice to know that in their world transfers always go thru 100% correct, without error and on time

- eg" the failure of a mutual fund’s service company or its custodian is extremely unlikely to result in a loss to the fund’s shareholders".

Flip side: So there's a possibility? I guess it must be very small then, and I'm the sort of lucky person who is never on the receiving end of bad odds

- "owning an ETF introduces a third entity that could fail—i.e., the broker....." -

Oh no: A 3P can bring additional risks too? Please tell me you are in seemless interconnection?

-"....If a brokerage firm holding an ETF in a customer account were to fail, the ETF’s shareholders would be protected by SIPC. In most cases, SIPC’s role is to ensure that customer cash and securities are still in the brokerage account and to organize an orderly transition of those assets from the failed brokerage firm to a solvent one. In the unusual case where some or all of a customer’s cash and securities are missing, SIPC insurance covers losses up to $500,000 (maximum of $250,000 for cash losses).

- Can I have a written agreement saying that I will always be "most cases" and not "an unusual case"

- Oops did they just say that sometimes a customer's cash and securities goes missing?

- SIPC insurance covers losses up to a limit. Always worth knowing what these limits are.

- Sounds to me like I couldn't put all my assets there without loss on that limit. I hope other people have less than $500k with you too

- BTW Have you checked out the ability of SIPC to cover losses if this happened on a wide scale? Even a US government guarantee is not zero risk. Protection bodies and governments can go bust or run out of funds too.

If in an extremely unlikely circumstance a client’s assets are lost (i.e., the Vanguard fund shares owned by the client have been removed from the client’s account), investors would be protected by SIPC up to the limits discussed above.

- So another good example that clients assets do get lost and do get removed from accounts when they shouldn't

- Same issue with protection limits and quality of the body protecting

Many processes and controls are in place that would make it difficult for a custodian to commit fraud or for any fraud to go undetected.

Glad to know its "difficult". I'd prefer extremely difficult or impossible though

Vanguard and our custodians work closely on an ongoing basis to identify and address opportunities to improve the custody services that are provided, including fraud prevention.

Oh, you mean these controls aren't fool proof and perfect already, so you have to improve them, including to do with fraud too. Then again to be honest I expected as much

A custodian may only act upon authorized instructions from an approved Vanguard officer or representative

Nice to know all Vanguard's officers or reps are saints and would never do anything wrong and don't make mistakes

Because Vanguard reconciles its internal accounting system for each fund with those of the custodian every day, any unauthorized trades or differences in securities positions or cash balances would be readily apparent to Vanguard and trigger immediate follow-up

Great so Vanguard has the perfect accounting system that never goes down, all it's reconciliations are automatic and not dependent on humans in any way

Thanks for the reminder unauthorized trades happen

I hope those readily apparent discrepances are looked at and no-one ever takes a holiday/is sick/ IT system failure/ power outage etc where something might get missed

Immediate follow up?

Tell me do you track all these response times as part of your OR framework? and are they always 100% immediately followed up? Perhaps all the companies I've ever worked with or been associated with should come and talk to you as none of them have ever been able to meet 100% immediate follow up without exception

and so it goes on...

custodian would be liable? - hope the custodian never has a fraud issue and suffers severe financial shock to pay that liability

Just to finish off

What prevents Vanguard from committing fraud in some way (e.g., taking a buy order and taking an investor’s money, but never sending the money or information of the order to the custodian)?

Vanguard has many controls in place to ensure that the funds it receives are handled properly and that it complies with all aspects of the law. One of those numerous controls includes spreading responsibilities across multiple roles in separate areas of Vanguard to, in part, protect against a single person being able to commit fraud.

Nice to know that a single person wouldn't be able to commit fraud. Very carefully chosen words "single person"

I promise not to mention about collusion in your world of single people

If somebody at Vanguard somehow did commit such a fraud and the auditor didn’t notice it, would investors have any recourse?

Clients should certainly contact us directly, but they also can contact the funds’ boards of trustees or the funds’ primary regulator, the SEC.

You mean to say your auditor doesn't always pick up frauds and frauds do happen. Nice to know I can contact your company if your company commits a fraud against me... and of course no one would ever try and cover up anyone else's tracks would they

Look, to be serious for a minute. There's enough there in their response to say that while it's unlikely you would suffer loss, nothing is perfect, and things do go wrong. A combination of events (even if very unlikely) and you could lose everything

Hence splitting your money into more than one unconnected place. One in a million x one in a million x one in a million is always going to lower the odds of losing everything.

I do understand the convenience aspect. I'd just prefer 3 convenient points.

Cheers

Fletch:)

Edited January 31, 2014 by fletchsmile

[fletchsmile]

A relationship manager is someone who is assigned to your account when you have a Premier Account at HSBC or equivalent.

To what extent one wants to use their services is up to you. To suggest that the RM is going to run off with one's funds is a nonsense.

Sorry to shatter your dreamworld paradise but yes an RM or any number of employees in various capacities including IT with a financial institution do have the capacity to misappropriate your funds.

It definitely happens - read many of the posts by people who who are always telling you how unsafe Thai (and other banks) are.

It is by no means a high probability or the norm, but it happens. I can also tell you that from first hand experience working in various financial institutions.

A customer is depending on the financial institutions controls (internal and external) as well as having recourse if something goes wrong. These are usually highly significant mitigants which normally make a very low probability of significant loss. What you have to bear in mind is that controls do sometimes occasionally fail, and if you happen to be unlucky that the institution fails or the party you have recourse to fails at the same time....

Nothing is zero % risk.

Cheers

Fletch

Yes, and every time I venture across the road I might get knocked over.

Thai bank risk? I can hardly sleep worrying about my 1000 baht on deposit. Maybe its time for a meeting with my RM at Krung Thai.

I guess if you're only worth a 1000 baht then you'd have no problem starting over

BTW Don't forget to look both ways on crossing that road

[ExpatJ]

Fletch. Are you drunk ? I can't think of Any other explanation !

Sent from my iPhone using ThaiVisa app

Edited January 31, 2014 by ExpatJ

[Naam]

I'd just prefer 3 convenient points.

that applies only to rich people (like you) Fletch.

poor mortals (like me) can only afford 2½ convenient points.

[SheungWan]

Here is one perspective on the discussion over whether to keep all of one assets with a single mutual fund family of funds.

http://www.obliviousinvestor.com/is-it-safer-to-use-multiple-fund-companies/

Prior to consolidating all our investments with a single fund family my research had led me to the same conclusion as the writer in the link above.

For me an additional issue is as I age, I want to simplify my life. Splitting our time between the US and Thailand as retired folks means other priorities besides investing. When I was younger I did as you said - funds across several companies, tracking data, etc. Now, I keep everything with Vanguard and life is easier. Additionally, I want to make record keeping and access to monies easier for my wife when I kick the bucket, as statistics say I will most likely do before her.

Lastly, IRAs and required minimum distribution issues are much simpler when everything is at one family of funds.

This does not mean I have stopped watching and tracking investments - I probably check them too much, but I always have been a bit on the anal side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

- These are very carefully chosen words that the PR person uses. A lot can be read between the lines into the careful choice, to back up why I would say it is not zero risk so spread your assets.

e.g

- "extremely unlikely" - aw come on you mean it's not impossible or zero chance. Is there really room for things to happen?

Like there is a chance for me to win the Lottery for example. Forget it. You worry if you want to.

As for spreading it about, I think that would be interpreted by gold bugs in Thailand to mean having one safe built into the floor and one in the ceiling.

[SpokaneAl]

Here is one perspective on the discussion over whether to keep all of one assets with a single mutual fund family of funds.

http://www.obliviousinvestor.com/is-it-safer-to-use-multiple-fund-companies/

Prior to consolidating all our investments with a single fund family my research had led me to the same conclusion as the writer in the link above.

For me an additional issue is as I age, I want to simplify my life. Splitting our time between the US and Thailand as retired folks means other priorities besides investing. When I was younger I did as you said - funds across several companies, tracking data, etc. Now, I keep everything with Vanguard and life is easier. Additionally, I want to make record keeping and access to monies easier for my wife when I kick the bucket, as statistics say I will most likely do before her.

Lastly, IRAs and required minimum distribution issues are much simpler when everything is at one family of funds.

This does not mean I have stopped watching and tracking investments - I probably check them too much, but I always have been a bit on the anal side.

Sent from my iPad using Thaivisa Connect Thailand mobile app

- These are very carefully chosen words that the PR person uses. A lot can be read between the lines into the careful choice, to back up why I would say it is not zero risk so spread your assets.

e.g

- "extremely unlikely" - aw come on you mean it's not impossible or zero chance. Is there really room for things to happen?

Like there is a chance for me to win the Lottery for example. Forget it. You worry if you want to.

As for spreading it about, I think that would be interpreted by gold bugs in Thailand to mean having one safe built into the floor and one in the ceiling.

It seems to me that there is a great deal more risk in many of the investment ideas floated in the great, interesting thread than in keeping all my investment monies in an entity the size of Vanguard.

Sent from my iPad using Thaivisa Connect Thailand mobile app

[xylophone]

Taking the view that there is a certain amount of "risk" in everything to do with investing, one has to then try to minimise that by investing in institutions/banks that have things like "government guarantees", Independent trustees and what is generally considered to be a good reputation in the marketplace as regards risk management in all its forms.

If one looks past the risk of failure of the institution/bank, then any misappropriation of funds within that organisation, by an individual for example, will be covered for the investor. Should a relationship manager or similar decide to run off with your funds, then the institution/bank will reimburse you, or if something else untoward should happen to your funds, generally speaking you will be reimbursed.

Sure there have been collapses in the past, but they would be only a handful compared to the over 1 million banks worldwide, not to mention other types of financial institutions.

Pick wisely, look for good credit ratings from several agencies, look at trustee or guardianship arrangements and also if the Institution/bank concerned has any problems in the areas of "risk management" in the past, also of course, doing some research on the "returns" offered on certain products can give an indication, and I use the old adage, "if something appears too good to be true, then it probably is".

There is an element of risk in everything we do and the main point is to try to minimise it wherever possible.