Nov 23, 2021

An agnostic approach to investing minimises uncertainty

Article by Henk Appelo

Product Developer

Liberty Investment

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Traditionally investors have looked for places to put their cash so that it can meet the needs of certain life plans like retirement. Let's stop for a moment and ask ourselves why do we do this? You may find the answer is because we have always done it, or because everybody else does this.

Why not flip things around instead and ask the question of what outcome would you want to have with your money in a particular circumstance, like retirement for example?

Now this is a question that might sound simple, but the depth of choice available to any investor right now makes it just a little bit harder to answer at first glance.

Many people are time starved. More are overwhelmed and confused by the current array of choices. And most, research tells us, are looking for investment advice that cuts through the complexity and helps them to achieve their personal investment goals.

This is why many money managers have completely evolved their approach to investing.

To begin with, it is pivotal to improve the advice experience by making it outcomes based and interactive. What do clients want their investments to do for them and what are their specific goals? By understanding this, advisers are better equipped to deliver meaningful guidance that will help people engage with, and achieve their lifestyle goals instead of simply chasing fund performance.

We call this new approach goal-based investing.

Let's look at investors as unique individuals whose particular lives demand differing ways of doing things.  This is why it is prescient to take an agnostic view to how investments are positioned. There is no one strategy that is capable of being right the whole time, so if we keep an open mind to where we put a person's money, this is surely a better way of doing things.

Goal-based investing embraces multi-strategy portfolios that link to this new approach and are designed to deliver a vastly improved value proposition. Multi-strategy investment portfolios are managed by top professionals whose specific mandate is to deliver performance. This means that they are empowered to combine a wide array of uncorrelated strategies across all asset classes to ensure performance during any market cycle. They also negotiate the best fees and include the top performing brands in each portfolio.

If the complexity of the markets is making you feel uneasy, like perhaps you are missing out on something or you are perhaps too committed to something else, a goals-based approach simplifies this. You state what you want, and between your money manager and your financial adviser a goals-based way of doing things can offer you a plan that will manage your money using every strategy available to maximise its full potential.

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