Financial security for all: ……………………….opportunity for all!

Monday, June 15, 2015

The world must find a way to allow up to 9-billion people predicted to live on earth to do so comfortably and well, equitably, peacefully on our increasingly crowded planet. The current economic system and financial services is not fit for that purpose. Extracted from Transforming Finance Tony Greenham – Head of Finance and Business – New Economist Foundation.

Financial Services as it is, is to make upfront gains and sell commission-based financial products.

Whilst regulators look at ways of controlling banks and other service providers, private clients struggle to see clearly. Some entrepreneurs, self- employed or in business can use their banking relationship to install some form of control and follow up.

The majority of clients do not have the time nor the knowledge and experience to face up to the machine that banks have become. They end up paying fees and commissions which are not trivial. “Over time, these seemingly small fees will compound and can easily consume one third of investment returns, yet a lot of people don’t believe that this problem applies to them,” says Mitch Tuchman, Managing Director of Rebalance IRA, HNWI and Ultra High Net Worth individuals have had quality service and access to advice, facilities, and competitive pricing for a long time.

The current system prefers to manage wealth because it is easier and pays well rather than creating Wealth.

To create Wealth for more, we need a community of Independent Financial Guardians/Protector who will accompany private clients by 1) making him/her more knowledgeable about finance - tell them the truth! and 2) making the Investment Managers/Bankers/Pension Funds/Insurance Companies accountable to the end users
How to make these services profitable for non HNWI clients they will need to use : technology and outsourcing whilst they build on-line facilities to be efficient offering different level of services. But above they have to work hard at it.

Financial Guardians/Protector know where the hidden costs are and how to then monitor to save their clients on negotiated management fees on mandates – discretionary or advisory, custody, administration, ledger/statements fees, commissions, brokerage fees and others.

They provide information and share their knowledge to give guidance - but never Investment Advice.

The two professions – Financial Guardians/Protector and Investment Managers - occupy different space in the Wealth Management universe. They complement each other.
Investment Managers have to accept that they need their performance and management controlled and reported on by an Independent professional just as the CEO of a company by an Auditor.

By concentrating on costs, savings, including tax and letting a proper diversification with the magic of compounding runs its course performance increase and can make material difference in the end. Whist the service will not be to pick the right stock or bond but they will get their clients to pay much less than they are asked for discretionary or advisory mandates and save on other costs associated in managing investment whilst they control the costs and performance and assist in rebalancing.

In this new world of financial security for all, each one of us will have his/her own “protector”, “guardian” “controller” a personal Chief Financial Officer shall we say. The latter’s main mission is financial strategy : to assist the clients in making the right decision about allocating resources that focus on Wealth 1) creation 2) safeguard 3) risk-return performance and 4) succession planning. He confirms, selects, validate and monitor banks, asset managers, and other service providers to ensure that the end users objectives are achieved, but crucially he never make investment decisions to protect his independence vis a vis the client.

He should be Qualified, understand the investment world and has powerful IT tools to create the appropriate dash board to map his client’s financial security journey. The plan is to get more interested to create wealth for themselves to become part of the Wealthiest and to break a system whereby the wealthiest 1% will soon own more than the rest of the world's population, according to a study by anti-poverty charity Oxfam.


We can change the system and create Financial Security for all.