1) Sex, friends and asset allocation
I am afraid I can't take credit for the gratuitous headline above but it works a charm huh? What in the world does sex have to do with asset allocation you might be thinking. My thoughts exactly.
According to financial advisor Robert Laura, writing for the Financial Advisor magazine, what a client gets up to in their private time is indeed relevant to risk profiling and asset allocation. The logic is that social, mental and physical secrets provide insights into character and behaviour and joie de vivre which have a bearing on risk tolerance and the kind of returns you need to generate.
Mr. Laura doesn't go so far as to suggest financial advisors grill their clients on frequency. He does however propose information gathering on par with insurers in order to give advisors a better overall sense of lifestyle, outlook and ability to absorb bad financial news. A bit of a stretch with the s-e-x angle but I get what he's after and I'm suitably jealous that I didn't come up with that headline myself.
Although privacy experts may argue against the need for retirees and investors to disclose this information to their advisor, I believe that mental, social and physical details could help an advisor develop an appropriate asset allocation model. Advisors may also find this information useful in segmenting clients and prospects.
For example, after a steep market drop like we experienced last August and September, would you rather call a client who has an active sex life, recently met with some old friends or just left their volunteer role at the pet shelter, or chat with a client who’s bored and subsequently checks their account balance three times a day? Which kinds of clients do you have or would you rather have? Those with a focus beyond their net worth are more likely to tolerate such a difficult or negative period instead of reacting emotionally and either pulling out of the market at the wrong time or switching advisors.
Don’t be surprised if this approach to asset allocation also becomes a model for profiling clients. Forget classifying clients by their net worth or whether they’re a “Driver” or “Amiable.” Instead, imagine segregating clients based on their sexual activity, network of friends, propensity to volunteer, or at the very least, blood pressure, cholesterol and blood sugar levels. While this may seem controversial, the reality is when building a profitable business do you want your niche to be grumpy retirees whose business income may last five to ten years or healthy, happy clients with a life outside of their net worth and a business relationship that could last in excess of 20 years?
2) Don't not hire me because I'm beautiful
This might rival #1 for yellow journalism but there's a personal finance story here, I swear. The Economist in this article reports on a study which found that good looking female job seekers were better off not including a picture of their gorgeous selves in their CVs. Turns out it's not because of the belief, by prospective male employers that beauty and brains, don't come in the same employee. It has more to do with catty HR women weeding them out on the basis of jealousy. Oh boy. We've come a long way, not.
3) Nothing ventured, nothing gained
And now for something completely sensible and serious. This Harvard Business Review blog considers the old arguments of sacrificing money for a job you love to do and are passionate about and discusses some very practical ways to overcome the transitional jitters. The thing that tends to hold most people back, is financial insecurity and of course fear of the unknown. Rather than take that giant leap of faith, the authors propose taking baby steps that test the waters. Nothing ventured, nothing gained. So true.
4) Deferred retirement
The R word seems to scare people, most of all politicians, New Zealand National Party ones more specifically. As all the OECD countries that we love to compared ourselves with are bumping the age of retirement out to 67 or later in an effort to extend the shelf-life of pensions and make them viable for younger generations as well, Mr. Smile and Wave Key is toeing the "She'll be right line" - until his own retirement from public life.
Here's the thing: The number of recipients in line for New Zealand Super payments (according to Treasury projections) is expected to balloon from 500,000 in 2010 to 1.3 million by 2050. Funding costs for the NZS will double in 30 years and the taxpayer pool necessarily to support this base won't exist, unless we go through another Baby Boom or open the doors to mass migration.
A few solutions have been bandied about all of which have been dismissed with a smile and wave by Government. Whether government acts on this on not, newbies joining the workforce today and Gen Xer's like myself who've been in it for 20 odd years can expect to work longer, whether they like it or not.
This blogger puts on a positive spin on his decision to retire at age 70.
Another upside to deferring retirement for a year, according to a retirement report by Mercer, is that for every year you stay in the workforce, your super savings will stretch 1.5 to two years longer ; so twice the bang for your working buck. Love what you do and you'll never work a day in your life they say.
5) Investing in a low interest rate environment
Investors are hard pressed to make a buck in this low interest rate environment. It's particularly harsh for those at the conservative end of the risk scale with reduced income from cash and fixed interest in their portfolios. Harbour Asset Management in a recent presentation on the subject discusses the need to re-evaluate what constitutes a balanced portfolio that delivers sufficient returns for investors.
Here's a link to their commentary which finds reason to be hopeful about the New Zealand and Australian equities markets.