最良の財務戦略は、多くの場合、最大の運用リターンをもたらすものではありません。
全ての投資家が堅固なパフォーマンスに価値を置いていますが、退職者など多くの人にとって、一番の関心事は資産を長持ちさせることであり、資産の増加を眺めることではありません。
同様に、典型的に女性は、向こう見ずな利益の可能性よりも金銭的保障を優先します。
いずれの市場も上昇し続け、各種商品が卓越した業績で販売されていると、安定性と堅実なリスク管理の重要性を簡単に見失ってしまうことを私たちは知っています。
ファンドマネジメントにおいては、アクチュアリーのようなリスク管理の専門家よりも証券アドバイザーを称賛する傾向があります。
80年代の映画トップガンにたとえると、投資家は、Val KilmerによるIcemanに見られる規律や安定性といった資質よりも、Tom Cruiseの役どころであるMaverickに見られる大胆さや自信などの特徴を称賛し求める傾向があります。
幸いにも、二者択一で選ぶ必要はありません。市場の大きな調整に巻き込まれないようにしつつ、長期的な財務目標を満たすために十分なリターンを求めるという両者のバランスをとることができます。
つまり、MaverickとIcemanを同居させることが可能なのです。
Covid-19によるプラスの側面とは、あらゆる市場環境に責任の持てるポートフォリオを構築するよう、投資家に改めて注意喚起したことです。
この結果、アドバイスの会話の性質を変え、ポートフォリオの構築やリスク管理についてのより堅固で深い議論をアドバイザーに求めています。
投資家は、長寿リスク、シークエンシングリスク、流動性リスク、その他、無数のリスクに直面しています。しかし、とりわけ危機的状況下では、投資家が最も憂慮しているのは、一般的に投資リスクです。
これは、退職直後や退職間際の人々に特に当てはまります。彼らの資産がまさに頂点にあり、調整の局面において、より失うものが大きいためです。
Covid-19は、高いレベルで市場リスクを回避するため、バケット戦略などの従来のポートフォリオの構築や財務計画戦略の有効性についての議論を再燃させました。
Plugging the bucket strategy’s holes
Bucket strategies essentially divide a client’s retirement savings pool into several accounts, typically three or four. Each account serves a different purpose and is earmarked for a particular timeframe (now, soon, and later).
It is a popular strategy because it is easy to understand and visualise, and extremely helpful at managing client behaviour.
That is because human beings tend to compartmentalise their lives and the bucket concept aligns to their thinking. During periods of financial stress, it is also easy to recall. If people know they have enough cash in Bucket one to meet their needs for the next few years without needing to sell assets in Bucket two or three, they’re less likely to panic and more likely to stay on course.
However, the biggest criticism of bucket strategies is that they do not provide protection against a severe, prolonged downturn.
They are only good as long as a market correction is moderate, followed swiftly by a strong rebound.
Unfortunately, it is impossible to predict how severe a correction will be and how long the recovery will take.
It took the Australian Market seven years to recover lost ground from the 1987 stock market crash1 and another 11 and a half years to recover from the 2008 Global Financial Crisis2. By contrast, Japan is still waiting for the Nikkei 225 to hit its previous peak in 1990.
The missing piece
There is a way for investors and advisers to address the risk management limitations of bucket strategies while maintaining upside exposure to investment markets.
The missing piece, until now, has been a flexible, low-cost risk management overlay, designed for retail investors.
Risk management overlay strategies are effectively an active asset allocation strategy, based on extensive stochastic modelling, designed to deliver stable returns over a full market cycle.
More commonly utilised by institutional investors like insurance companies and pension funds, Milliman’s traditional client-base, retail demand is growing due to increasingly volatile market conditions and changing demographics.
As more Australians approach and enter retirement, they want solutions that can insulate them from financial stress and deliver a smoother ride.
To help advisers build more resilient portfolios and to facilitate meaningful conversations, Milliman has launched a range of tools and solutions that quantify the benefits of risk management and aid the intelligent allocation of risk and fee budgets, see breakout.
The purpose of this article is not only to demonstrate the effectiveness of Milliman’s SmartShield Managed Accounts and our new Simulator, but also to encourage robust advice discussions and support advisers to insulate their clients from market risk and keep them on track to achieve their goals.
There is no better time than a crisis to proactively contact clients, review their situation and take steps to secure their future.
Transparency, flexibility, and downside protection
To foster robust client discussions during this challenging time and, beyond Covid-19, keep risk management at the fore, Milliman has launched a range of tools and solutions to help advisers quantify the benefits of risk management and intelligently allocate risk and fee budgets.
With the Milliman SmartShield Managed Accounts, retail investors can now access the investment insights, risk management expertise, and best ideas of Milliman’s large, global team.
They can gain upside exposure to investment markets while limiting or shielding the impact of a market correction.
While many other products claim to provide downside protection, they typically come with limitations such as illiquidity, lack of flexibility, and high fees. They are not ideally suited to retail investors.
SmartShield addresses these limitations and is designed to support the advice process. Advisers can dynamically turn protection on and off as needed, based on their client’s individual circumstances and needs.
The primary outcomes are smoother returns and a more comfortable client experience.
The new Milliman Risk Simulator is an online portfolio construction tool that allows advisers to input client data like target retirement age, current investment balance and target income, to see the impact that these new SmartShield Managed Accounts can have, by portraying various scenarios on a client’s goals.
Users can see how a portfolio will perform under normal conditions, with and without risk protection. They can also see how a portfolio will perform in a severe market downturn, for example the GFC or a Covid-19 scenario.
It enables investors and advisers to view the clear benefits and then weigh up the application of a risk management strategy, over and above a portfolio that does not include this.
For more information, visit https://advice.milliman.com
1The Sydney Morning Herald. 1987? That's not a crash, this is a crash. Retrieved from https://www.smh.com.au/business/1987-thats-not-a-crash-this-is-a-crash-20121019-27wre.html.
2Financial Review. The ASX's long, long road to recovery. Retrieved from https://www.afr.com/markets/equity-markets/the-asx-s-long-long-road-to-recovery-20190725-p52aop.