Family office approach
Family office approach
Podcast
6.3.2023
In an international comparison, wealth is less well positioned in Germany and insufficiently equipped for the future. The diversification of wealth is still underestimated in this country and too little attention is paid to alternative asset classes. The larger the wealth, the more necessary an investment strategy is - and this is precisely where we come in. Completely product-independent and exclusively committed to the interests of our clients, we have developed a 5-step approach that makes your wealth future-proof.
In the 1980s and 1990s, investors successfully invested with a 60/40 portfolio - 60 percent in equities, 40 percent in bonds. The idea behind this: Equities and bonds have a diversifying effect. If equities perform poorly, bonds can compensate and vice versa. This mix offered investors appealing returns with generally low volatility.
Nowadays, diversification is not an option, but an absolute must for every successful wealth. This is the only way to achieve investment goals over the long term. Successful investors today rely on a high degree of diversification in order to make their wealth more stable and maximize the chances of achieving their investment goals. This is demonstrated by high-net-worth individuals (HNWI), i.e. people with an investable wealth of more than USD 1 million, particularly in a global comparison. According to the Global Data Wealth Market Analytics Report, they invest much more frequently in alternative asset classes, for example, than Germans with similar asset volumes. A full 33 % are invested in private equity alone (16.8 % private equity funds, 16.2 % private equity investments), whereas this asset class is still greatly underestimated in Germany.
The Handelsblatt Research Institute and FINVIA investigated the question of "why" in the study "The Germans' wealth management ". According to the study, many investors consider alternative asset classes to be too opaque and too complicated. At the same time, they rarely seek external advice. Investors fear conflicts of interest between themselves and the financial industry.
Reinhard Panse, Chief Investment Officer at FINVIA, confirms this fear: "The financial industry is not helpful here, as it is still - at least in part - focused on product sales. The objective development of a long-term investment strategy tailored to investors' needs is unfortunately a rarity."
This is exactly where we come in with the FINVIA approach. Our commitment is to our customers only - regardless of any product- or bank-driven interests. With us, every wealth is just as unique as the person behind it. In order to offer you the best possible individual advice and investment strategy for your wealth , we have developed our 5-step approach.
We start with a fundamental question:
Step 1: What do you want to achieve with wealth ? So what is the investment objective?
Step 2: Based on this, a long-term allocation is made to various asset classes (SAA) with which the investment objective is to be achieved.
Step 3: Which investment style and which managers are best suited to implement the strategy in the asset classes?
Step 4: The right infrastructure is required for implementation: be it the right custodian bank or the right tax or corporate law structures.
Step 5: Last but not least, the development and achievement of objectives must also be transparently traceable in order to have full control over wealth at all times and to be able to act in the event of a crisis. This is ensured by modern asset controlling and reporting.
The starting point of the FINVIA approach is always the asset holder's investment objective: What are your goals and what role should wealth play in achieving them? What is your deposit and withdrawal strategy? Which existing assets should be taken into account? How high can interim losses be for you so that they are still economically and emotionally bearable? Is the investment objective dependent on other factors, e.g. because private assets should also always serve as a source of financing for your company? How high can the illiquidity be so that it is acceptable in your asset allocation?
In order to answer all these questions, it is essential to take a look at your overall assets. This is the only way to draw up an optimal strategy for your wealth . To do this, you should go through each question on wealth in detail with an advisor. The transition from defining the investment objective to strategic asset allocation is seamless.
Strategic asset allocation, or SAA for short, is an essential component of the FINVIA approach. It determines the distribution of your wealth across the various asset classes within your investment guidelines and taking into account your personal preferences, needs and risk tolerance in order to achieve the investment objective in the best possible way
The weighting with which asset classes are used is influenced on the one hand by the investment objective itself and on the other by the capital market environment. Asset classes have different functions and advantages in the overall assets and must be included in the SAA on this basis:
The detailed analysis within the SAA results in your optimal allocation. Taking into account all relevant aspects of your wealth , this strategy promises the best chances of success for your investment objective. However, the SAA is by no means set in stone, as the capital market is constantly changing. This means that our SAA also adapts if new optimal allocations and investment opportunities arise as a result of changes. Of course, only if the adjustments also fit in with your specified guidelines and risk budgets.
Want to find out more about strategic asset allocation? You can find a detailed explanation in our blog article "Strategic asset allocation - the foundation for successful investing".
Once the SAA has been defined, your investment strategy is implemented. Again, it is important that your preferences and risk appetite are taken into account in order to create a customized portfolio for you. Exclusive access to a large selection of curated asset managers is essential. We select the right asset managers for you based on your SAA. If we take equities as an example, both riskier and risk-averse strategies can be pursued with the right equity manager. Preferences such as individual stocks or funds, or even a completely passive approach via ETFs and regional or sectoral focuses should also be reflected in the implementation. You must therefore have a wide range of options from which you can hand-pick your individual portfolio.
For the right infrastructure, you need the right custodian bank or custodian banks. Several questions play an important role here: Do you want to trade a lot or rather less? Do you attach great importance to having a direct contact person or is this of secondary importance to you? Do you want additional financing options or do you want to rely entirely on your own capital? Should your securities accounts be located in Germany or abroad?
You should discuss suitable company law structures with your tax advisor and lawyer and implement them accordingly. Here FINVIA can be an important sparring partner with a high level of expertise.
So how can you find out whether wealth is developing correctly and whether you are achieving your investment goals? A look at the real economy can help here. Only companies with excellent accounting and controlling systems are successful in the long term. The same applies to private assets. With modern asset controlling and reporting, you not only know the status of your total assets at all times and everywhere, but also the status of all sub-areas and individual assets.
To be able to make all the important decisions for your wealth , you need the right data basis. If you have incorrect or insufficient data, you will make the wrong decisions, which can have a negative impact on your wealth . Modern asset controlling offers you transparency and control and helps you to react quickly to market changes, especially in volatile times. This allows you to avoid emotional action, for example in times of crisis, and always base your decisions on facts.
With FINVIA, you have access to your reports anywhere and at any time - 24 hours a day, 7 days a week, online and via app. The results within the reports are commented on by our experts and are therefore easy to understand. This gives you peace of mind, knowing that you and your wealth are as well prepared as possible for all eventualities and can act quickly.
Family office approach
6.3.2023
Christian Neuhaus
The larger the wealth, the more important it is to have an investment strategy that matches the individual goals and preferences of the asset holder - because every wealth is just as unique as the person behind it.
In an international comparison, wealth is less well positioned in Germany and insufficiently equipped for the future. The diversification of wealth is still underestimated in this country and too little attention is paid to alternative asset classes. The larger the wealth, the more necessary an investment strategy is - and this is precisely where we come in. Completely product-independent and exclusively committed to the interests of our clients, we have developed a 5-step approach that makes your wealth future-proof.
In the 1980s and 1990s, investors successfully invested with a 60/40 portfolio - 60 percent in equities, 40 percent in bonds. The idea behind this: Equities and bonds have a diversifying effect. If equities perform poorly, bonds can compensate and vice versa. This mix offered investors appealing returns with generally low volatility.
Nowadays, diversification is not an option, but an absolute must for every successful wealth. This is the only way to achieve investment goals over the long term. Successful investors today rely on a high degree of diversification in order to make their wealth more stable and maximize the chances of achieving their investment goals. This is demonstrated by high-net-worth individuals (HNWI), i.e. people with an investable wealth of more than USD 1 million, particularly in a global comparison. According to the Global Data Wealth Market Analytics Report, they invest much more frequently in alternative asset classes, for example, than Germans with similar asset volumes. A full 33 % are invested in private equity alone (16.8 % private equity funds, 16.2 % private equity investments), whereas this asset class is still greatly underestimated in Germany.
The Handelsblatt Research Institute and FINVIA investigated the question of "why" in the study "The Germans' wealth management ". According to the study, many investors consider alternative asset classes to be too opaque and too complicated. At the same time, they rarely seek external advice. Investors fear conflicts of interest between themselves and the financial industry.
Reinhard Panse, Chief Investment Officer at FINVIA, confirms this fear: "The financial industry is not helpful here, as it is still - at least in part - focused on product sales. The objective development of a long-term investment strategy tailored to investors' needs is unfortunately a rarity."
This is exactly where we come in with the FINVIA approach. Our commitment is to our customers only - regardless of any product- or bank-driven interests. With us, every wealth is just as unique as the person behind it. In order to offer you the best possible individual advice and investment strategy for your wealth , we have developed our 5-step approach.
We start with a fundamental question:
Step 1: What do you want to achieve with wealth ? So what is the investment objective?
Step 2: Based on this, a long-term allocation is made to various asset classes (SAA) with which the investment objective is to be achieved.
Step 3: Which investment style and which managers are best suited to implement the strategy in the asset classes?
Step 4: The right infrastructure is required for implementation: be it the right custodian bank or the right tax or corporate law structures.
Step 5: Last but not least, the development and achievement of objectives must also be transparently traceable in order to have full control over wealth at all times and to be able to act in the event of a crisis. This is ensured by modern asset controlling and reporting.
The starting point of the FINVIA approach is always the asset holder's investment objective: What are your goals and what role should wealth play in achieving them? What is your deposit and withdrawal strategy? Which existing assets should be taken into account? How high can interim losses be for you so that they are still economically and emotionally bearable? Is the investment objective dependent on other factors, e.g. because private assets should also always serve as a source of financing for your company? How high can the illiquidity be so that it is acceptable in your asset allocation?
In order to answer all these questions, it is essential to take a look at your overall assets. This is the only way to draw up an optimal strategy for your wealth . To do this, you should go through each question on wealth in detail with an advisor. The transition from defining the investment objective to strategic asset allocation is seamless.
Strategic asset allocation, or SAA for short, is an essential component of the FINVIA approach. It determines the distribution of your wealth across the various asset classes within your investment guidelines and taking into account your personal preferences, needs and risk tolerance in order to achieve the investment objective in the best possible way
The weighting with which asset classes are used is influenced on the one hand by the investment objective itself and on the other by the capital market environment. Asset classes have different functions and advantages in the overall assets and must be included in the SAA on this basis:
The detailed analysis within the SAA results in your optimal allocation. Taking into account all relevant aspects of your wealth , this strategy promises the best chances of success for your investment objective. However, the SAA is by no means set in stone, as the capital market is constantly changing. This means that our SAA also adapts if new optimal allocations and investment opportunities arise as a result of changes. Of course, only if the adjustments also fit in with your specified guidelines and risk budgets.
Want to find out more about strategic asset allocation? You can find a detailed explanation in our blog article "Strategic asset allocation - the foundation for successful investing".
Once the SAA has been defined, your investment strategy is implemented. Again, it is important that your preferences and risk appetite are taken into account in order to create a customized portfolio for you. Exclusive access to a large selection of curated asset managers is essential. We select the right asset managers for you based on your SAA. If we take equities as an example, both riskier and risk-averse strategies can be pursued with the right equity manager. Preferences such as individual stocks or funds, or even a completely passive approach via ETFs and regional or sectoral focuses should also be reflected in the implementation. You must therefore have a wide range of options from which you can hand-pick your individual portfolio.
For the right infrastructure, you need the right custodian bank or custodian banks. Several questions play an important role here: Do you want to trade a lot or rather less? Do you attach great importance to having a direct contact person or is this of secondary importance to you? Do you want additional financing options or do you want to rely entirely on your own capital? Should your securities accounts be located in Germany or abroad?
You should discuss suitable company law structures with your tax advisor and lawyer and implement them accordingly. Here FINVIA can be an important sparring partner with a high level of expertise.
So how can you find out whether wealth is developing correctly and whether you are achieving your investment goals? A look at the real economy can help here. Only companies with excellent accounting and controlling systems are successful in the long term. The same applies to private assets. With modern asset controlling and reporting, you not only know the status of your total assets at all times and everywhere, but also the status of all sub-areas and individual assets.
To be able to make all the important decisions for your wealth , you need the right data basis. If you have incorrect or insufficient data, you will make the wrong decisions, which can have a negative impact on your wealth . Modern asset controlling offers you transparency and control and helps you to react quickly to market changes, especially in volatile times. This allows you to avoid emotional action, for example in times of crisis, and always base your decisions on facts.
With FINVIA, you have access to your reports anywhere and at any time - 24 hours a day, 7 days a week, online and via app. The results within the reports are commented on by our experts and are therefore easy to understand. This gives you peace of mind, knowing that you and your wealth are as well prepared as possible for all eventualities and can act quickly.
About the author
Christian Neuhaus
Christian Neuhaus is one of the founders of FINVIA.
After gaining his first professional experience at UBS Sauerborn, where he was a member of the investment committee, the business graduate joined HQ Trust GmbH, the multi-family office of the Harald Quandt family, in 2011 together with some of the current FINVIA founders. Here, he advised complex large assets on asset structuring until 2016. He was then involved in setting up the digital asset manager LIQID - an associated company of HQ Trust GmbH, to which he eventually returned to help develop the digital strategy.
