14Likes
Considering locking up some money for about 20 years eventually to distribute for my family. I currently personally use HSBC Jade and Cit Private Client. The advice I got from the latter put me off. My RM suggested purchasing one of those AIA insurance / savings plans with have a 20 year IRR of about 4%, not guaranteed. The guaranteed IRR is something sub 2%. This just struct me as terrible advice for the time horizon. Are we really looking at 20 year equities being worse than 4% a year? There's minimal effort at this level to understand my financial goals, my cash flow, etc. When they make recommendations I feel like it's without consideration to those factors. I realise they earn fat commissions on these products and it got me thinking of looking for another entity for financial guidance.
The amount is between USD 5m - 10m, so qualifies for some private banking minimums, but given the service I've experienced at lower tiers, I'm skeptical that the private banking divisions of the same banks would be much better? Plus I'm skeptical of granting an entity that potentially earns commissions on products a discretionary investment mandate. This thread here where someones BEA was churned for fees comes to mind.
To be honest, I'm much more comfortable with a custody fee (provided it's low enough) than I am knowing that they would also generate commissions on certain products they enter in my account.
Does anyone have recommendations of what sort of entity am I looking for? Is it an independent financial advisor? Planner? Is this a thing in Hong Kong? A fee based fiduciary advisor? I would ideally love to surrender the management of this portfolio to someone such that my involvement and maintenance would be minimal. Possibly quarterly performance monitoring, but not too much by way of investment decisions.
My alternative for low maintenance management would just be to have the portfolio in a brokerage and rebalancing to some set targets quarterly and not think about it. This just feels like a bit of a blunt instrument and I don't know what the best target allocation for my case would be. So it's likely I would still seek guidance on the target allocations.
- VXUS: 40% (Expense Ratio: 0.08% ) (Global Stocks - Ex-US)
- VOO: 25% (Expense Ratio: 0.03% ) (US Large and Midcap Stocks)
- VGT: 20% (Expense Ratio: 0.10% ) (tech stocks)
- VNQ: 5% (Expense Ratio: 0.12% ) (Real-Estate)
- AGG: 2.5% (Expense Ratio: 0.04% ) (US Aggregate Bonds, Investment Grade)
- BND 2.5% (Expense Ratio: 0.04% ) (Total Bond Market)
- EMB 2.5% (Expense Ratio: 0.39% ) (Emerging Market Us Dollar Denominated Sovereign Bonds)
- IAU 2.5% (Expense Ratio: 0.25% ) (Gold)
What am I looking for here? Does anyone have any recommends or good experiences? If it complicates things further, the assets are currently held by a BVI entity.
Edit: This isn't my money. This is my families money, hence the desire surrender it to another party to manage so we can avoid too many conversations about the money for a period of time. None of the family needs urgently it and I think we're all comfortable locking it up for 20 years. It would be nice to have another party be responsible for the allocation decision so nobody (specifically me) gets flak for any mishaps in performance as the other members of the family are more passive about the management of the money.
-
10-09-2020, 03:09 PM #1
Wealth Management / Private Bank Options
Last edited by tck; 10-09-2020 at 03:26 PM.
-
-
10-09-2020, 03:30 PM #2
There are a few fee based fiduciaries / financial planners I can think of. Maybe PM me and we can take this offline.
Just to add, nothing wrong with your asset allocation but it seems to be unnecessarily complicated. For example you have both BND and AGG, but part of BND will already cover what is covered in AGG. Other similar examples like that. Maybe get it down to 3-5 core holdings?
-
10-09-2020, 03:31 PM #3
There's minimal effort at this level to understand my financial goals, my cash flow
I would ideally love to surrender the management of this portfolio to someone such that my involvement and maintenance would be minimal. Possibly quarterly performance monitoring, but not too much by way of investment decision
Sounds like a fee-based IFA would be best suited to your requirements. Of course, that’s just a theoretical category, and you’d still have to find one that actually fits.have the portfolio in a brokerage and rebalancing to some set targets quarterly and not think about it. This just feels like a bit of a blunt instrument and I don't know what the best target allocation for my case would be. So it's likely I would still seek guidance on the target allocations.
If you’re not satisfied with passive long-term asset allocation exposures, then I suppose you might have to concede a bit more in expenses for active management, assuming you think those outweigh the passive sitting and you can delegate that like you want.
-
10-09-2020, 03:35 PM #4
Is there even such a thing as a fiduciary advisor in HKG?! If there were, would you trust one?
Are you eligible to invest outside of HKG? I.e. U.S. because that's where I have experience.
If you've got a 20 year timeline, you don't have to be that smart. Just patient/disciplined, keep fees down and ride low-cost funds hitched to indexes. Jack Bogle your way through it. As you said, "a blunt instrument."
I don't see any reason to consider annuities given your timeline and goal.
There are such things as target-date-based funds that claim to be a solution for what you have described but I haven't looked seriously at them and have not heard good things. But they do exist and the stated goal/timeline does fit what you described.
If you want someone else to do the rebalancing and possible tax-loss harvesting (U.S. based) there are some robo advisors that will charge you a song with the kind of balance you're talking about.
Good luck and congratulations on having the foresight to plan out 20 years.
-
10-09-2020, 03:37 PM #5
-
10-09-2020, 03:48 PM #6
Thanks! Will PM. And yeah, I guess the bond allocation component is quite overlapped, it was more of a function of, I couldn't really choose. VGT is probably highly represented in VOO as well. EMB, albeit more expensive was because of a hope that there could be better prospects for emerging market bonds. Ideally I'd find something local-currency denominated instead of USD to hedge my USD exposure too. This is kind of, shoot from the hip, and I'd say having 8 things might not necessarily do a whole lot better than a simple 3 fund portfolio. I was just trying to mentally have an alternative that looked diversified enough for my family to accept as a basis for comparison to potential managers we chose.
@huja Yea. Annuities seemed terrible hence my realisation that I'm not really getting advice / planning from my relationship managers. Access to US investments would more be through a brokerage like IB. I'm unsure about the entity holding the assets though as it is a BVI and I know it can be hard to open accounts for such entities even in Hong Kong, let alone in the US.
Is board consensus that private banking is not the way to go? I talked to someone a while ago and it didn't seem like most of the services would be relevant. Additionally, I wouldn't be using the cheap margin financing on this account.
A family friend has recommended a few private bankers, but she is in the industry and must believe in it as a valuable service to the clients; so I'm taking these suggestions with a grain of salt.
The bulk of the internet (which obviously requires a massive grain of salt) seems to agree that this value is debatable over simple ETFs and index fund exposure. I actually agree that it's unlikely we outperform in the long run using a manager, but I'm debating this cost for ease of management and peace of mind (and absolution of responsibility for family finances)Last edited by tck; 10-09-2020 at 03:56 PM.
-
10-09-2020, 03:58 PM #7
@tck - Have you got your RM to run Aladdin for you on your allocation?
Some random comments (not in any order)
- DO NOT give an advisor - fiduciary or not, mandate on an account, unless it is a small part of your net-worth.
- If you're in not in trading mode - i.e. beat the f' out of markets because you think you can or your bank can, then you don't really need an advisor as such
- If you're not looking for serious leverage - you don't need a private bank
- You probably need more tax advice to reduce your taxes on dividends than you need a PB... Unless you are a US resident.
- If you're looking at US only stock holding - you don't need a PB
In general, with the serious PB outfits - $5-10M USD is NOT a significant amount for seriously dedicated service and you'll probably end up getting confused with all the crap that they throw at you (even at risk assessed level) and pay a 0.25% minimum "asset management charge".
What you'll be left with will be what I call retail++ or similar service levels to Jade with a few free lunches and some random swag thrown in.Last edited by shri; 10-09-2020 at 04:08 PM.
-
10-09-2020, 04:00 PM #8
You probably owe them for creating the wealth, to look after it. It is an Asian thing...absolution of responsibility for family finances
-
10-09-2020, 04:14 PM #9
I wouldn't mind, I don't consider myself incompetent in the matter, but my mother seems to want a private banker. I'm only begrudgingly indulging even though my preference was just to allocate to ETFs ourselves.
The concern came when we found out my mother was day-trading the account and considering plopping the majority into a single retail space for investment in HK at no great bargain despite current circumstances. It's technically my father's money left in a trust after he passed. My mother has control over it as executrix, but it's for the family as the beneficiary of the trust. It seems that the only way my mother surrenders control over the estate would be to a private banker despite the fact that I don't think the services are particularly beneficial for us except for isolating the assets from risky behaviour. She doesn't seem a fan of my suggestion of just agreeing on a target allocation and rebalancing and seems convinced that trying to get into PB would be advantageous.
Ultimately, I'm trying to see what the best options would be for this third party manager is. When I say absolution of responsibility, it's for everyones decision. Whether it's my mom's day trading, the property, or my ETF allocation, there is the potential for a disagreement to arise which is what we're trying to avoid.Last edited by tck; 10-09-2020 at 04:24 PM.
-
10-09-2020, 04:16 PM #10
Seems to me he wants help with financial goals and limited handholding, or alternatively, complete peace of mind without having to consider finances at all. For the former it’s a fee-based IFA, for the latter, maybe a multi-family office? It really depends on what services are wanted.
Private bankers - overpriced concierge, access to complex products, flattery. Of course, you could accuse some family offices of the same, but perhaps
more customisation.
Originally Posted by huja:
