Developing a financial strategy for asset management can be a challenging task. During this process, you should take into account trends not only in the economy but also in politics, geopolitics, technology, etc. It will take much time to study all these disciplines in detail in order not to make mistakes in asset allocation. Therefore, people who value their time and, at the same time, want to know effective ways to profitably manage their capital turn to professionals.
Financial specialists monitor trends in the economy, politics, technology, and other fields in real-time and have an excellent command of fundamental knowledge. In this way, they master the tasks of making accurate forecasts and wisely allocating their clients’ capital. The experts in the field of wealth management strategies from the Certuity Company, who have been serving Ultra High Net Worth Families for more than 10 years, are a great example of such specialists.
Why Dynamic Wealth Management Should Replace the Traditional One
The methodology of dynamic wealth management is perfectly corresponding to the modern world. Traditional approaches go back to the previous centuries, when life moved much slower, and the family structure had a rigid hierarchy with an obvious head who made the final decisions. Today’s situation significantly differs from that of the 18-19th and even the 20th century.
Accelerated Pace of Events
In the globalizing world, events occurring on one continent can affect the economies of countries located at a considerable distance. Therefore, it is necessary to monitor events occurring not only within the investor’s country but also beyond its borders. The reaction in some situations should be quite fast, for example, if you predict a market collapse.
Wide Opportunities
Investment opportunities are becoming more and more varied due to globalization and the rapid development of technologies. Making a profit from investing in other countries and regions may be more promising than searching for profitable opportunities in an already redistributed market. But to venture into such investments, it is necessary to know both the political and cultural context of other countries.
The same goes for tech startups. They often promise a real revolution in production, service, and other spheres. That is why their support seems worthy and profitable. However, in order not to be deceived by scammers who hunt for gullible investors, you must perfectly understand all the technical details of the projects they offer.
Change in Family Traditions
Modern families are significantly different from those that existed in earlier times. Today, it is customary to take into account the opinions and desires of each family member when developing a financial plan. Without a dynamic model, such a task cannot be accomplished. Moreover, as Daniel Ostrov, Deep Srivastav, and other authors of the dynamic programming methodology note, investors can have multiple goals, even potentially competing ones.
Key Differences Between Traditional and Dynamic Approaches to Wealth Management
A dynamic approach to wealth management goes far beyond the pursuit of a goal of preserving existing capital and its smooth transfer to descendants. It is used when the main goal of the investor is to increase it by actively participating in emerging opportunities. In this case, part of the investment portfolio is allocated to guaranteed assets with low volatility, and the rest is invested in promising projects. The utility of investment projects is determined by a higher level of profit or the social significance of projects if the investor pursues philanthropic goals.
| Variable | Traditional Risk Management | Dynamic Risk Management |
| Notion of risk | Risk as the volatility of the assets in the investment portfolio | Risk as the probability that the strategic financial goal or goals won’t be met |
| Type of investment portfolio | The static portfolio built on a fixed level of volatility | The dynamic portfolio based on a rationally grounded mix of financial assets |
| Risk management objective | Minimizing volatility for an expected return | Maximizing the utility of wealth in conditions of changing situation |
Where to Look for Dynamic Wealth Management Experts
The need to modernize approaches to wealth management has been debated for decades among both theorists and practitioners. In journals on banking, management, and finance, you will find many scientific articles devoted to the study of both the general principles and nuances of the dynamic approach.
However, it is best to apply these ideas to the management of your family’s wealth with the help of experienced advisors. Having walked this path of dynamic capital allocation with other families, they know both the hidden opportunities and the pitfalls. One of the companies actively developing this approach to capital management is high net worth family office Certuity. The company’s financial experts offer comprehensive investment advisory services, which include both consulting and wealth management for super-rich and ultra-rich families.
In addition to developing dynamic investment strategies, the company offers many other services that are an integral part of wealth management:
- Philanthropy
- Legacy planning
- Tax and estate planning
- Family governance
- Alternative investments
- Financial reporting, etc.
Dynamic wealth management is based on a special investment philosophy focused on achieving the desired goal of the investor, which is unique in each specific case. To learn more about the features of this approach, consult the company’s experts. You will understand whether it fits your family’s needs and make an informed choice. Today, it is the most promising and widely used approach to managing the capital of wealthy families. Use its advantages to get even more opportunities for the development and prosperity of your family.
