Total Portfolio Advisory

I remember back in 2015 when I was chatting with a friend who had been in the Financial Advisory (FA) industry for almost a decade. I went back home that night feeling shocked and yet extremely excited because I learnt that FA in Singapore was still very much in a rudimentary stage. The general approach focuses a lot on ascertaining and prioritising the clients’ needs and immediately zooming into a product-allocation. As I had been managing my own personal portfolio for years, I quickly realised that this approach, while it is effective from a sales perspective, is likely to sub-optimise the clients’ portfolios.

To illustrate my point, if a client wishes to plan for his/her retirement, a common approach would be to ascertain the client’s retirement shortfall taking into account his available assets and thereafter prescribing an investment or annuity product to address the shortfall. Sounds familiar? What if I tell you that this approach is actually sub-optimising your portfolio because one would quickly realise that by asking yourself some basic questions like:

(1) Does this take into account short term needs such as loss of income due to job lay-off?

(2) Paying up existing liabilities such as the housing loan to reduce debt and building more towards your retirement

(3) Reducing taxes by topping up into your CPF Special Account

A lot more thorough planning and scenario-testing needs to be taken into account when planning for even a single milestone as your financial assets and liabilities are intertwined.

It brings me immense pleasure to introduce the Total Portfolio Advisory© (TPA) approach – a revolutionary personal wealth management system that is designed to provide you with the certainty in life as you are able to construct an effective financial portfolio that evolves with your ever-changing life’s needs through sound Asset Allocation (AA) strategies. The TPA approach is founded on two very simple and logical concepts:

(1) Employing financial accounting to evaluate and improve one’s personal financial statements; and

(2) Developing, deploying and tracking your AA Plan.

The TPA approach seeks to reduce financial uncertainties by first projecting likely life milestones with defined time horizons and financial commitments, and thereafter employ a holistic asset allocation strategy to chart out the various financial instruments and targets. Finally, these instruments are actively tracked and adjusted to ensure that the targets are on track.

Therefore, the first step of the TPA approach starts with the purpose of the portfolio. The purpose of the portfolio is defined by its financial milestones and I would strongly urge one to define the milestones using the S.M.A.R.T. (Specific, Measurable, Accurate, Realistic, Time-bound) approach so that the portfolio can be efficiently deployed. For example, a newly-married couple who is planning for their firstborn would define it by: 3 years from now, family planning of the first child, CPF-MA needed $2,500, Cash needed $15K (based on a standard natural delivery, 3 days 2 nights single ward at a private hospital, confinement nanny of 1 month and inclusive of confinement food). If you have problems defining the life milestones accurately, work with our financial coaches who have vast amounts of experience to help you derive the financial amount needed.

So, spend some time to think through your life milestones; milestones are usually pegged on to a significant life events and will usually entail some form of financial commitment. The projection of these foreseeable milestones would allow you to effectively allocate resources to grow your assets accordingly to finance these milestones in time to come. There will be ad hoc milestones that are inserted in throughout your life, for example, house renovation, birth of second child, etc. This would mean that your portfolio must evolve with your financial needs and adjustments will then be done to accommodate these new milestones.

On behalf of my team of financial coaches,we look forward to walking with you through your various milestones in life!

Best Wishes, Dexter Koh TPA Founder

Dexter Koh, MBA

Founder

Like what you have read so far? Join us in this one-week long program to be a TPA-certified practitioner. The one-week program covers three broad areas:

TPA Methodology
Understanding Various Asset Classes, Risk and Return; and
Real-life Up-to-date Common Calculations that You Will Ever Need to Manage Your Own Portfolio

Your financial portfolio is just like your vehicle; it is supposed to take you to the various destinations in your life but without first determining your financial milestones; how do you put together your financial portfolio that is effective?

In many of the workshops and seminars that we conducted, we realised that most people do not have an idea of how long they should invest and how much they should grow. Can these really be determined and why should one determine these?

The answer is yes as all asset classes have different expected returns and understanding not only the expected returns but also the characteristics and risks of these asset classes would allow you to develop an effective Asset Allocation (AA) plan to balance between returns and risks. Which is why by determining all the various financial milestones in your life, you will be able to know the time horizon and amount needed for each milestone before working out the AA plan to finance these milestones.

Some of you may have heard of “vicious cycle” whereby one’s financial status does not seem to improve no matter how much one’s income has risen. Ever wonder why?

Introducing the Virtuous Cash Flow Cycle (VCFC) – it forms the framework of the TPA approach and not only will you learn how to break free from the vicious cycle, you will also learn the secret to how the rich gets richer.

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