interview question - where would you invest your money and how does this differ from investing clients

Junglebook's picture
Rank: Chimp | 5

Hi

looking for some advice on an interview ill be having tomorrow. I have modelled an answer as below points if anyone can add/comment please

Comments (2)

Most Helpful
Jan 7, 2019

I mean, you hit the nail on the head with your answer. You discuss risk profile, time horizons, and objectives - and that's really the crux of how you invest personally versus how you manage money for clients. The name of the game is ultimately suitability. Someone who is risk averse might not like an 80/20 equities/bonds split, while someone who is looking for growth at a reasonable pace may have a different approach to what they want in their portfolio. The only thing else that I would add is the type of account that they are investing with/Tax liabilities. What you can and can't do with an investment is partially limited by the type of account that you are setting up. For example, an individual account can do almost anything, where as a trust may have specific guidelines. Likewise, there are certain investments that retirement accounts cannot hold (Some types of real estate holdings, insurance, and derivatives all come to mind), which you need to be mindful of. Likewise, tax liabilities are something to be aware of. When you talk about suitability, certain strategies may be more or less beneficial based on your tax bracket. Someone in the highest tax bracket may benefit from tax-exempt bonds, for example, while someone in the lowest won't see any real advantage.