The big picture view of investment and retirement: An Interview with the CEO of AAM Advisory
Financial advisory specialist, AAM Advisory, was established in Singapore back in 2007, in what was most probably the worst time ever just before the Global Financial Crisis in 2008. Ten years on, AAM Advisory has truly come into its own, with over 4,500 clients and S$925 million under advisement.
Now, a wholly owned subsidiary of Old Mutual Group, AAM is helmed by CEO, Matthew Dabbs, a veteran financial advisor with over 2 decades of financial advisory experience. A financial advisor by training from the Chartered Insurance Institute (UK), Dabbs believes in leading his team by example through being the best advisor possible. ZUU Online caught up with Dabbs, to learn about his secrets to investing and financial planning.
“There’s no secret,” quips Dabbs as he sat down with ZUU Online within AAM’s office in CapitaGreen. “Sometimes, the best investments are the ones you buy and then forget about.” The stock that Dabbs bought early and forgot about was Alphabet – then known as Google. Alphabet’s share price has risen 18-fold since 2004.
“I’m really boring [in my investments], I don’t fret over periodic ups and downs” he admitted. “I’ve learned over time to just be patient. So, don’t go chasing the markets. I’m no guru, I’m no stock picker or anything like that, it’s just the one thing I’ve learned from experience: to buy and hold. Whatever you are investing in, try to keep the cost to the minimum and just be very patient.”
Dabbs would know that well as he now regrets selling his Apple shares in the early years when prices were going down. “I sold Apple when I shouldn’t have. But you know, these things happen. So definitely have faith in the companies you are investing in, or the sector, and just stay right there.”
For Dabbs, the key to successful investment lies in being disciplined and starting early. “Be disciplined to start investing, and keep on being disciplined putting that money away. Then have a look at it once in a while – but not that often so you don’t worry about daily trades. Just be disciplined, stick with it. It will pay returns over the long term for sure.”
“You’re never too young to start. Young people should put what they can, what they are comfortable with, and even if it was just $25 into a world index, you’ll be surprised in 20 years time what that value will be.”
That being said, common sense also has a part to play in investing, according to Dabbs. “You should also have parameters in mind. If something is dropping by 20%, have a look and decide if you are okay with it. Did you get in at the wrong time, or was your idea flawed? Never be afraid to sell it when it’s down.”
“Just don’t sell Apple when it’s down,” he says with a laugh.
Appointing an investment manager
Incidentally, for someone who advises others to manage their money, Dabbs prefers to engage managers to manage his investments as well. “I don’t have the time to manage all of my money, even though I tell everybody else how to do it,” he explains. “There’s no point stressing over it. At some point, it’s easier just to appoint someone to look after it; particularly if they are specialists in certain areas.”
“Look at what your risk scale is, pick a manager that you are comfortable with and believe in their philosophy and let them manage it. If you think you’re getting a fair value for what you are receiving in performance, against the annual management charges, it’s not a problem. You should pay people, if they are doing a good job.”
So how does Dabbs choose a manager?
“I’m a big believer in people. Pick an advisor whom you understand is actually trying to work on your behalf. I think that’s very important. It needs to be a mutually beneficial relationship.”
Overlapping personal philosophy and corporate philosophy
Certainly, Dabbs’ personal philosophy in picking an investment manager, has permeated into AAM’s corporate philosophy. Much of AAM’s investment philosophy echoes Dabbs’ own, with an emphasis on long term performance, patience, portfolio allocation, and providing efficient or low cost portfolio advice. The same can be said of AAM’s business as a financial advisory.
“We don’t push products, we are very much about the solution,” he said firmly. “I’m not a believer in, ‘this product does this for everybody’. It doesn’t. Everybody’s different.”
When faced with a new client, AAM would make a needs-based analysis based on a comprehensive fact-finding exercise. “It’s a bit like going to an accountant or a lawyer, the more information you give, the better we can advise you,” he says.
In fact, Dabbs would not hesitate to make recommendations that are not what their clients originally came to AAM for.
“When Mr and Mrs client comes to us, what exactly is it they need? We do the analysis, and make the recommendations. Even if clients have something else in mind, we might say ‘your priority should be this, this and this first.’ We’re quite matter of fact about that.”
So what is the biggest priority for Dabbs and his clients? Insurance protection.
“Investments are all nice, but you need to get your ducks in order first. So, if you are married and you’ve got kids, you have to get protection. There is no point trying to and build all this wealth if you’re not around to enjoy it and your family suffers. That’s definitely something that needs to be stressed.”
If clients already have sufficient protection in place, then the advice would revolve around other factors. “It depends on the client’s goals, and their age,” said Dabbs. “If they’re an older couple, retirement might be just around the corner. If they have saved up for it, then it’s purely about how they want us to manage that money during their retirement. Or, it might entail estate planning and/or protecting the family wealth.”
“For financial planning – the whole picture is very important.”
One of the more interesting cases Dabbs encountered, involves the division of wealth within a family, without the knowledge of said family members. “The clients wanted to protect the family wealth from gold diggers, as they were concerned that the son or the daughter would marry the wrong type of person who would try to get hold of the money,” explained Dabbs. “So basically, they made sure that the money is protected if they ever got divorced, and only their son or daughter would get access to the money on terms stipulated by the parents or the family.”
“That’s becoming more common when trying to protect the family wealth.”
Reaching out to clientele in a tangible manner
To further emphasise the importance of a holistic financial plan, AAM Advisory publishes an annual “Singapore Financial Advice Guide” that is distributed to their clients. The guide is divided into two main segments: a financial guide, and a guide to living in Singapore for newcomers.
The guide starts with a life cover calculator for clients to easily calculate the amount of life insurance protection they require, before moving on to explaining the different types of insurance coverage that is available including:
- Life insurance
- Critical illness insurance
- Income protection insurance
- Private Medical Insurance
- Health Insurance
One unique offering from AAM is the International Health Insurance, which caters to people who work overseas. The comprehensive coverage from these plans allows a customer to seek treatment anywhere in the world, and offers benefits like an emergency evacuation, pregnancy cover and routine complications, road ambulance, and parent accompaniment – where a parent accompanying a child during an emergency evacuation will be covered for their accommodation and travel expenses.
Other areas covered in the guide include:
- Savings and investment
- Wealth solutions
- Retirement planning
- Estate planning
Focusing on the expatriate market
The second part of the guide provides information for new expats on their transition moving into or out of Singapore, in a nod to AAM’s unique expertise.
Despite the fact that the information is not immediately relevant to financial planning and advice, AAM went out of their way to explain the intricacies of living in Singapore. The information included the cost of purchasing a car and a map of the Singapore MRT system for ease of travel, to property regulations when renting or purchasing a property, as well as issues of employment and immigration, estimated fees at popular international schools, and even how one could get permanent residence with greater ease while making use of the Global Investor Programme.
“It’s not just expatriates we deal with, we have a lot of Singaporean clients as well,” Dabbs said with a laugh. Going back to the topic, Dabbs explains that there are nearly 384,000 expatriates served by just 100 individual expat financial advisors. “That’s a pretty underserved market, almost 1 to 4,000. You don’t see that in many markets at all, so I would say, we’re fulfilling quite a niche.”
The benefit of hindsight
So for a veteran financial advisor like Dabbs, what is his biggest worry for his clients?
“Say, 2008 happens when you are about to retire. Something like that could be a nightmare for a client, if they have realigned and planned their risk accordingly for their retirement” said Dabbs after some thought.
“You can never know when things will happen and when markets will crash. If you’ve got a lot of money in riskier investments at that point, you could lose a lot of it very fast. You could have built it over 10 years and have it halved. That’s not good.”
To mitigate such a situation, Dabbs thinks the answer lies in starting one’s financial and retirement planning early. “If you can plan early, you can begin to mitigate the risk as you approach retirement by allocating your money into less riskier assets like money market funds and bonds.”
“That way, you will be prepared” he concludes.
This article first appeared on Financialadvice.com.sg.
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