A good investment manager may be able to crunch the numbers on your savings plan, but a great one can adapt to your changing needs and expectations.
Aspiring asset managers from local universities received a crash course on this distinction during a three-month virtual, investment competition hosted by JP Morgan Asset Management which concluded last week.
'It was very different from just working with a textbook at school,' said Grace Lai Nga-sum, a third-year student at the Chinese University of Hong Kong.
Lai and her CUHK teammates Leo Chan Sun-wing, Jeff Lam Hoi-tung and Victor Ng Chun-ming took first prize in the group category, earning HK$10,000 worth of credit to a JP Morgan account. Their assignment was to create a detailed retirement savings plan for a fictitious 28-year-old marketing manager.
Their proposal received high marks, but evaluators suggested it should have been more flexible. Like most others in the competition, the team made projections into the distant future that assumed trends would be constant in both the market and the client's financial position.
Terry Pan, the head of retail business at JP Morgan, said that as a teacher grading the proposals as a school assignment, he would give some of them 'decent grades. But as the virtual investor, I wouldn't give them my money.'
Asset managers are expected to know their client and operate within the bounds of their risk tolerance and expectations. The participants in the competition did not overlook that obligation, even though the investment case itself was fictional.