Table of Contents

Case Background 2
Key Findings 2
Recommendations 5
References 7
Exhibits 8

Case Background
Rudy Wong, an investment advisor at O’Hagan Securities was in a dilemma that caught him in the middle of his clients and the stock market crash of September 2008. In the United States, the Dow Jones Industrial Average as well as the Toronto Stock Exchange had dropped to their lowest level since 2003. This financial crisis led four (4) of Wong’s clients to request urgent meetings regarding their assets and investments. All four (4) were of different gender, age, and particular needs. This left Wong concerned since they all held a risk of losing everything. He had to decide the best way to reassure all of his clients by communicating logical arguments based on their portfolios and his expertise, managing their emotions and attempting to re-establish their faith in the market despite its current situation. Wong knew that the outcome of his decisions had a great impact on his professional credibility and the interests of his clients who entrusted their life savings to Wong and O’Hagan Securities.

Key Findings:
As an investment advisor, it is Wong’s duty to help clients to optimize the allocation of their financial assets to meet their individual needs. He does so by not only taking into account their short and long term goals, but also clients’ financial resources and limitations. Investment Advisors are considered all-purpose financial counselors who show the client how they can save money in all aspects of their life; from mortgage payments, children’s college fund, credit card choices, and even retirement planning. They do so by examining five (5) main area for each client. The five (5) areas are liquidity needs, disposable income requirements, tax planning situation, investment time prospect, and provisions for unforeseen circumstances.
An advisor such as Rudy Wong attempts to show value by providing an objective point of view to the client. It is important to do because with a subjective view, because in response to a change in the market, it can trigger psychological temperament with emotional individuals.
A main task for every advisor is to determine client’s investment portfolio and goals. Only then can the advisor choose the most appropriate investment strategy for the client’s particular needs. O’Hagan does this by having clients fill out a questionnaire, which is aimed to ensure an in complete analysis of their needs. From Exhibits one (1) and two (2), the advantages of this questionnaire and profiling was that it helped the advisors to quickly learn their clients investment time horizon as well as their current financial situation. However, the disadvantages were that risk tolerance might be distorted due to biases, and it lacked validity and reliability in some areas. The Investment Policy Statement was the outcome of this, which included a couple of key items. It documented the key financial goals that the client was trying to achieve, the subject to a number of constraints including liquidity needs, investment horizons, tax consideration and any unusual circumstances.
Emotions drive investment decisions largely because people are worried that everything they have worked for can be lost due to a change over night. It is easy for investors to react emotionally, whether through overconfidence in rising markets or reacting with fear in failing markets. Exhibit three (3) shows the cycle of market emotions. This cycle demonstrates when an individual is likely to see financial opportunity, success, or risk. Client Facts:
Bob Miller
1. Time Horizon: 23 years
2. Investing Strategy: Aggressive
3. Risk Tolerance: High
4. Current Investments: 70% equities, and 30% in bonds
5. Asset Timeframe Requirements: Long Term Liquidity
6. Client(s) Notes: Capable of withstanding big losses in one year and would remain faithful to his long-term