• May 2013

Taming the Wild Ride of Wealth Management With Strategy and Creativity

By Rita Cheng, CRPC®, CFP®
CEO, Blue Ocean Global Wealth

Is being wild and adventurous—and strategically planning ahead for retirement—a non sequitur?

That question was answered for me when I read Mel and Patricia Ziegler’s book, “Wild Company: The Untold Story of Banana Republic.” Not only did they start their retail fashion company with $1,500 and no business experience, they re-imagined military surplus as safari and expedition wear.

Innovation was the key to their success. And the same is true when it comes to being creative about planning ahead for your financial future.

  • My favorite approach is outlined in the book, Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne. Here we learn that one of the most valuable, long-term, sustainable, competitive advantages a business can acquire is the ability to out-innovate its competition in ways that improve efficiency or create value for their customers.

The authors do not use their competition as a benchmark. Rather, they value innovation and are motivated by the need to become more client-focused.

It’s unique because while many financial services companies have committed tremendous resources to leverage investor insight and market intelligence to develop innovative products and services—all too often they fail to align their innovation strategy with business strategy.

Innovation in the absence of a culture of collaboration is of limited value. A culture of collaboration fosters the exchange and adoption of innovative ideas to be shared by and supported throughout the entire company.

Another challenge facing the financial services industry is eroding customer trust in financial institutions, coupled with concerns regarding privacy and security. This has cultivated an environment where innovation may be considered perilous and arduous.

Nearly five years since the global economic meltdown began, the nation’s financial services and banking industries remain among the least trusted by consumers, according to the latest annual global survey of trust conducted by global public relations firm Edelman.

“While trust in every industry declined in 2008 after the global economic crisis, financial institutions and auto companies were particularly hard-hit,” said Matthew J. Harrington, Edelman’s U.S. president and CEO. “Since then, an industry-wide commitment to producing high-quality products and communicating openly and honestly with customers has lifted auto companies out of the global trust doldrums, but financial institutions still have a long way to go to regain the level of trust enjoyed prior to the financial meltdown.”

Despite this, research shows that consumers do value the advice and their relationships with their financial advisors. Personal finance by it’s very nature is, well “personal,” and trusted, competent professionals who deliver objective advice help their clients distinguish sense from nonsense.

For this reason, the Blue Ocean Strategy I utilize with my clients is one of education, innovation, and collaboration.

To accomplish this, I take the ART approach:

  • A = Amount. Amount you will need for this goal. For example, if a client wants to send his or her children to college, we work to determine what amount is possible. The same can be true for other financial goals, such as purchasing a home, starting a business, or retiring.
  • R = Rate of Return. This refers to the growth rate of the client’s financial resources. Sometimes clients feel that they cannot afford to take on any investment risk, but the reality is that clients need to accumulate wealth. The biggest risk clients can take is being so risk-averse that they do not take advantage of the time value of money, tax-deferred growth, and dollar-cost averaging. With my clients, we focus on education and adopt a proactive approach to risk management. The difference between saving and investing is significant, and when you begin to build wealth, it is important to spread your risk among different types of investments. It’s also important to keep money in cash reserves—in checking, savings, and money market accounts—that is not invested. That’s because it is important to have a short-term savings strategy for an emergencies or opportunities that may arise.

Here’s a rule of thumb to keep in mind: Since most people are funding their retirement over 20, 30, 40 years, shorter-term goals are best funded with short-term vehicles (cash) and longer-term goals (college education savings and retirement) are best funded with investments (stocks, bonds, stock mutual funds, bond mutual funds, etc.).

Many people use the terms “savings” and “investing” interchangeably. They are not one and the same! Clients should have both a savings plan and an investment plan. Wealth accumulation depends on a long-term investment strategy. A diversified portfolio with a disciplined investment strategy helps clients achieve their financial goals and long-term wealth accumulation.

  • T = Time. Are you about to send your child off to college or thinking about the age you want to retire? Depending on when you start saving and planning ahead—time can be on your side. If you have procrastinated, your options are fewer. By using a strategic financial-planning framework, it is easier to determine what is more important—such as retiring at age 57 with a pension of $4,600 per month or waiting until age 62 with a pension of $5,100 per month. There is no wrong or right answer. The right answer depends on the client’s unique situation (family situation, household assets, monthly expenses, health, just to name a few).

The Bottom Line

By understanding your options, you’ll be better equipped to make informed decisions and implement the advice needed to reach your goals.

And while I cannot innovate the entire financial services industry on my own, I can definitely do my part to ensure that my clients feel more financially empowered and confident.


Marguerita M. Cheng, CFP® is the CEO of Blue Ocean Global Wealth, which provides corporations and institutions with portfolio construction, investment due diligence, and risk-management consulting services. The firm works with families, entrepreneurs, and executives to help them identify and achieve their financial goals. As a CFP Board Ambassador, she helps educate the public, policy makers, and media about the benefits of competent, ethical financial planning.

A Financial Planning Association (FPA) National Board Member and member of the finance committee, Cheng served eight years on the Board of Directors of her alma matter, The Robert H. Smith School of Business at University of Maryland, where she collaborated to increase alumni engagement and developed asset management education programs. She is also the President of the Blue Ocean Economic Empowerment Fund.

Cheng says her greatest joy and passion is touching the lives of others so that they may achieve their “personal financial success.”

For more information, visit www.blueoceanglobalwealth.com.

Securities offered through Private Client Services, LLC. Member FINRA | SIPC. Advisory products and services offered through Blue Ocean Global Wealth, a registered investment advisor. Private Client Services, LLC and Blue Ocean Global Wealth are not affiliated entities.

Blue Ocean Global Wealth intends that this article will be viewed for informational purposes only. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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