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What is a Wealth Manager and Why Do You Need One?

In an era marked by financial complexities and an abundance of investment options, individuals and businesses alike, often find themselves seeking guidance to navigate the intricate world of wealth management. This is where a seasoned professional known as a wealth manager comes into play, offering personalised financial strategies to help clients achieve their financial goals and secure their financial future.

Understanding the Role of a Wealth Manager

At its core, a wealth manager is a financial advisor who takes a comprehensive approach to managing an individual's, families, companies, or trust’s financial affairs. Unlike traditional financial advisors who may focus on specific aspects, such as investments or retirement planning, wealth managers consider the broader spectrum of a client's financial situation. This includes protection planning, investment advice, retirement planning, tax strategies, estate planning, and more.

Key Responsibilities of a Wealth Manager

Comprehensive Financial Planning: Wealth managers conduct a thorough analysis of a client's financial situation, considering their income, expenses, assets, and liabilities. This comprehensive approach enables them to develop a customised financial plan which models various scenarios and facilitates educated goal setting. A good financial plan removes any notion of product seeing since it clearly demonstrates shortfalls and action that needs to be taken to ensure such shortfalls are managed/mitigated.

Investment Advice

Wealth managers design and implement investment strategies tailored to the client's financial objectives and risk tolerance. They continuously monitor and adjust the portfolio to adapt to their clients changing financial circumstances and objectives.

Risk Management

Assessing and mitigating risks is a crucial aspect of wealth management. Wealth managers work to protect and grow their clients' assets while minimizing potential risks.

Estate Planning

Planning for the transfer of wealth to future generations is an essential service provided by wealth managers who often work in conjunction with professional tax advisers. This involves strategies to minimize estate taxes and ensure a smooth transition of assets.

Tax Planning

Wealth managers explore tax-efficient strategies to optimise clients' financial situations, ensuring they take advantage of available deductions and credits.

Wealth Manager Gibraltar

Why Do You Need a Wealth Manager?

1. Personalised Financial Guidance:
Wealth managers offer tailor-made solutions based on your unique financial situation, goals, and risk tolerance. This personalised approach goes beyond a one-size-fits-all investment strategy.

2. Holistic Financial Planning:
Rather than focusing on isolated aspects of your finances, a wealth manager considers the bigger picture. This comprehensive approach ensures all aspects of your financial life are working together harmoniously.

3. Expertise and Experience:
Wealth managers bring a wealth of knowledge and experience to the table. Staying abreast of market trends, regulations, and financial products, they guide clients through the ever-evolving financial landscape.

4. Time-Saving:
Managing one's finances can be time-consuming and complex. Engaging a wealth manager allows individuals to offload this, freeing up time to focus on personal and professional pursuits.

5. Adaptability to Life Changes:
Life is unpredictable, and financial goals may shift due to numerous factors. A wealth manager helps navigate these changes, adjusting financial strategies accordingly.

A Valuable Partner

In conclusion, a wealth manager serves as a valuable partner on your financial journey, offering expertise, personalised guidance, and a comprehensive approach to managing your wealth. As you strive to achieve your financial objectives and build a secure future, the support of a skilled wealth manager can make all the difference.

AWML Quick Note: Successful Investing During Market Downturns

According to the Chinese calendar, 2022 is the year of the tiger. So, was it the king of beasts the one who bit off the market’s leg? In this Quick Note, we explore how and why a zodiac sign alone doesn’t explain the sharp reversal we have witnessed in global markets. We’ll go through the business cycle, and look for hints of where we are and we round it up by looking at the opportunities and dangers on the horizon.

Amongst all the uncertainty, we’ll start this Quick Note by outlining a few timeless truths:

1. Markets go down when there are more sellers than buyers, and they go up when there are more buyers than sellers. By buying and selling, investors “price in” their expectations. Gains and losses occur based on how reality transpires against those expectations. – If a company is expected to grow its revenue by 20%, investors will buy its shares in anticipation, but if it “only” grows by 15%, its share price will normally fall.

2. Price always equals the amount of money and credit spent divided by the quantity sold. If the amount of money or credit available increases without an accompanying rise in the supply of goods/services/financial assets, prices will rise (inflation). Equally, if the quantity sold decreases (i.e. supply disruptions) without an accompanying fall in money and credit spent, prices will rise (inflation).

Having established this, with the advantage of hindsight, we will dive into the reasons that led investors to sell their shares and bonds (thus pushing the price down), and buy the US Dollar and commodities (thus pushing the price up):

Understanding what’s happening: the Business Cycle is as old as money itself:

Inflationary Pressures
Source: Fidelity Business Cycle Update.

The consumer is the central piece of any economy, so to take the pulse of the economy, you simply need to gauge how much households, companies and the governments are spending. Let us now look at a template of the business cycle, and understand where we are today:

1. If the amount of money or credit available increases without an accompanying rise in the supply of goods/services/financial assets, prices will rise (inflation). Inflation can also arise from price spikes in raw materials (i.e. oil and gas), which increases input costs for companies, thus reducing margins and profitability.

2. Inflation squeezes household budgets by raising the cost of living (food, energy and other items of essential spending) at a faster pace than household wages. This dynamic forces consumers to cut back on all non-essential spending (i.e. buying a new car, holidays, leisure).

3. By virtue of 1) and 2), companies not only become less profitable, but they also lose revenue, which inevitably leads to cutting back on hiring or even firing some of their workforces to realign budgets. So far this year, 1) and 2) have been in full display, but investors have more than started to price in the expectation that unemployment will rise in the near future.

4. To bring inflation under control, central banks raise interest rates, which diminishes credit creation (banks lending money to families and businesses), and forces consumers to cut back on spending, which in turn harms business revenues. How much central banks need to raise interest rates to bring the inflation genie back in the bottle depends on how much monetary excess they’ve allowed to accumulate in the system during the previous cycle.

5. The shift from low to high-interest rates hurts financial assets across the board due to 1) expectation of slower economic growth, 2) price adjustment as “risky” financial assets need to provide attractive returns over “safe” cash, and 3) less money and credit available to buy and invest.

1. Meanwhile, investors don’t just sell financial assets, they:

1. Rotate into “safe” financial investments like government bonds if inflation is
under control.
2. Rotate into “real assets” like commodities, gold, and infrastructures if
inflation is a worry.
3. In both scenarios, the amount of money that’s parked on the side-line, waiting
for better opportunities, increases.

6. The ensuing feeling of decreased wealth hurts business and household confidence, which has a detrimental effect on CEOs’ investment and expansion decisions, and shifts households’ willingness to save, away from spending. Both attitudes further contribute to a self-fulfilling downward spiral.

Eventually, a bottom is reached (as investments become priced at bargain prices), confidence indicators bottom out (as consumers realise that it’s unlikely to get much worse), or inflation peaks (signalling the success of the central bank’s inflation-combating measures), and the cycle resumes:

7. To bring economic growth back to an upward trend, central banks slash interest rates, which promotes credit creation (banks lend money to families and businesses, first to the most creditworthy, and just about to anybody at the end of the cycle), which pushes consumers to spend, which translate into higher company revenues, profitability, and hiring.

8. Economic growth rates rise, increasing inflows into capital markets, reinforcing optimism in the economy and in the good times ahead.

9. Eventually, indebtedness levels grow as businesses, governments, and households seek increasingly higher growth/returns, debt levels grow at a pace that’s faster than goods and services can be produced, and incomes can grow due to structural productivity and demographic trends.

And the perpetual wheel of motion continues, cycle after cycle.

The secret for successful long-term investing?
Not panicking.

Long Term Investment

One of the questions we get asked the most during times of market turmoil is “what shall I do?”. Let’s think about that for one second: if you, alone or with the help of a Wealth Manager, constructed a solid financial plan with an investment strategy that’s diversified and with a medium to long-term horizon, should you tamper with it at time where uncertainty is at its highest? We don’t think so.

Conclusions from the table above:

1. No single investment alone provides a better risk-reward than a diversified portfolio.

2. Losses, as measured by the % of negative months and the largest fall from peak to bottom
(maximum loss), are common and a natural part of investing.

3. The most volatile assets tend to carry the biggest losses, but also the highest yearly average returns. When diversified, risk and return are two faces of the same coin. Additionally, using data from the US Stock Market (S&P 500 Index with dividends reinvested) going back to 1927, we studied how investors would have done if they remained invested over different time periods. Here’s what we found:

1. 13.33% of 3-year holding periods registered negative returns, with the best 3 years registering an average annualised gain of 31.84%, and the worst 3 years registering an average annualised loss of -25.87%.

2. 6.82% of 5-year holding periods registered negative returns, with the best 5 years registering an average annualised gain of 28.44%, and the worst 5 years registering an average annualised loss of -8.42%.

3. 1.18% of 8-year holding periods registered negative returns, with the best 8 years registering an average annualised gain of 22.79%, and the worst 8 years registering an average annualised loss of –0.67%

4. 0% of 15-year holding periods registered negative returns, with the best 15 years registering an average annualised gain of 19.45%, and the worst 15 years registering an average annualised gain of 3.68%.


1. In the short term, returns from investing in stocks vary dramatically but the longer you hold them, the better.

2. As your holding period/investment horizon increases, the possibility and magnitude of losses shrinks (you minimise downside), while your upside tends to remain high and stable.

The above results are not intrinsic to stocks, as we repeated it for other assets and the same conclusions were largely held. During our research, we also found that less volatile investments/portfolios (diversification is the best way to reduce volatility) registered less frequent, and shallower, losses.

Investing involves risks and is, by definition, uncertain. We recommend more than ever that clients' investment portfolios are risk-managed by professionals and that the portfolio is diversified across multiple asset classes, within multiple investment markets and preferred economic sectors.

Get in touch with one of our Wealth Managers to learn how to do just that.

Joao Feliciano Martins, CMSA, ACSI
Wealth Manager


Performance Monitoring Dashboard:

  • Medium-risk (50% equities) portfolios year-to-date and last 3 years:

Performance Monitoring Graphs

Performance ranking (best to worst) in USD:

  1. Commodities (Oil, Natural Gas, Copper, Platinum, Wheat, Corn, et al), +36.58%
  2. Physical Gold, -3.86%
  3. Broad Stock Market, -14.16%
  4. Long term government bonds, -23.15%
  5. Long term inflation-protected government bonds, -25.67%

 Economies Monitoring Dashboard: 

GDP Growth Rates

Inflation: The Silent Killer

One of my fondest childhood memories is listening to my grandmother repeat the same personal finance advice every time she gave me a few pounds: “don’t spend it all in one place”. Although I often chose to neglect her wise words, and instead opted to buy as much ice cream or candy as those happy pounds would allow, I now look and understand the importance of her message: saving is VERY important.

However, the lesson that I had to learn myself, which I often discuss with clients, is that saving alone won’t increase your standard of living significantly. This is especially true in times like today, where inflation not only reduces our ability to save – compared to last year, diesel and food now represent a significantly larger slice of everyone’s budget – but it also reduces the value of our hard-earned savings. How? Glad you ask:

HM Government of Gibraltar last published its quarterly inflation data (the index of retail prices, a broad measure that attempts to calculate the cost of living) in April 2022, showing that prices, in general, rose by 7.6% when compared to April 2021. In simple terms, saying “the inflation rate went up by 7.6%”, is the same as saying that the average Gibraltar resident’s cost of living increased by 7.6% and that every £1 they have deposited in a non-interest-bearing account, can now only buy £0.924’s worth of groceries. Inflation is a stealth, but penalising, tax.

It gets even worse. By doing some simple maths we can calculate that if inflation averages 5% over the next 10 years, the £1 you have today will only be worth £0.60 in 2032. Let us now look at one of Gibraltarian's favourite investments: Fixed Income.

If upon retiring, you decide to downsize and invest the leftover proceeds in fixed income paying 5% interest per year, and that is your main source of income, you will be pretty disappointed when you notice that the interest you receive is no longer enough to meet your monthly budget and that you’re forced to either reduce spending or tap into other savings you may have. The picture should be even worse when July figures are released. For reference, May’s inflation figure in the UK came out at a surprisingly high 9.1%: £1.00 in May 2021 can now only buy 0.909 worth of goods and services.

Before we move away from the doom and gloom of the perils of inflation, let us now look at the most recent budget update from Gibraltar’s Chief Minister, and what it means for the immediate outlook for inflation. To us, the £45.3 million budget deficit immediately stands out, together with the expected increase in net debt of £11.5 million. Inflation has a centuries-old history of association with worsening government finances and debt increases. Furthermore, in their speeches, central bank leaders suggest that until we see a resolution in 1) the Russia-Ukraine war and 2) covid-induced supply chain disruption, inflation is likely to persist at elevated levels.

What can you do to (try) keep up with inflation?

I’ve addressed how debentures aren’t the solution to inflation-proofing your income and wealth, and for obvious reasons, leaving money in the bank earning less than 1% interest also won’t do any good when your purchasing power is being eroded by 7% and more every year. So, what can you do?

To help us answer this, let’s look at the 1970-1982 period and use data available for the USA. Throughout this period, inflation grew at an average rate of 7.64% per year, oscillating between 3.30% (1971) and 13.30% (1979). This was indeed a very challenging period for savers. In the chart below, we compared how $100,000 growing in accordance with the annual USA inflation rate performed VS an investment in a theoretical medium-risk portfolio (60% stocks, 30% fixed income, 10% commodities). In this exercise, we also included a 1.30% total annual cost ratio on the medium-risk portfolio.

Source: Abacus Wealth Management.


During times of rising inflation, if investors don’t want to see the value of their savings eroded, it is essential that they learn to no put all their eggs in one basket. Besides being diversified, it’s equally important that they allocate a proportion of their portfolios to risky instruments like stocks, as some blue-chip companies can pass on some of their rise in costs to consumers. Thus they provide an important inflation-protection element to portfolios.

Joao Martins.

AWML Quick Note: 2021 in Review

Welcome to yet another AWML Quick Note. This time around, we have a slightly longer than usual note, as we will look back on 2021 and see how it affected global markets. Two years have now passed since Covid-19 shaped how families live, work, travel and how governments make their policy decisions. These have been two very eventful and volatile years, but how many of you would have guessed that a proxy for global stocks – iShares MSCI World Index Fund – would have risen by more than 37% in the last two years, with 19% of that gain coming in 2021 alone? 

Read more …AWML Quick Note: 2021 in Review

AWML Quick Note: 3Q2021 in Review

Welcome to our third AWML Quick Note. Following a volatile and mostly risk-off quarter in the markets, this letter has a lot of ground to cover. We aim to shed some light on the events that shaped cross-asset returns in the July-September period and explain how they affected clients' portfolios. Let’s dive in.


3Q2021 witnessed a China-led decline in Asian and Emerging Markets Equities, while the US Dollar reigned supreme, and Japan Co outperformed.

Following a very positive first half of the year, global equity markets hit the brakes while geographical diversification proved once again to be a reliable ally for investors. The spectacular implosion of the Chinese Real Estate Conglomerate, Evergrande, which at its peak boasted a market cap of $54billion (currently less than $5billion), raised concerns of a Chinese-equivalent “Lehman moment” and subsequent contagion to the Chinese banking system, with assets in excess of $50trillion, and global markets.

Read more …AWML Quick Note: 3Q2021 in Review

Spouses Pension! What Spouses Pension?

A recent review of my own defined pension benefits revealed something very disturbing indeed. Said revelation was that my Wife (and partner of 23 years) is not actually entitled to the usual 50% spouses’ pension in the event of my death.

I am a deferred member of the scheme in question and the scheme rules state very clearly that to meet the definition of “Spouse”, both of the following criteria must be met:

  1. The member had to have been married to the claimant Spouse AND
  2. The member had to have been living at the same address as the claimant Spouse at the time of becoming a deferred member of the scheme

Our situation only met with one of the criteria. This effectively means that in the event of my death, fifteen years of hard earned pension benefits disappear.

Read more …Spouses Pension! What Spouses Pension?

Predicting The Future

“Between the optimist and the pessimist, the difference is droll. The optimist sees the doughnut; the pessimist the hole!” – Oscar Wilde.

2020… What a year it was! Now that it finally is behind us, the question of what to expect of 2021 grows ever more pressing. As we digest Q1 2021 market outlooks and read through last year’s summary and analysis, we are impressed by how contrasting pundit’s predictions are. Nonetheless, it comes as no surprise given how polarised 2020 was. In 2020:

  • The Chinese economy was expected to grow by 1.9%, and the Shanghai Composite grew by 38%.
  • The American economy was expected to decline by 4.3%, while the S&P500 and the Nasdaq100 grew by 16% and 43%, respectively.
  • The British economy was expected to fall by 9.8%, while the FTSE100 declined by 14%.
  • The American Money Supply (M2) expanded by 25%, to +/19.2Trillion USD, while the US Budget Deficit was expected to be of 3.8Trillion USD in 2020, all while Gold increased by 25%

Read more …Predicting The Future

AIG Improve Their Critical Illness Offering – “Critical Illness Choices”

AIG have recently replaced their old Critical Illness cover with a new and improved version known as Term Assurance with Critical Illness Choices. The goal is the same – to offer cover to customers in the event that themselves or a loved one develops a critical illness; is diagnosed with a terminal illness with a life expectancy of 12 months or less; or passes away.

What is different with the new offering is in the wording of the product name, “choices”. Customers will automatically get the standard cover which will cover them for the core critical illnesses. This is great for those that want a lower cost critical illness cover, but for those that want additional benefits, they can customise their policy to suit their needs and budget. The options available at an additional cost are enhanced critical illness cover, children’s cover, waiver of premium and total permanent disability.

Read more …AIG Improve Their Critical Illness Offering – “Critical Illness Choices”