Podcast Transcript: The Money Makers by Sophia

Ep. 36: Yvonne Leung, J.P. Morgan Private Bank Asia

“Investing through all market cycles”

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Welcome to The Money Makers podcast brought to you by Sophia. Sophia is an exciting education platform for women focused on managing your money and growing your wealth. This podcast is a show for amazing women everywhere of all ages, we will feature conversations on all areas of our lives where money matters affect women.

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Hi, welcome to The Money Makers by Sophia, this is Christine Yu, Co-founder of Sophia and your podcast host for today. This is a very special podcast episode, as we are announcing our Sophia partnership with J.P. Morgan Private Bank. We're pleased to partner with J.P. Morgan to deliver a year-long program called Women and Wealth, a series of in-person and digital experiences for women in their wealth management. By partnering with J.P. Morgan, we at Sophia aim to provide women with the knowledge and tools they need to make informed financial decisions which are essential in creating and managing their wealth. We believe that when women are empowered, our entire community benefits. Today I sat down with Yvonne Leung in Hong Kong. She's the Head of Managed Solutions at J.P. Morgan

Private Bank Asia. We talked about how we can invest throughout all cycles and build wealth. Yvonne has been in the finance industry for over 20 years. At the bank, she works closely with advisors and portfolio management teams in delivering core multi-asset managed solutions for clients in the region. At the end of the podcast, we've recorded a podcast job and guide as well. Happy listening. Hi, today on The Money Makers by Sophia, we're here with Yvonne Leung, Head of Managed Solutions for J.P. Morgan Private Bank Asia. Yvonne, it's so great to have you with us today. I'm really excited about this podcast. We've talked about this for such a long time. First, let's talk about you: give us a brief

introduction of yourself and what you do for the bank. Yeah, thanks for having me here. Christine. Thank you so much for the time today. I've been in the financial industry for more than 20 years, I run the managed solutions business within the J.P. Morgan Private Bank in Asia. And within the private bank, we're keen to learn more about our clients and see how we can help them achieve their long term goals, whether it's like short term or long term, it was never about what we want our clients to invest in based on market conditions. But to understand more about their goals based on their goals, we plan and come up with different actual investments that meet their requirements. And also preferences. That's what we call goals-based planning, which we can talk a little bit more about later on. But as it's market independent. So the most interesting part of our job is to guide our clients towards how they'd like to express their views and preferences on their portfolio, whether this is discretionary strategies or mutual funds in different regions or themes. And it's a lot of explaining to do with clients because often they need to spend a lot of time, resources and even interests to make decisions on what they want to own on their portfolio. And it all depends on the client's situation. And we're here to help them make the most appropriate recommendations. I love that and really is that when we're building wealth, especially for women, it has to start with goals. Right, Yvonne? So I want to talk about you know, both organizations, both Sofia and JPMorgan were focused on helping women build wealth. You know, talk to me about a key lightbulb moment that you had for you in your investing journey. And, you know, maybe share some principles that you hold close when it comes to investing your own wealth. Well, there are quite a lot of them.

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When I first started, I'll just share a key one. When I first started investing towards the later part of my college years, like a lot of my peers, we buy companies or stocks that we like the ones that we were familiar with, it's all the Hong Kong blue chip names as well. We didn't have a plan, we didn't pay much attention to how much we own on individual stocks and percentage of my portfolio. We thought that we have like an ongoing stream of new money meaning our salary, but I've actually gone through different cycles so the dotcom bubble was okay, I didn't have a big portfolio. SARS affected Hong Kong but I had less of that back then not a large amount and the market was on the rise even with bumps along the way didn't occur to me that I there's anything that could go to wrong until the financial crisis hit and I participated back then in a share save program at the company that was working at back then. So meaning we bought shares at a discount. So just as the market turned to receive the shares, and then the share price actually plummeted.

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by 70% in just a matter of months. So since I've participated in the program for a few years, so I've actually accumulated quite a lot of data and that amount was actually quite substantial. So I wasn't aware of how much I'm concentrated to just one company. And that was the pivotal moment where I had to reassess and take the right action, did a lot of self reflection and realize that I was lack of long term foresight, I need a more sustainable financial plan. I need to think seriously what my long term goals are, I still had a long career ahead of me back then. But I had to think about when do I want to make major investments? When do I want to retire? And what's that retirement life going to look like? etc. So I don't talk to talk, but walk the talk. So I work backwards to see what needs to be done. And taking a long term lens definitely helped me back then. I love everything you've said, because it's really about having that long term view when it comes to building wealth. And you know, we always say it, Sophia, it's about time in the market, not timing the market, right? And it's really so important to think about that, especially when you think, for example, about S&P 500 returns over history. We're really excited as Sophia to be working with J.P. Morgan Private Bank throughout the year on an amazing program called Women and wealth with Asia as the fastest growing wealth creation hub for women, which is super exciting, of course. I mean, I'd love to hear how J.P. Morgan approaches Wealth Management with women's unique needs in mind. How do your female customers tell you, they see their wealth journey? Yeah, before I share how they think about their wealth journey. And maybe I

can also share how I see the female investor base evolved within the private banking space over the years. When I first started my career, I dealt with a lot of clients from Hong Kong, and they were first generation they created wealth through their businesses or real estates that they've invested in. Most of the time, when they brought in the second generation, it's mostly sons, we were told that the daughters are actually more interested in the non investment related side of things. But there are still professionals like accountants and lawyers, but they're just not as interested in investments. Over the last 10 years, we've increasingly seen parents brought in daughters into the investment dialogue, because some of them started to worry about the financial education that their daughters might be lacking to deal with the wealth that will be passed on to them, especially for those who have only one

child. And also more women have become more financially independent, they want more control of what they want to invest not being told by what you should be invested in. They want to express their preference, values based investing, like leaning more into areas that they're more interested in, like education, equality, climate change, etc. And women do have an advantage in investing. So as human beings, we do have emotions, and they could impact our investment decisions, often irrational ones. There are a lot of empirical studies that substantiate that. However, contrary to a lot of what people expect, there are in fact, research indicating women tend to be less emotional when making investment decisions, because when they listen to their feelings, they're more aware of the impulses triggered by

the emotion of greed. And they're more likely to resist the impulse to overreact by trading too much on new information. However, when speaking to women clients is also very interesting. They tend to feel less positive than male investors around investments. So women feel the stress and anxiety when it comes to investments. And that's also the reason why a lot of women tend to hold more of their assets in cash and fixed income, and avoid equities or alternative assets. So to a certain extent, there's nothing wrong with that. But it's very important to see if these investment can help them achieve their long term goals, they just need to understand the trade offs. There's no free lunch like less risk, less return in general is never going to change. But for example, if they invest only in cash or fixed income, then they're exposed to inflation risk. So not just the 2-4-6 percent inflation headline numbers that you hear from the news, but it's everywhere. Look at the prices of the handbags, some of the brands have raised prices like double digits, not naming names,

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but we see the C brand and the H brand.

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And we may not be able to afford the same bag with the same amount of money over the

next few years. So on a more serious note, though, to overcome the anxiety, knowing the

fundamentals that become even like more important to women investors to build the right

level of confidence instead of being affected by the often exaggerated headlines on the

news. This is where we can come in to share more and look under the hood for them. And

women are actually more detail-oriented. So they're more proactive in asking questions, more

vocal about their concerns or feedback. So it's actually good for us to understand the gaps

and what they're trying to achieve. So back to the goals-based

planning

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I was talking about the different goals around liquidity needs preservation needs, like maintaining purchasing power that I was talking about, how do they define their assets, how much they want to leave to the next generation, and also growth, wealth perpetually. Wow, that really resonated with me every single thing you said. The other thing, just to kind of, you know, bounce off, what you're saying is that women are, and this is a stat that I love to talk about, women are twice as likely to incorporate ESG factors into their investing, right. And so it just brings a whole new perspective into values based investing, and really investing with a long term view. So that's absolutely incredible. So I want to switch gears now. And really talking about, you know, how we can grow our wealth, right, despite the investment climate that we find ourselves in, growing our wealth through investing in the financial markets has certainly been somewhat more challenging, you know, in 2022, with most asset classes,

seeing record lows, right against, you know, the overall market volatility picture after a decade plus of easy monetary conditions. I mean, I think every single investor I spoke to last year and every probably every financial institution felt, you know, there were not that many places to hide, right, that was a common sentiment. But you know, this is an interesting year, we have a different market picture. So tell us, in your view, and J.P. Morgan's view, what are three things in the financial markets that we need to be thinking about? For 2023, we've seen already a lot of turmoil and financials, especially just in March 2023, alone, but yet in the same breath, the NASDAQ closed 15%, higher on the year as at the end of March. So how should we be thinking about investing through all market cycles and across asset

classes this year? Yeah, March was definitely a turbulent time. But there's always something in the market every year that makes us nervous about investing, but the market is anti-gravity. So it's always on the uptrend in the long run, I would say. So viewing things through a longer term lens would help bring down the level of anxiety and avoid making irrational investment decisions. So for 2023, three things in the market that we need to think about his first inflation, second rates. And I would say the third thing around recession. So while we're making good progress on the inflation front, for example, wage inflation and other measures of labor market tightness, like job openings, and quits, do not suggest wage spiral even though the labor markets remain recently, and inflation is the key to inform fat

about its rate decision. But with inflation being relatively sticky, still, the most likely cause of getting things under control looks like a recession shouldn't be a deep one. The growth slowdown recently has been pretty benign. So there are still a lot of uncertainties in the market, just like any other year, there's always something to happen in the market. Like I said, that makes us nervous about investing. But as long term investors with a dramatic reset in valuations experienced last year, we've come to one of the most attractive entry points for stocks and bonds over the decade, we believe a multi asset diversified portfolio would continue to outperform cash and inflation. And besides the long term, multi asset

portfolios, everyone should build to whether different stages of market cycles for this year, in

particular core fixed income, meaning treasuries or high quality corporate bonds, etc, now offers the potential for protection, yield, and capital appreciation. So the largest US bond index we've seen is actually down 10% from its all time high. And this is still the biggest dip in the core bonds that investors have had the opportunity to buy over the last 40 plus year. So all in all, diversification is the key to investing long term. And it helps manage risk better and manage anxiety better and to help clients achieve their long term goals. And again, tying back to the goals based approach that I alluded to earlier, there are different buckets of goals that they want to achieve, like liquidity reserve or even like growing their wealth perpetually. Wow, you've said a lot. But I think you really touched on the very most important points, right? It's about inflation, fixed income and recession. So it's important to understand

those three things. And you've given us some fantastic ideas on how to manage those three things. So I want to close with, you know, understanding kind of, from your perspective, if you are talking to a woman trying to build her wealth, you know, what would you say to her about, you know, something that you've learned, or something that you hold close when it comes to creating wealth for the future? What's the nice inspirational thing that you can leave our listeners with today?

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One thing I always keep in mind is steady hands prevail. We have to be conscious about making rational decisions, especially during volatile moments. As a reminder, do nothing is also an active investment decision so you don't have to buy or sell. And during troubling time, that's often the worst moment. Most important thing is to review what you have on your portfolio on a regular basis and see if you're still aligned to your North Star. Again, don't lose sight of your plan and your long term goals and there's a lot of noise in the market. Stick to your Northstar, and stick to your long term wealth planning goals. I love that. Thank you so much for being with us today, Yvonne. And we'll catch you another time. Thank you. Before we wrap up today, here's a few jargon words we talked about in the podcast. Inflation.

Inflation refers to the price increase of a basket of goods and services. Do you notice your favorite luxury handbag seems more expensive now? You aren't dreaming. It's inflation. Flights seem extra pricey? Inflation again, the opposite is deflation, which refers to the decrease in price levels of goods and services. This is not to be confused with disinflation, which means that the rate of inflation is temporarily slowing down, S&P 500. This stands for Standard and Poor's 500, which is a stock market index, which tracks 500 of the largest publicly listed companies in the United States. Many investors consider this index to be the best overall gauge of US stock market performance. Diversification is an investment strategy. And it simply means not putting all your eggs or investments in one basket, or that you aren't just investing in the same thing. As you build wealth. You also need

to think about how you can ensure that you're reducing the risks of your investing activities, because each investment may react differently to certain world or market events. And that's why diversification is an important investment concept.

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We hope you have enjoyed this episode of The Money Makers podcast brought to you by

Sophia, the education platform for women. Visit sophiawomen.com. Learn, invest and

change the world!

Podcast: Goals-Based Planning

Guest: lldi Gritsayenko, Asia lead for Goals-based Planning, J.P. Morgan Private Bank

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Welcome to The Money Makers podcast brought to you by Sophia. Sophia is an exciting education platform for women focused on managing your money and growing your wealth. This podcast is the financial sprint, short bursts of money wisdom for women.

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Hi, this is Christine Yu, Co-founder of Sophia, and welcome to the podcast. Today we are going to talk about a topic so many women have asked us about: how to financially plan for our lives with our goals in mind. We're so fortunate today to have just the expert: lldi Gritsayenko is the Asia lead for J.P. Morgan Private Bank on goals-based planning.

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We're going to talk through some financial planning 101, as well as cover a few hypothetical scenarios. Get ready to feel inspired for your own financial planning journey. And don't forget to listen all the way to the end for our podcast jargon guide. Hi, everyone, and welcome to The Money Makers podcast. We're very excited today to have lldi Gritsayenko from J.P. Morgan Private Bank, and we're going to be talking about goals-based planning. So lldi, welcome to the show. Tell me about yourself and what you do at J.P. Morgan Private Bank. Hi, Christine. Thank you so much for having me. I really appreciate the opportunity. My name is lldi Gritsayenko and I'm the Asia lead for goals-based planning at J.P. Morgan Private Bank. In my current role, I help clients create a holistic plan for their strategic asset allocation vision, and help them optimize the way they allocate their capital based on their goals, needs and values. Amazing. So both our organizations are focused on helping women build wealth, you work with many clients on creating their financial plans to help them achieve their goals. I'd love to hear about your own personal lightbulb moments when it comes to building your own financial plan. What was a key moment for you in your wealth management journey? What were some key approaches you followed in creating your own financial plan. So I was born and raised in Hungary. But when I moved to New York in my early 20s, two things happened. First, when I got married, my husband and I, we started more consciously focus on our financial situation, and our investments as we were preparing to purchase our first home together. Then second, when I started working in private banking in New York, as an analyst, I had the chance to open my own personal retirement account called a 401 K. And when I started contributing to this retirement account, that was the first time I truly had to select an asset allocation by myself. And also think about the actual investments that would go into that asset allocation. I think that is such an interesting lightbulb moment, because so many people, when I speak to you know, women are actually just anyone in their own wealth journey, starting their retirement plan, you know, contributing to their pension, that's really like a, you know, a natural first step for us to learn about asset allocation. Yes, absolutely. And, for me, I love the creativity of it, and how it made finance and investments just so much more personal, and tailor to my unique needs. I think that was my epiphany moment. Love it. So I'm really excited for us to talk about goals based planning. But before we get started on that, I'd like to maybe cover some financial planning 101 that we need to understand, before we get started on creating a unique plan for ourselves. Are there simple ways we can be thinking about how we save and create wealth for the future? I think financial planning in general goes very much hand in hand with investment planning. So the key concepts relating to that would be first of all time horizon, right? How long do you expect to hold an investment? Is it for the short term, or maybe medium term five to 10 years like saving for college or a wedding fund or first home purchase? Or maybe long term 10 to 15 years? Most commonly that's used for retirement planning for some of our

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clients. Also, you need to consider how much risk you're willing to take and how much risk you're actually able to take in your investments and be honest with yourself in assessing your risk tolerance. Because as we learned during the market crisis of 2008, many investors overestimated their ability to stomach downside risk, and rushed to sell their investments near the markets bottom suffering massive losses. So honesty is the best policy - with yourself. Exactly. And I think third is really the asset allocation. Think about the general investment process for that the foundation of a portfolio is based on the strategic asset allocation, which is the 10 to 15 year target for your asset allocation mix. That's meant to be held consistently, if it was meant to be disciplined and diversified with at least annual rebalancing. Then you can also think about the tactical allocation, which is a more active portfolio strategy, where you might shift the percentage of the assets you hold in various investment categories to take advantage of short term market opportunities. Usually, these tactical shifts range from five to 10%. Or they might be lower, depending on the current landscape in the market. I also think that just to touch on this briefly, manager selection can also be important how you pick an investment manager, and I usually stick to the four P's, philosophy, process, people and performance. So it's not just for marketing, then the four Ps, right? No, there are other uses as well. I like that I'm always going to remember that. I'm glad you find it helpful. So let's go back to goals-based planning, because you are the expert in goals­ based planning. What is it? Why is it important to create a financial plan for yourself, focus on your personal situation, and your life's goals? How should anyone get started with a goals based plan? Are there any aspects for example to consider? And for women specifically, like lifespan, your family situation, income? And we also talked about your risk tolerance earlier, right. So what are some of those things that we need to take into account? All right, so just to begin with goals based planning is a framework in which we help our clients organize their thoughts around their wealth in different buckets, liquidity, lifestyle, legacy and growth. So this approach enables us to really truly understand the intent for our clients wealth, and help them build a strategy to address all of their needs. And there are risks as well. So if we look at liquidity, that tends to be short term cash needs for emergency funds, or sometimes capital for opportunistic investments, then lifestyle is anything that pertains to your personal comfort zone, your everyday living needs, such as children's education, living expenses, housing, maybe private club fees, the legacy is wealth you intend to leave for family or philanthropic giving, either during your lifetime or after. And then growth is basically everything else where you might not have a clear intention, but you would like to grow your assets. And some clients also think about their concentrated positions in this section of the wealth as it generates more over time. So to put it simply, you could think about your own wealth management in these buckets, right? So your liquidity bucket, your lifestyle, bucket legacy and your growth bucket. That's correct.

And just to shed some light on why this is important, because historically, we have typically approached a client's situation with one single allocation, when in practical sense, not all of these goals carry the same time horizon or risk tolerance. For example, if you would like to give money to charity in 20 years time, or if you need cash flow for retirement needs on an everyday basis, those goals will be completely different. And you need a different strategic asset allocation to go with them. And just to add to that, 70 to 95% of portfolio returns tend to come from the strategic allocation so

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So you need to make sure you get that right. I always think that is so interesting whenever and we teach, you know women about asset allocation, right, that it's so important because it drives the vast majority of your returns. That is so interesting. And Christine, you also asked about why it is important to create a financial plan for yourself focused on your personal situation and your life goals. I think a few things specifically would speak to this, for example, as one of my colleagues put it recently, understanding and taking control of your financial situation is a life skill, just like swimming that really truly resonated with me. Also, financial plans should be personal and bespoke just because your next door neighbor is investing in something, it doesn't make it the right solution for you and your life. I also think that having a well-structured plan enables you to measure your performance and progress to those goals more precisely, and meaningfully. Another thought on how should anyone get started with goals based planning for themselves and the specific aspects women should consider for their planning needs. So first, you need to define what is truly important to you what goals and values do you have, create a list for yourself, and look at your balance sheet, what assets and liabilities Do you currently have? And how do those match your objectives? Make sure to create the structure that works for you and look for efficiencies, budgeting and cash flow should also be considered. And with these consistency and discipline are a key. And as for aspects specific to women, research has shown that we tend to live a bit longer. And on average, that is definitely something we need to account for when creating portfolios for lifestyle needs. Also, the priority of financial goals tend to be a bit different for men and women. Men might note investing for growth as their number one objective, while women might focus more on taking care of loved ones and living expenses. But it is important not to lose sight of growth and aim for it in a responsible manner. And lastly, if you think about it, life events tend to also impact women more, we take more career breaks than men, which can affect liquidity and lifestyle planning substantially. So I want to get practical, I'd like us to talk through two to three examples of some profiles, and what kind of factors and financial planning you'd highlight for each of these hypothetical situations. So maybe the first case would be someone who's 25 years old, single, who has no children, and perhaps at this stage, no intention to have children, who is a professional woman, and wants to retire young at 50 years old.

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Alright, so for this particular individual, I think that cash flow and budgeting should be key considerations, along with building a solid investment framework for her retirement portfolio. With the 25 year or so time horizon she had in mind, I think it's also a good idea to develop a balance sheet for her with her assets and liabilities. So she's very clear on what she has. I love that. So we're used to thinking about balance sheets, in the context of companies, but you're saying it's your personal balance sheet.

Absolutely. And, you know, making sure you have everything accounted for clearly is very important. I also think for this person, if taxes are a consideration, effective tax management on the investments can also be very important, along with staying invested throughout market cycles, and sticking to her plan. I like that. So let's move to the second case. She's 35 years old, she's married, she's self-employed, she's an entrepreneur, she's got two kids and doesn't want to retire, but keep on doing meaningful work. So in this scenario, I'm a parent myself and I can truly relate to it. I think having an emergency budget for unforeseen life situations with cash on hand is very important. That would be my number one things to check off the list. Then because you mentioned children, I don't know their ages, but doing estate planning, taking care of wills, health care proxies, guardianship documents for the family would be essential, as well as sufficient life insurance for the parents and creating a strategic investment plan for all of the

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family's assets. So in case she changes her mind and stops working, she would have a plan B to fall back on. And also, this pool of capital can be repurposed for legacy purposes for the children if needed in the future. Very interesting. So the last profile, she's 55 years old. She's newly divorced. She's got two adult college aged children.

She has been a homemaker and she receives a divorce settlement.

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This is a difficult life situation in itself. And for the woman in question. I think having a continuous and reliable income stream would be essential. Her portfolio should focus on downside risk management and inflation protection. In the long term. Any investment she's not utilizing for lifestyle needs should be invested with a responsible growth mindset. For the two adult college aged children, not sure who's responsible for paying the tuition. But if the mom is the one, then she needs to allocate funds for this purpose in a conservative manner, and only in investment solutions that offer liquidity, preferably daily. And just be mindful that educational inflation tends to be higher than regular inflation. And that's a very important consideration for cash flow, planning for educational needs. And in general, she needs to take full control of her financial life and rebuild it while actively managing risk. Having a trusted team of advisors would be key to this success. So interesting. Educational inflation, we know, private education is expensive. But that's a very good point to note. So what happens when life changes or something unforeseen happens, like a death in the family, a chronic illness, or change in a marital situation similar to what we've just discussed?

How do we change our financial plan? What things do we need to consider when something unforeseen happens? I think that having a plan for your investment needs should not restrict you, it is quite the opposite. It should give you oversight and the level of flexibility to make informed decisions when you need it the most. I also think that for an unforeseen situations, focusing on what you can control in that moment, would be important such as cash flow, liquidity, lifestyle expenses, and maybe just at some point, when the dust settles, just go back to the drawing board and re examine your risk tolerance, your time horizon, and how the events have impacted your balance sheet. I also think that making sure that the legal framework you have in place for your life works in tandem with your strategic investments, because then you can make sure you reach your desired outcomes in the long run. I love that you talked about how a financial plan is actually the source of your financial freedom, it gives you choices.

That's so inspiring. So we've talked about planning for the future, for both the exciting things that life could bring, but also for the unexpected things. It can be daunting or overwhelming to create a financial plan for ourselves. But you know, as we just said, right, having a financial plan means we're better able to navigate the future. What is one inspirational thought that you'd like to leave us with today? Well, there is so much more I would like to say but let me just leave you with one thought. I truly believe that discipline is the bridge between a goal and an accomplishment. Make a plan, revisit this plan and make sure it still makes sense for you, and stick to it throughout challenging market cycles. I think that would be my last comment. I love it, discipline. Thank you so much lldi for being with us on the show today. I loved everything you said and I can't wait to chat again. Thank you. Before we wrap up today, here's a few jargon words we talked about in the podcast. Asset allocation: simply put, it is how you decide to divide up your investments across different asset classes in a way that achieves your financial goals and takes into account your risk tolerance as well as your investment time horizon.

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Manager selection: No, this is not how to choose your next boss. If only!

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Manager selection refers to the process of evaluating and selecting an investment manager, the person or the company, managing the fund that you own or are looking to own. This process can include due diligence and research on a variety of quantitative and qualitative factors, such as their performance track record, and their investment process. And finally, education inflation. This refers to the steady increase in the cost of educating your child or even yourself over time.

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We hope you have enjoyed this episode of The Money Makers podcast brought to you by Sophia, the education platform for women. Learn, invest and change the world!