Rudy Wong Investment Advisor Case Study Essay

Words: 1661
Pages: 7

Kyle Stocker

Rudy Wong: Investment Advisor Rudy Wong, an investment advisor at O’Hagan Securities was in a predicament 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 had stooped to its lowest level as well as the Toronto Stock Exchange since 2003. This financial crisis led four of Wong’s clients to request urgent meetings regarding their assets and investments. All four were of different gender, age and particular needs which left Wong concerned that they all hold 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
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The clients investment priorities and goals were somewhat uncovered by a needs analysis which evaluated a clients investment horizon, short term needs and long term planning. The Investment Policy Statement was the outcome of this which included a couple of things. 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 to a great extent because people are worried that everything they have worked for can be lost due to a change in the market/stocks. It’s easy for investors to react emotionally, whether through overconfidence in rising markets or reacting with fear in failing markets. Exhibit 12 shows the cycle of market emotions and at what points an individual is likely to see financial opportunity and success or risk. When clients become very optimistic about themselves, therefore driving overconfidence that is the point of maximum financial risk where they need to start to tell themselves to set back and worry about long term investments. After a while of desperation and panic they will become despondent where maximum financial opportunity exists. The pattern will then pick up from where it began when overconfidence starts to slowly settle in after a period of financial gain. Rudy