The portfolio problem lies in the ability to deliver asset management expertise efficiently and productively in the presence of personalisation. Every client’s existing assets, financial needs and risk preferences are different. The biggest component of personalisation is the construction, planning and management of assets relative to the client’s inflows to and outflows from the portfolio over time. The other two major components of personalisation and the portfolio problem include the ability to manage hundreds of diverse segregated personal equity portfolios and the ability to relate all portfolio decisions and relationships as markets, relative prices and asset/liability relationships change.
This section introduces the problem as a portfolio problem to set the context of the management of assets within a liability management framework, that is a framework that manages assets to meet current and future financial needs.
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