Private investor focus | Did I achieve my goal? | Financial wellbeing and investment journey

As a wealth manager or financial advisor, how do you select your client’s investment funds? Do you perform a due diligence? If you do, what is the criteria you use? Do you focus on the fund’s performance over the last couple of years? Do you compare the return numbers against peer groups, indices, or other funds? Do you look for funds with the lowest cost (even though return numbers are published net of fees)? Or maybe you only invest in well-known house brands?

The challenge with using these types of criteria metrics is that they are all relative benchmarks and are not good indicators of whether your clients will achieve their investment objective, or what the investment journey will be like over their investment term. This means that using criteria like average returns, risk-adjusted returns or volatility are not the type of criteria private investors use to measure investment success or risk. Private investors benchmark their success in much more absolute terms. They typically ask one very important question:


For private investors investing is very personal. They invest money to finance certain life events that are important to them. For private investors investing is a means to an end. It serves some emotional or functional purpose. An emotional purpose could be to give them a sense of security or the status of being financially independent. Functional purposes could be more practical like paying for their child’s education or providing a sustainable income during retirement. Whatever the goal is, it is important to them! Not achieving their goal has a personal consequence for their life.

The value added by advisors is not only helping clients achieve their financial goals, but also facilitating financial wellbeing on the journey to achieving the desired outcome.


To achieve both these advice outcomes require an investment strategy that integrates the financial behaviour of people with sound, time-tested investment principles. It is a well-known fact that the success of an investment is not only determined by the returns but is also influenced by the investor’s behaviour. This means that when it comes to investing it is not only returns that are important for the private investor, but also what the journey will be like in pursuing those returns as it will influence their decisions during the investment journey.

To follow an outcomes-based advice approach, requires a different way to investing. An investment strategy is needed that incorporates the financial wellbeing of the private investor, and at the same time reduces the uncertainty of delivering the planned outcome at a specified point in time. When considering the type of investment philosophy you need, a traditional investment will not suffice. Traditional investment strategies look for return opportunities and risk is then often a by-product of the combination of asset classes used. Outcomes-based investment strategies focus on enhancing the consistency of a specified range of outcomes. (Read part one of our blog here for more on the differences between traditional and outcomes-based investment strategies.)

Though outcomes-based strategies are still far and few in the South African market, Amity Investment Solutions manages investment portfolios according to an outcomes-based investment philosophy.  Amity Investment Solutions is a boutique discretionary fund manager with a unique investment philosophy. Our proprietary outcomes-based investment process adds value to advisors and private investors alike by reducing the uncertainty of investment outcomes.

Our outcomes-based blog series will be continued in part 3 where we will discuss how Amity manages money by applying an outcomes-based philosophy.


The Amity Advisor Experience team will assist with any queries you may have!
Go to our contact us page to find the necessary details.