Ayesha Ofori was a wealth advisor at Goldman Sachs. Courtesy of Yolande De Vries
Ayesha Ofori worked in asset management at Goldman Sachs for six years.
In an interview with Business Insider, she explains that she founded her own company, an investment platform for women.
Ofori shares the wealth-building strategies she’s learned while managing her ultra-high-net-worth clients’ portfolios.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
This essay is based on a transcribed conversation with 40-year-old London-based Propelle CEO Ayesha Ofori about her experiences at Goldman Sachs. Business Insider has verified her employment. The following text has been edited for length and clarity.
I started at Goldman Sachs in New York in July 2012. I previously completed an MBA (a Master of Business Administration) at London Business School with an exchange at Columbia Business School. During this time, I completed an internship at Goldman Sachs.
As an alpha type, I fit into the culture at Goldman Sachs
After completing my wealth management training in New York in September, I moved to London to work in wealth management in Goldman’s UK office. When you’re in banking, there’s nothing bigger than that.
If you had asked me back then what success looked like, it would have been to become a partner at Goldman Sachs. The culture suited me because I’m an alpha guy.
A few years later, I quit to start my own business and help women close the investment gap. At Goldman, I helped rich men get richer. But I also learned wealth management lessons from Goldman and had my own experiences that I wanted to pass on.
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The clients I served often had more than ten million dollars
As an asset manager, I looked after the private assets of private individuals. My job was to find potential clients who had at least $10 million in cash or an easily liquidated asset class such as stocks and shares and were interested in opening an account with us.
Most of my clients were primarily trying to preserve their wealth. But some also tried to make money. How the client structured his portfolio depended on whether he wanted to maintain or increase his wealth and his knowledge of the various products.
Ordinary people can learn from the rich
At Goldman, I made rich men richer every day. But I didn’t feel like I had a seat at the table. I wanted to use my skills for something more positive. I quit in 2018 to start my own business in 2019.
I noticed that wealthy people went about building wealth differently than normal people, for example in terms of savings, investments, and debt.
I try to bring the philosophies I saw in building wealth at Goldman into my company, Propelle. Propelle is a platform that helps women close the investment gap with men.
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What I definitely didn’t want was to leave my money in the bank
When I was at Goldman Sachs, I noticed that we didn’t have many female clients. I researched and found that women in the United Kingdom (UK) are good at saving money – but not at investing it. This is the conclusion reached by a study by the research institute Boring Money, about which the “Financial Times“ reported.
Women are paid less and are often the ones who stop work to care for children or elderly relatives. The pension gap between men and women in the UK is 40 percent, according to the trade union federation Trades Union Congress (TUC) found out. As they get older, many women do not have enough money to maintain their standard of living.
The wealth gap between men and women is wide, and women need to catch up. Why don’t we invest like the wealthy? All of my clients have invested in some form. When I worked at Goldman Sachs, I focused on paying off my student loans and saving money. I realized that there was no way my money should be sitting in the bank doing nothing.
I created an investment portfolio like I would for my clients and invested in real estate. This financial safety net helped me leave Goldman and start my own company. Investing is about having a long-term time horizon. It’s not about getting rich quick. It’s about thinking about the future, making a plan and continually investing. I want women to get to a point where they are investing on a monthly basis.
Alternative investments and the problem with calculated risks
At Goldman Sachs there were various ways to create client portfolios. One strategy was called “core-satellite.” In the middle were traditional asset classes, such as exchange-traded funds (ETFs). Surrounding this core layer was a satellite layer of alternative investments that many of Goldman’s clients wanted to access.
Many investment platforms focus too much on traditional investments. Wealthy people are more able to take calculated risks because they have the tools and advisors to do so.
I want women who want to start investing to also have access to alternatives. This could mean, for example, making small investments in startups, art or wine as non-traditional investments in their portfolio.
It’s not exactly the same as Goldman Sachs. For example, I don’t think normal people should invest in hedge funds. But they could invest in similar things, like startups, where the risk and reward can be higher.
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Investing in startups usually has a lower minimum investment – sometimes as low as $20 (around 18 euros). It’s different than investing $10 million like a Goldman Sachs client would. But the principle is the same.
With Propelle, my investment app, the plan is for users to focus on traditional and alternative investments. It’s about taking a calculated risk, not a blind risk.
Debt isn’t always bad – but many normal people are afraid of her
I’ve found that wealthy people are good at making money with money that doesn’t belong to them – by taking out loans. This is one of the most important drivers for building wealth. I view debt as a financial technique. You are a tool.
You can use debt as a tool to create wealth, but the average person doesn’t see it that way. Many people are afraid of debt. My mother is one of them. She wants to be able to pay off her mortgage and she doesn’t want to have a credit card.
I encouraged them to think of a mortgage as a tool. An example is releasing equity from a property you own and paying six percent on the money you borrow. You can use this money to invest in a real estate project for which you expect a return of 20 percent. The difference of 14 percent would be income without taking taxes into account. That depends on interest rates, but that’s a clear case.
Risk is clearly a factor because the six percent interest rate is guaranteed, but the 20 percent return is not. Having a clear plan for expected returns and timelines or a contingency plan is important when taking a risk.
Calculated risks and an emergency plan are essential
I have seen many wealthy clients borrow money for their stock portfolio and then use it for other investments. This can be stocks and shares or real estate. They will hopefully earn a return on their stocks and a return on their second investment. They started with one pot of money, and now they have two that give them returns while paying a lower interest rate on their debt than on their return.
Wealthy people also incur debt, just on a different level.
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This works if the market is growing during your investments. If the market falls and you have a loan, you still have to make payments. It’s great to make your money work as hard as possible, but you need to make sure you take calculated risks and have contingency plans.
Read the original article Business Insider.
