Portfolio > Portfolio Construction

Looking at Risk Tolerance

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In my last posting, I discussed the importance of scalability. In keeping with this topic, this week I continued to refine the MS Excel risk tolerance project. Using Monte Carlo simulation on my 9 model portfolios I have simulated the range of returns for each portfolio using monthly, quarterly, and annual periods as well as a 5 year average. After running the simulation, I now have the probable range of returns on each portfolio for the periods mentioned. This information is contained both in numeric and graphical formats and can then be compared to outside portfolios. So when a prospective client provides me a copy of their statement from a competitive firm, I can compare the range of returns on their portfolio(s) with my models. This information is also placed on a scatter plot graph for easy comparison. So if one of my models provides a better risk/return profile than one or more of their portfolios, it will be readily apparent. The goal here is to develop an objective analysis.

Let’s move on to marketing of which, to date, I have done very little. I have a good relationship with one attorney firm who has referred a couple of clients to me but that’s been the extent of things so far. I recently had a graphic designer develop some post cards which I just got back from the printer. The purpose of these is to highlight the key advantages, or differentiating factors of my business. The plan is to create a series of mailings which will be sent to a selected group. Each mailing will contain general information such as a bio and perhaps a picture plus a specific advantage. Some will be geared toward firm branding and some will be a call to action.

It’s important to list your competitive advantages and articulate them to your target market. One of mine is the proprietary financial planning tool I’ve developed. Oracle will be featuring this in a one-hour Webinar I’m conducting on Wednesday, September 19th. If any of you are interested in viewing it, send me an email and I’ll be glad to send you the details.

Thanks for reading and if you have any comments, I’d be glad to hear from you.