Close Close

Portfolio > Portfolio Construction

The Priceless Value We Offer

Your article was successfully shared with the contacts you provided.

The end of a year is always a good time to reflect upon the value that we as advisors bring to our clients. 2009 will certainly have its own set of challenges, but with this current bear market, helping our clients maintain their sanity has to be one of the most important items on our agenda.

With this in mind, I’d like to elaborate a bit on a recent meeting I had with a client.

He had just transferred his accounts to me and was positioned fairly aggressively. He was also, understandably nervous as he watched the markets fall during the transfer process. In September we completed a financial plan which confirmed that he is in great shape. However, this was before October and he wasn’t sure if he would still be able to meet his goals. So we update his plan. We entered the reduced portfolio value, added additional risk (standard deviation) to stress test it, and ran 1,000 trials with Monte Carlo simulation. The result? We reconfirmed that even though he has lost money, he should still reach his goals with little trouble. This gave him peace of mind and he mentally checked his portfolio off his list of concerns. Now, that’s not to say he doesn’t care, but he is no longer worried. That’s priceless in my view as this is really what clients are looking for us to provide.

New Office and Maybe New Planning Software

My new office space is getting closer to completion. I frequently walk into it and imagine what it will be like. Flat screen TV here, my desk there, a plant in that corner, etc. Since you never get a second chance to make a first impression, I want it to look great.

But I am having second thoughts about my financial planning software. For years, I’ve been using an Excel spreadsheet with a Monte Carlo simulation add-on called Crystal Ball. I am now considering the purchase of another program to either enhance or possibly even replace it. I’ve just started a 14- day free trial period with Money Guide Pro which has some very nice features. This would allow me to complete a plan in much less time without a dropoff in value to the client. Sounds like a good business decision, huh? I’ll let you know.

Thanks for reading!


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.