The Trick on Repositioning Client Assets

At this point, I hold about 98 mutual funds, 20 ETFs, and a few individual stocks. I am working on reducing this to a more manageable number and I’d like to share my process with you. I’d also like to hear how you approach this, so if you are willing, your responses would be appreciated.

I don’t believe it’s a good idea to simply sell the clients’ old funds and replace them with my funds, especially in a taxable account. The first thing I try to do is determine if the transferred funds are in a category I like and if the fund is a quality fund. If I don’t like the category, or, if I don’t like the fund, I look for an opportunity to get out.

To assist with this, I’ve created a spreadsheet into which I export the funds from TradePMR’s Web site into Excel. Then I copy the exported page and paste it into my spreadsheet which reads certain cells and gives me a snapshot of the account. It shows the percentage and the dollar amount of each category and what the gains and losses look like. It also compares the account to the assigned model and shows whether it is overweight or underweight.

The ultimate goal is to reposition with the least tax impact. I am finding as my asset base grows, my need for this type of process is becoming more important.

Here are a few questions I have for you.

o How many different securities do you have in your book of business?

o How do you manage the process of repositioning the account after it is transferred to you (assuming it is not in cash)?

I realize every advisor has his own way of doing things. I’ve often thought if we could share our “best practices” it would benefit the industry, the client, and each of us individually.

Thanks for reading and I look forward to hearing your comments.