This week I updated a client’s financial plan and refined my financial planning template by adding an additional metric. I have added an output page entitled “Savings Rate” which calculates the client’s total savings rate and distinguishes between taxable and tax-deferred savings.
The template I use (which has evolved over a period of five to six years) is a unique tool, in my estimation. Every output page is full of useful information as opposed to fluff and provides me with a high-quality, comprehensive picture which enhances the task of prudent decision-making. I am very excited about this.
Managing a client’s portfolio is the lifeblood of any successful RIA firm. Therefore, it’s important to know how each and every account is allocated and to have a snapshot of their total holdings. This includes assets held with you as well as those which may be held at another firm for some reason.
It’s equally important to keep abreast of current market conditions. One of the first things I do each business day is turn on CNBC to see if the futures are up or down. I also keep an eye on the U.S. dollar versus other currencies, primarily the euro. Finally, I look at the price of oil. With a picture of my client’s accounts and a view of the markets and the economy, I can determine if I need to make any adjustments.
For example, earlier this year I bought an oil ETF when oil was around $38 per barrel and later sold when it hit $70. During this time, I also acquired a couple of new clients. Since I had already bought into oil, these new clients didn’t have it in their portfolios. So at one point, I had some clients in and some out of oil. What I needed to be able to do was to see who had it and who didn’t. I could do this by searching for a particular security and viewing the report which shows all accounts that hold it. However, when you consider that each account has a number of different securities, knowing how each is allocated is very important to me. I have developed a method to track this and will share it in a future blog.
So how do you manage this process? How do you keep a close eye on the broad and subcategory allocation of each account under your purview? I’d like to hear your thoughts and, as always, thanks for reading.