Portfolio > Portfolio Construction

Key Systems for a Healthy Independent Advisory Business, Pt. 6: Operations

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Over the past several postings, I have written about the three key systems necessary for an advisory business to be healthy. Although it would be difficult to thoroughly cover each system I hope you have found some relevant and useful “food for thought.” This week, we will begin discussing the third and final system, operations, consist of areas such as IT, compliance, bookkeeping and budgeting. We’ll cover the first one now and the rest next week. 

IT and CRM
Most of us probably need to spend a little more on technology than we’d expect. That said, the best technology isn’t cheap, but it may be more costly to ignore it. For starters, every business needs a good Client Relationship Management ystem.

I use ACT!, but there are many others. Last year I took a good look at Redtail (the version prior to Leapfrog), but found it lacking. I also came close to using, but after a trial period, I decided against it. Why? As it turned out, they had set me up with the wrong trial version. By the time anyone realized it the two weeks were nearly over. When I requested a trial with the actual version I wanted, they seemed reluctant. Because I was not impressed with their customer service, I opted out. Perhaps you’ve had a different experience. That was mine. 

Performance Reporting and Rebalancing
I use TradePMR’s performance reporting, under which it manages all client data, which saves me a great deal of time. As for portfolio rebalancing, Trade’s system allow for rebalancing. As long as I have established a model portfolio and assigned it to an account, rebalancing is easy. The only thing lacking is the tax effect for doing so. To manage this, I use Excel and simply copy/paste data from Trade’s system into my spreadsheet. Then it automatically calculates the capital gains/losses and categorizes short-term and long-term. 

Financial Planning
I use a rather robust Excel spreadsheet that I began creating in 2004 for my financial plans. In addition, I use Crystal Ball, an add-in to the Excel toolbar which allows for Monte Carlo simulation and optimization. I did consider eMoney recently, and will consider other applications. I left a message with the eMoney rep for my territory a few weeks ago….still waiting for a response. 

Data Backup
This one’s real easy. I use Carbonite. For about $50 a year, it automatically backs up my data. When I bought a new computer a year ago, I simply downloaded my data from Carbonite and I was back in business right away. 

Next week we’ll finish the discussion on Operations. Have a great week and thanks for reading!