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Using Kwanti’s Portfolio Lab Software With Clients

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Incorporating good technology into an advisory firm should help improve client relationships, save time and money and improve efficiency. As I’ve mentioned before, 2015 has been a year of new technology for my business, which I’ve written about in posts like Lesson Learned: One New Piece of Tech at a TimeSo Far, I’m a Happy Customer of Redtail and My eMoney Review: Good, but What’s With Monte Carlo? 

In this post, I’d like to share a little more about my latest technology addition, Portfolio Lab from Kwanti.

Kwanti is not a household name as the company has not been very aggressive with its marketing, though I believe it will be in the future. I learned about Kwanti from a reader and fellow advisor, Robert Henderson, who has used the product for several years. I would summarize Portfolio Lab as an easy-to-use tool which combines the best features of several other products. Although it’s offered at a very reasonable price, there are a few limitations.

Portfolio Lab is great for analyzing portfolios that include individual stocks, mutual funds and ETFs. If you use any other type of investment, you’ll need to substitute a benchmark as a proxy or exclude it from the portfolio. Fortunately, Kwanti has a large database of benchmarks (not sure of the exact number). If you cannot find a good benchmark, but have access to historical data (three years is ideal), Kwanti will incorporate it. Obviously, this would be the best solution. 

One way I plan to use Portfolio Lab is to demonstrate how a specific portfolio would have performed during select periods. Using an index fund for stocks and another for bonds, I have created a few portfolios with varying degrees of risk (i.e., conservative to aggressive) and saved each of them as a model.

This will allow me to show clients how these portfolios would have performed during a crisis or during some other period. This will help clients better understand risk and assist in quantifying their willingness to assume it. Portfolio Lab users can also assess the impact of rebalancing, advisory fees and reinvesting dividends, interest or capital gains. In addition, I plan to utilize the tool’s forward-looking portfolio optimization feature. I’ll discuss this more in a future post. 

A tool is only as good as it is accurate. Kwanti’s founder is a CFA, which adds a level of confidence since, in my view, that’s the most difficult designation one can acquire in the financial services industry. I believe we’ll be hearing a lot more about this unique tool in the future.

Thanks for reading and have a great week.

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