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Portfolio > Portfolio Construction

8 Ways to Go Beyond the Typical Portfolio Review

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Does this sound familiar? Your client has done a financial plan. This led to an asset allocation consisting of several money managers, ETFs or mutual funds. There are few individual stocks. At least once a year, you meet with your client and discuss historical performance, using a professionally generated bound presentation, about the thickness of the issue of Vogue magazine for the month covering Fashion Week. Are you adding value? Yes. But are you adding the right value?

Let’s step back, looking at the relationship from your client’s point of view. They receive a printed monthly account statement. They look at the first two pages, determining if they made or lost money and how much. You have suggested they switch from paper to electronic trade confirmations, to help save the environment. Since the notifications direct them to your online account activity site, they rarely check them out. As long as things are going smoothly, they are happy. They have little idea of what they are actually paying in fees.

Let’s look at 8 ways you can show the value you bring to the advisor–client relationship:

1. Are those money managers sitting on their hands?

They are trading, buying on weakness and rebalancing the portfolio. How many days were they active during the past month? How many trades?

You call and tell your client that although the market is volatile and you have recommended the client sits tight, the managers are doing their jobs.

2. What are the money managers buying?

Your client should know, but they are probably not making the effort to find out. Find out what the managers have recently added to the portfolios. It should be easy to see the logic. If certain tech or drug stocks have done well during the pandemic, chances are these managers are on the bandwagon.

Let your client know the names. Are they some of the top performers in recent weeks? Your client will feel their chosen managers are paying attention.

3. What does the firm think?

Your client hears all sorts of opinions on the TV news and cable financial shows. Very often, the news is both sensational and gloomy. What does your firm’s research department say? What about global markets? How many analysts do they have? In how many countries?

Your client is indirectly paying for this research. They are the home team. Clients will likely want to know what “their guys” are saying.

4. Is your firm’s research any good?

They will wonder. We buy wine based on critics’ reviews. We choose restaurants based on TripAdvisor evaluations. What awards has your research department won? How do they stack up with other firm’s research departments? Put another way, who has won more?

People take independent evaluations very seriously.

5. Get on those strategist calls.

Ask questions. Your firm likely has regular webinars or calls when research strategists share their evaluation of what’s going on with the economy and the markets. They often have the ability for audience members to ask questions live or through a chat feature. Think about what your client wants to know. Ask that question “on their behalf.”

You will be able to say: “I was on a call with our chief strategist yesterday. I knew you would want to know what he thinks about (X), so I asked him on your behalf…” That’s very powerful.

6. Call before the monthly statement arrives.

Let’s assume it’s been a volatile month. It isn’t practical to do this for everyone, but you can do it for quite a few. Call a day or so before the statement arrives in their mail. Review the high points.

Proper asset allocation should mean the damage isn’t as bad as they feared. You prepared them. They know you are on the ball.

7. Company earnings.

Maybe they do own stocks. They might have a concentrated position. When a big news story comes out or earnings are announced, call or email your client immediately. We are talking minutes. “You’ve probably already seen this…”

It shows you are on top of things and looking out for their interests.

8. Initiate portfolio reviews.

This sounds so obvious, but bears repeating. It’s not “Let me know when you would like to…” “Let’s schedule a portfolio review….” They are “report cards.” Their children get regular report cards in school. Yes, you will use the thick, spiral-bound report. Try to use expressions like: “Here’s where we started the year. Here’s where we are now…” It simplifies the story.

They will see you as being accountable for your advice.

These actions provide the human touch. Robots don’t do that. They will know you stand alongside them.

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