Using sophisticated asset class research and expert diversification to manage against drawdown risk, shortfall risk or low-growth risk ensures portfolios will explicitly align with a range of investor goals and the context that accompanies a particular goal.
Power with technology
In addition to the portfolio design process being underpinned by investor needs, technology can further enable the integration of how the recommended portfolio aligns with the client’s goal.
Being able to digitally present a portfolio’s probability of goal achievement, cash flow expectations and journey projections can build client confidence.
Showing account asset class and sub-asset class exposures, as well as implementation variables, can also mitigate client expectations of the portfolio’s performance.
It is also critical that the plan is always connected to the portfolio through a live, ongoing process.
As portfolios are adjusted to accommodate changing economic circumstances, a portfolio’s visual representation as it relates to an investor’s goal should also be recalibrated to present how the client is doing today and could be in the future.
Advisers can proactively assess the situation and be prompted to take necessary action instead of identifying such needs only during a periodic review, when the damage may already have been done.
Refocus on investments
Advisers who see themselves as client advocates should not provide an expert planning service and then simply select an investment product that looks like it aligns with the client and their goals.
While this may have been sufficient to be successful in the past (as we saw with an extended bull market), risk takes on many different forms as markets increase in complexity and returns are harder to come by. Now is the time to refocus on the investment part of the process.
Looking ahead, advisers must ensure they can give clients the greatest chance of success – and an equally great personalised experience along the way.
Russell Andrews is global head of advice solutions at SEI Asset Management Distribution
