Designing a methodology for managing your client investments is essential for a clear representation of financial performance and aides in effective decision-making. It is a generally accepted principle that a portfolio is designed according to the investor’s risk tolerance, time frame, and investment objectives.
Create Value Within Your Investment Model
“All good to great companies begin on the path to greatness
by confronting the brutal facts of their current reality.”
Jim Collins, Good to Great
Your goal is to create a weighted investment model (one or many) and implement a consistent investment strategy. Focus on actions that will provide unique added value for your clients. Position your firm to support the highest value-to-value exchange.
Evaluate your current investment model(s) with a focus on determining if they are creating added value. Employing a one-to-many investment strategy creates the leverage necessary to optimize your resources and elevate your delivery of services to clients.
Consider the following services (not all inclusive) while evaluating your model(s) and how you will deliver added value for your clients with each service.
- Risk Tolerance
- Asset Allocation
- Manager Research
- Portfolio Monitoring
- Performance Reporting
While you are ultimately responsible for due diligence and oversight of your clients’ assets, you may want to consider outsourcing services that are invisible to your clients such as manager research, monitoring, portfolio construction, performance reporting and re-balancing to a third party who specializes in these services. Other obvious outsourcing options or strategic alliances, such as CPAS, attorneys, and insurance agents will provide you the weight to focus on your firm’s unique added value and help clients with the steps they need to take.
Communication With Clients
Look at your value proposition through the eyes of your clients and prospects. You must be able to answer the question, “Why should a client invest their money with you, versus allocating their funds in some other way?”
When implemented effectively, your investment model should be viewed by your clients as a proactive model with enhanced services and communication. Implementation will require that you have direct systems and procedures in place to provide each service.
Advisors are required to make full and fair disclosures about fees. Consider the appropriate fee level for your services and investment model. You may want to implement a tiered fee structure that differentiates the service levels within your client segmentation process.
Your investment model(s) will allow you to sharpen your focus on the unique needs of each of your clients. Understanding that each of your clients has unique needs will ensure efficient client service delivery.
Ironstone can assist you in developing appropriate investment models and collaborate with you to develop solutions that are parallel to achieving the strategic goals of your firm.
Follow us as we explore each of Ironstone’s Fundamental 4™!
- Strategic Planning
- Business Development
- Operational Effectiveness
- The Human Element
You won’t want to miss our next in the series: Business Development-Client Appreciation