In 2018, the U.S. and other world equity markets enjoyed a solid economy, rising consumer confidence and strong earnings. Looking ahead to 2019, there are so many looming variables that without a crystal ball the best prediction is unpredictability.
Tariff wars, volatile oil prices, rising interest rates, and the mid-term election results will likely have you and your clients on edge through much of the coming year.
When your clients lose confidence in markets, the last thing you want is for your clients to lose confidence in you.
Client Communication is Key
A tumultuous market is no time for an RIA to go turtle. Instead, robust communications are key. The usual newsletters, blogs, and Chief Investment Officer reports are a great way to tell clients that you’re keeping on top of market events, but they do little to convey the message that you are paying attention to how these events might affect their personal positions and investment strategies. Today’s clients want your appraisal of what is happening in the market and what you’re doing to help them achieve the best outcomes. That requires continual, personalized communications and customized reporting that can be created and distributed quickly and efficiently.
Performance Measurement is a Real-Time Exercise
For many clients, checking portfolio performance has become as much an obsession as social media -- and like social media, anytime access should only take a few clicks on their smart phones. Investors now want to know how each individual asset in their portfolio has performed. As a result, today’s wealth managers need flexible technology to compare their clients’ individual strategies and investment performance at any point in time, so they can provide their clients with confidence that they are invested in the right instruments at the right time. Wealth managers also need a technology platform that can quickly calculate time-weighted rates of return as well as dollar weighted rates of return and communicate that information in a format that is meaningful to clients who aren’t investment analysts.
Diversification for a Diversified Client Base
In more tumultuous markets where external events can affect specific segments more than others, diversification must be closely monitored. A simple trade agreement or regulatory change could require a major reallocation of assets. This can get complicated for an RIA whose clients are invested in hundreds of personalized portfolios. When an event triggers a significant change in the potential performance of a specific industry segment, the wealth manager needs to alert those clients who may be affected, and quickly recommend a course of action. Without highly flexible reporting and analysis tools, this becomes a laborious process that can put client portfolios at risk.
Providing a Holistic, Unified Household View
In today’s world of dual incomes and multiple online investment portals, chances are you’re not managing 100% of your client’s assets. You may be doing a great job of analyzing and monitoring those client assets for which you have fiduciary responsibility, but how can you truly make the best investment recommendations if you don’t take into account the rest of their family’s portfolio? If you have the technology to incorporate your client’s entire portfolio, you can provide a holistic analysis that will be a lot more meaningful, and as a reward, you well may find those additional assets under your management sometime in the future.
A good client relationship will outlive bad market performance, but a bad relationship in a bad market is a quick road to the end of the relationship. Owning the right technology to quickly identify and respond to each client’s individual strategy and positions is crucial. To learn how our Global Wealth Platform can help, check out our infographic.
This article was originally published in the WealthManagement.com 2019 Market Outlook.
Written by Eric Rocks
Vice President & Managing Director