3 Steps to Being a Better Money ManagerPast performance is no guarantee of future results.
This is one of the most tried-and-true financial adages. Because software depends on data from past returns, many wealth managers build their portfolios looking backward rather than forward. But do you really want your portfolio to be built for the last three years?
In a recent episode of Kestra Out Loud, we sat down with Paul Ma, CFA, VP & Lead Portfolio Strategist of Fidelity Investments’ Portfolio Construction Guidance team, to discuss how to best position clients for this year and beyond. With degrees from Harvard University and Massachusetts Institute of Technology, Paul arms investment professionals with the tools and confidence to build better portfolios for clients.
Here are three ways to do so:
- Maintain a balanced focus across time horizons. There are three time horizons in financial planning: Strategic (10-30 years), intermediate, and tactical (1-12 months). The strategic horizon is arguably the most important but receives the least attention. Client concerns arise from short-term volatility and the current newscycle, causing wealth management professionals to spend too much time on the tactical time horizon. For a better end goal, incorporate all three into a holistic financial plan.
- Focus on being a CEO (not a CIO) for your clients. Wealth professionals on average spend 44% of their time managing clients’ money but would prefer to cut that figure in half. It’s possible to spend less time on the CIO role without sacrificing the quality of money management. The fastest growing firms devote more time to higher-order tasks that accomplish client goals and bring them peace of mind. Younger investors increasingly value comprehensive financial planning. To remain competitive, start with the foundational elements of money management and gradually allocate more time to helping clients achieve fulfillment and leave a legacy.
- Build an emotional connection. According to research by Fidelity, financial professionals who have emotional connections with clients drive three times more referrals than their peers and enhance client loyalty, especially during difficult times. Paul recommends wealth management professionals consider outsourcing some aspects of the CIO role, such as investment selection, insurance management, and tax planning. Utilizing model portfolios frees up more time for activities that drive value for clients.
At Kestra Financial, we aim to empower your success by offering the tools and resources for you to build stronger client relationships. To learn more from Paul’s vast money management experience, listen to our full interview here.