How to exceed your clients’ expectations
Today’s affluent clients want more transparency, reduced tax burdens, wealth and asset preservation, and socially responsible investing. They also want the flexibility to include alternative investments in their portfolios in ways that make the most sense to their specific needs and goals.
Many advisors are using advanced rebalancing capabilities to handle a greater variety of client needs and scenarios. These include:
- Split compensation – Consider the multi-dimensional nature of alternative investments by compensating to one or more classifications at customized ratios
- Separately managed accounts (SMAs) – Gain flexibility in how and where SMAs are securitized and traded during a rebalance
- Capital gains budgets – Establish capital gains limits to help control your clients’ annual tax burdens
- Customized investment policies and reporting – Ensure investment policy compliance during rebalancing and maintain constant oversight of potential policy violations
What do we mean by advanced rebalancing?
Challenging market conditions mean you have to react quickly to your clients’ changing goals and circumstances. Your rebalancing software should make it easy for you to appropriately manage your client’s asset allocation and risk at all times.
However, portfolio rebalancing capabilities vary widely in terms of their ability to handle complex asset management requirements.
Deciding on what rebalancing software to use should be driven by the sophistication of your clients’ portfolios and asset allocations. And you’ll need to be able to scale across a diverse set of clients.
Million-dollar households invest differently than billion-dollar households. While investing in exchange-traded funds, mutual funds and equities are typical among clients up to and including the HNW, the UHNW tend to have more complex and diverse portfolios with a greater focus on private equity, SMAs, real estate, and partnerships, and are more aware of the need to control tax liabilities.
Therefore, you need to be able to tailor services to specific clients while also scaling quickly to meet the needs of all your clients.
A rebalancing solution should allow accounts to be combined into million- or billion-dollar households. It should provide transparency into the securities and investment instruments used. And it should offer modeling flexibility using restrictions, compensation and target overrides while handling alternative assets and taking them into consideration during a rebalance.
Regardless of the sophistication of your clients and their portfolios, a rebalancing system should make the rebalancing process simple and ultimately empower you to exceed your clients’ expectations.