My best friend is going through something very similar. Glad you were able to make the move out of it. Best of luck to you dude.
You definitely need a primary, live news source that will keep you informed on day-to-day events. As time progresses, you will be able to relate news to asset price changes. Of course, you are not going to be an expert in every asset type. So, if you want to know more about something, you should make some contacts with such expertise. If I want to know about real estate, for instance, I will ask a broker what is going on, and spend my time verifying the information they provide, rather than inefficiently researching things myself.
Regarding the calculation methodology, Morningstar or other publishers should have papers to disclose this. You can ask their sales representative for this information if it is not clearly available on their website. You should also be able to replicate the calculations yourself - it doesn’t have to be exact, but close enough to get a general idea of what they are doing. Performance of active managers should be explained by the manager themselves. Some larger firms might keep track of the actual assets in each managed fund, but I do not think you have the resources to do that.
I don’t know the best way to communicate things to retail clients. From what I know though, they ask fewer questions if they make money, and more questions if they lose money. So, it seems that you need to know how to explain poor performance. As for sales pitches - I think people like data and graphs, like the percentile returns and distributions for each choice they make. But that might just be me.
G-Man:
I spent 17 years in public accounting before I made the switch. I have not regretted it one bit. A couple of things:
Like it or not, the CPA is more recognized than CFA in the private client world, so it was not a waste of time. You will get a lot of mileage out of “Well, I am also a CPA and…”
We are mostly an institutional shop, but we still have a slug of private clients. I have been here for 12 years and I can count the number of times a client asked me about any performance metric (other than "how much are we up this year?) on one hand. They want to ask “what do you see out there” and “what is the market telling you?” What are clients afraid of? Politicians. What are they not afraid of? Relative performance of your small cap allocation versus the Russell 2.
An important part of communicating with any client is explaining the process and how you stay consistent with that process. If it looks like you are winging it, you will lose them.
Congrats on the new position. Don’t look back. This business is easier than public accounting IMO. Billing is easier and you get paid for assisting people. The amount I was paid in public accounting relative to what I was expected to know did not come close to reconciling.
youll be fine greenman. my uncle graduated with a marketing degree and became an advisor.
hes pulling in 400k a year. he says its 90% marketing and selling yourself and especially true if you’re dealing with retail.
he works hard, i used to intern for him in high school.
make sure you get some nice tailored suits, teeth whitened, and good haircut.
First, you need to understand what the business and service model is for the practice.
What are the practice metrics:
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Total AUM of the practice and number of households
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AUM organized according to range and count of household:
(i.e. < $50k $10,000,000 (250 households); $50k to $2 million $60,000,000 (100 households) ; > $2 million $125,000,000 (75 households)) I’m assuming the A class funds have embedded commissions? Whereas the BY Mellon are in fee only so you can get a sense of the total AUM (in $$ and %) in fee only vs. embedded.
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Assets by type of account (401k, Roth) expressed in $$ and %
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Client assets ($$) by Age range and count of clients by age range
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AUM breakdown by manufacturer (i.e BY Mellon and Morningstar, expressed in $$ and %)
This should give you a high level overview of the practice. Depending on the b/d, this information could be very easy to obtain or you may end up having to pull some data off your financial system and dump into excel to create yourself. The admin may know how to pull this information off - then you simply need to reformat and construct some pivot tables. If admin doesn’t know how to generate the reports, you can call your head office and talk to someone there.
You should also book some meetings with the wholesalers (BY Mellon and Morningstar etc.) and ask them to review your current holdings with them. They should have a lot of useful client facing materials that use can use when in client meetings. Over time, you will begin to develop your own playbook* that you can use in meetings. Playbook - this is a binder of research and other material you collect and build on over time to help you explain your investment strategy and philosophy. For example, I have a slide that provides an overview of our firm and corp. structure that I use to talk about how we have strong corp. backing under a well known co. listed on the TSX. Another slide that illustrates our discovery process in working with prospective clients. A sample of a Financial and Estate plans, IPS etc.
It would be helpful to know more about your responsibilities in discussing the investments when in client meetings. Are you going to be responsible for reviewing their investment portfolio and providing a portfolio and market commentary? Because, its really important for you to understand how you will be servicing clients, and what their expectations are. For example, I would provide a breakdown of the service model as follows:
Review Meetings
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periodic review letters
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face to face (General meetings)
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Periodic touches - emails / calls / skype
Here you need to find out what the clients expectations are (by talking to them) and then decide how much servicing will be provided based on a metric (AUM, revenue generated).
Communications
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How do they prefer to communicate (in person, face to face, telephone )
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For meetings (best to have face to face) make sure you each have a clear understanding on the purpose of the meeting
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Website: use this as much as possible to post monthly / quarterly commentary on investments / planning to streamline this service (as opposed to mass emailing )
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Online account access
Reporting
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IPS - will you be preparing for clients ? already in place?
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Account statements and financial reporting. You will need to review the quality of the reporting and determine if you will need to prepare additional reports. (i.e. Net capital summary - I use this all the time. One of the most important reports i use)
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Goals discussion and Financial and Estate Plans
I agree with everything Goes to Eleven mentioned. No client is going to ask you about the Sharpe ratio …all this other stuff. It the markets and portfolio is up, the client is happy. If the portfolio and markets are down, you need to be able to explain how the portfolio strategy is protecting them on the downside. Keep the portfolio and market commentary very high level; if you start getting into all the nitty gritty details of the investment strategy etc. you’ll only confuse them and get sidetracked in the meetings.
Finally: managing relationships = hand holding
If your with a full service firm (investment mgt and financial planning) then you will be coordinating the investment strategy with their financial and estate planning.
Anybody know of a good daily? I have WSJ, but don’t read it as often as I should. It also seems to be filled with a lot of not-investment-related stuff, too. Plus, I have zero interest in doing security analysis on individual securities, so I’m not interested in stories like “Energy Capital Partners to buy Calpine” (from todays’ journal).
I know there is stuff from SeekingAlpha, Advisor Perspectives, ZeroHedge, and the like. Any recommendations on a daily newsletter?
Just do whatever your favorite wholesalers tell you to do.
Financial times and the economist. Dunno about newsletters though.