Advisors Have Needs, Too

Advisors need and want support when it comes to building investment and income portfolios for their clients, but what sort of support exactly?

In their own words, full-service advisors, independent advisors and registered investment advisors gave industry consultant Howard Schneider a clue. Schneider published those results in his report titled "Trends in How Advisors Construct Portfolios – Insights and Opportunities 2017."

Summed up, advisors frequently mentioned they wanted more unbiased research and data, insights into portfolio and asset allocation, better tools for rebalancing and modeling, and information about market trends and solutions.

"One thing that jumped out is that advisors are still looking to key sources - broker/dealers, asset managers and to a lesser extent insurance companies," Schneider said.

"They still have a lot of need for support in portfolio construction - education, tools to help them build the portfolio, how to optimize the portfolio so there's still opportunities for product providers to help in this area."

We pulled 15 comments out of more than 50 submitted in each of the advisor categories submitted to Schneider. (We eliminated one-word responses from our selection.)

The comments from each group appear verbatim below:

Full Service Advisors

• Systematic, easy-to-use and broad-based model portfolios.
• The ability to make more tactical moves rapidly.
• Updates from external partners on proprietary research.
• I rely on Morningstar, Value Line, and S&P and do not see that changing.
• New ideas, creativity … not the standard model portfolio.
• Automation for post-DOL world where we will be required to have additional scrutiny on continued balance.
• How to use more ETFs in a portfolio without the capitalization risks.
• After-tax performance reporting.
• A process to benchmark the portfolio to relevant indices.
• Finding the time to review portfolios every quarter.
• In building, should know when to sell.
• Simpler solutions to compare funds on an ongoing basis without a lot of data entry.
• Face-to-face meetings.
• Performance data one, three and five years information for equity funds, plus yield data and duration or bond funds.
• Staying within the clients “guardrails.”

Independent Advisors

• Back testing of active stock strategies relying on multiple measure of value, momentum, quality and trend.
• Looking to be able to better discuss portfolio performance in a way that is accessible to less sophisticated investors.
• I outsource money management so I’m interested in leveraging model which have had recent success in these markets.
• More education into Smart Beta.
• Final regulation/company policies as to the integration and use of the DOL rules!
• More education with technology.
• I cannot find a decent proposal generator that has a FINRA approval letter so my B/D will allow use.
• Tax harvesting.
• Small account advisory based solution to replace brokerage accounts.
• Basic, big picture understanding of different managers/solutions. Usually when there are only five options, researcher is simple. However, if there are 80 new options, I need to know the basics on each option so I know how I can drive my options.
• I would like alternatives, but it is crock to market them as “liquid.” It puts portfolio managers under unreasonable strews from forced liquidation.
• If using multiple third party managers, the ability to combined those multiple managers into a portfolio proposals that is simple and effective.
• More external wholesalers to discuss strategies with other than phone conversations with someone that doesn’t get what is happening.
• Getting rid of unnecessary and anti-client compliance rules that only help the crooks and not the honest agents.
• Performance reporting and comparisons over longer term, as well as info on how portfolios are constructed. This should be in plain English so clients can understand.

Registered Investment Advisors

• We have the models, they are complex, but selling them to people is harder. I think we need a way to simplify their benefits in a proposal. Still trying figure this out on our end.
• Better ideas.
• Time – I need more time.
• Institutional level portfolio attribution (think FactSet) at a reasonable price. I also want to run what-if analyses with a sophisticated mean variance optimizer.
• Long-term research of asset class behavior.
• Easy to explain, low risk with above average return. Not sure it exists.
• Faster solutions as our modeling software is slow.
• Non-biased information. Much of what I read is biased. It is hard to get any type of “this is where this strategy will not work” type of information from vendors.
• How to measure risk in non-liquid alternatives. Modeling risk in real assets.
• Another form of comparison than just Morningstar.
• None. Have a great business with a simple, low costs, passive investment strategy. I use all DFA funds and am extremely happy – and my clients are happy too. I’ve had a 3-6 month waiting list on all year for new clients. I do not believe actively managed funds beat passive over time.
• As we grow I would like to offload the chief investment officer to another advisor.
• Back office paperwork.
• Just knowing what is available and ability to create a present a non-complicated proposal. Most of the output from vendors’ websites are over client’s heads – they are geared for the RIA not the client.
• The most significant need I have is constructing a portfolio for smaller accounts that consists of more than one mutual fund, though I am beginning to come to the point of believe that is the easiest and best way to go for the client.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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