People rarely look at how their investments are performing in the good times. But while the COVID-19 lockdown has seen society tolerate a remarkable level of disruption to our lives, that tolerance does not extend to our investments.
One of the key selling points of a discretionary manager is that an expert will steer the portfolio in the good times and the bad, to optimise your potential for return against the risk you are prepared to take.
It is unsurprising at times like these that customers are likely to be more critical but good communication can really help.
The right email, broadcast, letter or telephone call at the right time to inform the client of what is going on, the impacts on their portfolio and your plans for dealing with these, can make a huge difference to the potential customer response.
Whilst poor performance is always a challenge, COVID-19 has shown us customers will be more likely to understand it when the explanation stands up, and the action plan to resolve it makes sense.
Always consider what you know of the customer, and what medium is likely to have the most positive impact – it makes a difference.
Times of stress in the market are typically times when advisers and discretionary managers are valued most, as they guide the customer through the storms, and give clarity when all seems confusing. The right message really can make all the difference.
It is not just customer expectations that will need managing. The adviser who introduced the customer should also be borne in mind.
Providing insight into what is being done to support their customer and how this may impact wider planning is prudent business, as customers tend to wander if an adviser is no longer happy to use a service provider - and advisers will not want to leave their business vulnerable to a wall of silence from a DMS “partner”.
And as one manager mentioned recently, it is not just the customer or adviser this message applies to. The good discretionary manager will have strong lines of communication with the underlying managers of the funds their portfolios invest in.
They will have a detailed understanding of the steps that are being taken, so that this can be reflected in how the discretionary manager deploys the fund for their portfolios and customers.
The poor manager will struggle to get the insight or access to data, possibly because of scale or poor relationship management. This is likely to impact the performance of their portfolios. It will be worth watching to see how the landscape changes post pandemic.
If you haven’t already, it would be prudent to check that the lines of communication in your business are well and truly open and, if not, what you can do to fix this.
After all, one thing COVID-19 is promoting is it’s good to keep in touch.
Rory Gravatt is a consultant at Altus