The secret to managing client composure

By Dave Chessell

Go to the profile of PortfolioMetrix
May 31, 2019

On a scale of one to 10, how worried are you about the world? Chances are your level of anxiety will be different to mine – that’s human nature. This has been very well observed in a recent article penned by our global CEO, Brandon Zietsman. Entitled Fear and (Dys)functionality, it highlights the difficulty advisers have when assessing how their clients will react to volatile markets and their planned financial investment strategies.

The ability to really understand each client when establishing an investment plan that will meet their lifelong needs is something the founders of PortfolioMetrix – Brandon being one of the them – understood right from the start. It led to the creation of the Financial Personality Assessment (FPA), which is an essential element of our WealthExplorer™ suite of tools.

The FPA uses behavioural finance that reveals how a client is likely to behave during times of volatility. Often what it shows comes as a revelation to the clients themselves.

Behavioural finance and emotion 

With sound behavioural finance at its core the WealthExplorer™ FPA asks all sorts of questions that are designed to reveal exactly how your clients might behave in certain scenarios. Alongside these insights sits information that advisers can use to coach clients through these events and to help them to understand what they should expect from the investment process over the long term.

This functionality reveals the unique and often unexplored emotional side of investing. Talking through the recognised range of emotions clients can expect to experience during a typical investment cycle – from optimism, euphoria, anxiety, panic, despondency, hope and back to optimism – for example, can prepare clients for the inevitable peaks and troughs in the performance of their portfolios.

Avoiding costly investment panic attacks 

This awareness of likely behaviour gives advisers the opportunity to discuss with clients in advance the dangers and possible value destruction involved in deviating from agreed investment strategies, helping them to understand how costly an investment panic attack can prove over the long term. 

With uncertainty in what will happen politically and economically causing anxiety for many people, advisers who can maintain composure among their most jittery clients will not only help them ride out the storms, they will also increase the trust and respect those clients have in their expertise.

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PortfolioMetrix are a multi-award winning, innovative investment manager that provides independent financial advisers with an alternative way to access discretionary investment management for their clients. Our proposition comes at a competitive price and doesn’t compromise the adviser/client relationship. The London winner of the Citywire Wealth Manager Regional Stars award for two consecutive years, voted the WM Small Business of the year, in association with ARC 2018 and, in 2019, have received the accolade of PA Discretionary Manager of the Year. Our proposition offers the convenience of online model portfolios yet delivers customised portfolios, tailored to individual client requirements. Investment performance has demonstrated consistent and reliable risk and return separation of portfolios that doesn’t undermine the financial planning process. This is achieved through our academically-robust, risk-based investment approach. WealthExplorer™ is integral to the PortfolioMetrix customised service. A proprietary owned and designed software system, WealthExplorer™, is purpose built to equip advisers with a broad range of tools designed to deliver unique client insights that add value to the adviser/client relationship and ultimately delivers better client outcomes, when utilised by financial advisers.

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