Demonstrating the real value you add, as a professional advice firm, to clients is naturally something you are consistently keen to achieve. As their portfolios grow under your management, so do the fees they pay you.
There are many ways in which you and your firm can and will successfully already do that. Professional, personalised communication and reporting for clients, for example; a sleek portal for clients to digitally access latest performance on their pensions and investments; and a robust and compliant investment proposition to ensure a client’s portfolio is invested at a risk level in line with their risk profile.
Recommending suitable investment solutions for your clients is one thing – but how do you know those funds are among the most efficient and effective for that risk level? How do you complete that research?
An incomplete or inaccurate impression
There is an immediate issue. So much available information about fund performance relies upon the unit price on the day it is viewed. This can give an incomplete or inaccurate impression. While past performance – as the time-honoured small print goes – is not a guide to future returns, an analysis of a fund’s performance, relative to a relative benchmark and other relevant solutions, can be one indicator of how well a fund has been managed to date. To pinpoint other key indicators, many more measures and data points are required.
But is your time best spent completing such fund research? And how do you know your time is being best spent? More pertinently perhaps, what tools can and should you use to help? Financial technology can pick up the load and complete this due diligence for you.
One such service, Dynamic Planner independently analyses the retail investment market, without bias or restriction each quarter. It flags its findings to users in the form of a simple badge attached to a fund. Okay. But how can you trust that? What exactly – in this instance – is Dynamic Planner looking at, when analysing a fund’s performance? Dynamic Planner analyses chiefly three things: the assets within a fund; consistency of performance; and a fund’s efficiency.
Three keys behind fund analysis
First, a fund’s assets. Dynamic Planner has a fantastic track record in this field and has been successful building and refining its asset allocation model since 2005 and the model’s launch. It maintains a database of more than 20,000 instruments and uses a 48-asset class framework to precisely understand a fund’s underlying assets.
Second, consistency of performance. Dynamic Planner’s team of analysts and investment professionals consider how close a fund fits the underlying assumptions of Dynamic Planner’s Asset Risk Model, in relation to an appropriately defined fund peer group.
Finally, efficiency. How well has a fund delivered performance in its own right – again in relation to an appropriately defined peer group?
Those questions are answered over a credible time period to eradicate potential short-term bias. Dynamic Planner’s Research logos are one of two: ‘Premium’ for funds with a five-year track record of success; and ‘Select’ for funds with at least a three-year track record of success.
Advice firms can rest assured that a Premium or Select badge is entirely objective and consistent – giving them a simple, easy and clear way of filtering out the noise, so to speak, of the latest, daily fund data and performance.
Further, your clients can rest easy that they are being recommended funds with historic performance proven independently by a credible third party and that performance analysis was entirely unbiased and in their best interests – no one else’s. Adding value. All good.
“You can quickly filter down your research [in Dynamic Planner] to Premium and Select rated funds, which we like,” said Laura Hutchings, a paraplanner at The Pension House in Northampton. “That’s what you want to recommend to clients: funds which have outperformed their peers… we nearly always recommend funds for clients, which are Premium and Select rated.”
Find out more about Dynamic Planner Research and Recommendations.
