Categories: Portfolio ManagementFamily Wealth Planning

But The Client Never Told Me!

In August 2007, my two HighView partners, Greg Rodger and Wayne Gillespie co-authored an article about how the misunderstanding of “Risk” is at the heart of most Advisor/Client conflicts. This article also appeared in The Monitor, the magazine of the Investment Management Consultants Association in August 2007. Given the recent volatility of global capital markets, we believe that the principles outlined in this article are equally relevant today as when this article was written almost three years ago!

In this article, Rodger & Gillespie review that one critical role of an asset consultant is to carefully manage clients’ portfolio expectations, both positive and negative. To support this approach, HighView has incorporated our portfolio risk-management practices into a three-step portfolio process of proposal, management, and review. Specifically, while the proposal phase is focused upon understanding clients’ investment objectives, risk tolerances, and constraints, and then incorporating these client attributes into a formal recommendation, the management phase is concerned with the implementation and ongoing management of the client portfolio. Finally, the review phase is a process through which clients’ portfolio results are reviewed with them on a periodic basis and their investment objectives, risk tolerances, and constraints are reassessed. At each phase of this portfolio process, we incorporate a set of prudent, yet practical, portfolio risk-management activities that ensures that each client’s portfolio truly is tailored to the client’s unique needs and preferences. This article reviews the portfolio risk-management considerations for the first phase, proposal.

For a related article about how Investment Advisors can avoid legal & regulatory risks through proper risk management practices (written by James Heelan, of Bennett Jones LLP)

HighView Financial