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Boost the added value of advice with goal monitoring

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Manage the complexity of investment decision making

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OPAL Platform

With OPAL's Goals-Based Planning Solution, we aim to translate client’s financial goals into an optimal investment strategy reflecting their personal ambitions, cash flows and risk appetite. Additionally, Ortec’s solution links investment portfolios to financial goals and tracks the progress over time on a daily basis, based on actual portfolio values...

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by Ortec Finance
| 23/07/2020 12:00:00

Would you advise a client to take on more risk than is actually necessary? The question may seem rhetorical, but the answer is not so straightforward in practice

Most portfolio decisions are mainly driven by the outcome of a generic risk questionnaire. The connection between these decisions, the client’s financial situation, the goal and the remaining horizon is often absent.

To solve this, we propose the use of frequently updated feasibility analysis, or goal monitoring. We find that through goal monitoring, low-cost process adjustments and easy-to-implement decision rules, advisors can increase the likelihood of clients achieving their goals, whilst minimizing the risk. This approach suggests the added value of a ‘dynamic lifecycle’ strategy instead of a traditionally static approach.

Our back test and forward-looking analysis find that this methodology leads to better results than current market practice, making use of a static strategy. With goal monitoring, advisors have the tools that proactively help to add value to their clients. This will not only increase client engagement and retention, but also run their business efficiently.

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