There are a number of questions that occur regularly as people look at our reports so we thought it would be helpful, in stages, to explain where our reports can make a difference for the adviser over the life of their client relationships.

It is important to use all of the tools available to achieve results for the client. However, it may surprise you that we think there are two key areas that are more likely to determine success for you and your clients before you get to investment performance.

First and foremost, it is important that any investment solution suits the nature and needs of the client. Accordingly, the client risk profiling process is a fundamental exercise in leading and educating the client to make an informed decision on their long term objectives.

Equally, finding a tax effective investment solution for the client is more likely to contribute to success in creating an environment for growth. The ability to compound any form of investment growth by reducing taxation over the life of the investment can have very powerful results.

Without the efforts of the adviser in establishing this framework for client investments, any fluctuation in value or future growth is more likely to upset the client and/or fail to achieve long term objectives.

Conversely, all of this effort is lost if you cannot make the most of investment opportunities in your asset allocation process and this is where Sinergi Heatmap and TACT are focused. A range of studies have shown that a larger part of investment performance is driven, not by the ability to pick an investment, but the timing of the purchase and sale of the investment.

In simple terms keeping your money working as much as possible and avoiding “stagnation or excessive down turns” can be the difference between acceptable and superior performance.

It remains absolutely true that attempting to aggressively “time” the market is too risky. However, positioning part of the client portfolio to benefit from positive trends, while avoiding the worst of negative trends can improve performance significantly.

Knowing that our TACT weight indicators tend to stay at the same level for an average of seven to nine weeks, Sinergi reports begin to provide some valuable insight to positioning your client portfolio with respect to your chosen fund managers.

By evolving from selecting managers on past performance, such as historic awards, to actively reviewing managers on current trends, you can justify your role in the post RDR environment. We believe your clients will expect and deserve a more active service when they are more aware of paying adviser fees.

Good timing is also able to reduce the effect of transaction costs and needless “churning” of a portfolio, as an ill inform decision is compounded by the cost of corrective action.

Sinergi Heatmap and TACT reports implement proprietary back-tested and evidenced based methodologies to provide trend information that gives the reader an idea of what is happening each week in markets and sectors. By relating these trends to the composition of your client funds you can:

  • Direct an appropriate part of your client portfolio to capture positive trends;
  • Reduce exposure to negatively trending markets or sectors; or
  • Equally importantly know when to do nothing.

This can be most effective when establishing a portfolio. Within the risk profile and tax efficient structure appropriate to your client you can look for the markets and sectors that are currently performing well in your existing fund choices.

Giving yourself the best opportunity to achieve a winning start for your client can make a significant difference to your performance as an adviser, bringing all three factors together, and cementing your client relationship.      

Keith Reid
Keith Reid
Keith’s training as an accountant and auditor has emphasized the importance of evidence in all good decision making process. The ability to monitor management processes effectively is a key to making the most of business opportunities. Both Keith and Gerry believe that this priority for capital preservation is the common principle that sets the framework for any sound investment strategy or business model.