It does not do to leave a live dragon out of your calculations, if you live near one - J.R.R. Tolkien
One of the great benefits of being a wealth management adviser is that the need for your services is constantly being renewed. Markets are in endless flux and investors value knowing that their portfolio is being managed to both anticipate and respond to markets.
One of the more troubling aspects of being a wealth management adviser, is that there is often a live dragon nearby, but you cannot be sure how far away it is or how cranky! I am of course referring to market volatility – not your more difficult clients!
Renowned investor Jeremy Grantham, co-founder of Boston asset manager GMO has been doing his calculations, and believes the US stock market is in “super bubble” territory. He is feeling the hot breath of the dragon on the back of his neck and says, “we face the largest potential markdown of perceived wealth in US history.”
The point of writing this blog is not to advance or dispute the views of Jeremy Grantham. Rather, it is advocate for preparing your business for when the dragon comes, whether it is mildly or wildly destructive, and whether it stays for a week or a year. The one certainty is that it will come!
The most powerful strategy available to wealth management advisers to prepare for volatile markets is to implement a managed account program.
As you would expect of a seasoned professional investor, Grantham has strategies for how he will respond in this challenging environment. Further, as a unit trust manager he also has the means to move quite quickly to implement the transactions he believes are necessary. Put simply, he has well developed market views, and the means to implement them in a timely way.
As fiduciaries, it is incumbent on advisers to also have well developed market views, sourced internally or externally, AND the means to implement them in a timely and equitable way. That is what a well developed managed account program does.
Generally, it means working with chosen partners to take advantage of their specialist expertise.
Philo Capital has a strong reputation for helping advice firms to establish and run managed account programs that go beyond the norm. If you would like to start 2022 by creating / updating a managed account strategy for your business, or if you would like to simply learn more about the managed accounts market and how it is evolving, please don’t hesitate getting in touch with us.