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Portfolio Management Support Advisors Should Expect From Broker-Dealers

In this environment, advisors should expect superior technology, a nimble approach to portfolio construction support and personalized service from broker-dealers.

As the fee-based model continues to gain prominence and portfolio construction becomes more of a focus, busy advisors will need more assistance from their broker-dealers to adapt to the shifting business landscape, even as financial markets are experiencing greater bouts of volatility. This includes having access to superior technology, a nimble approach to portfolio construction support and a more personalized service that boosts an advisor’s ability to do their jobs.

In this era of consolidation, it’s worth considering whether all firms are well positioned to deliver this type of experience. 


Scalable portfolio management technology is a must for advisors, who in many cases serve hundreds of clients. The best tech platforms facilitate better service, tracking whether portfolios remain consistent with a client’s financial plan or perhaps if they have drifted outside their risk tolerance.

At the same time, they are also compliance friendly, alerting advisors when a client has made too many trades or, at the opposite end of the spectrum, a fee-based client hasn’t been active enough. Meanwhile, tech-driven portfolio management should also make it easier for broker-dealers to share proprietary data with their advisors, which would potentially provide them a leg up as they work to best position clients during inevitable market fluctuations.

Broker-dealers should also be able to plug customized information into these tools about trusted investment managers available on their platforms. That would simplify sometimes very complicated decisions, like, for instance, which third-party solutions might be better for clients nearing retirement, as opposed to one better geared for investors who have a different time horizon.

Portfolio Strategies 

Broker-dealers should strive to support a range of investment management models, whether it’s the traditional rep-as-PM approach, the use of model portfolios or a combination of the two. They also should be able to work with advisors to develop Unified Managed Accounts, and even create and manage custom products based on the feedback from the field force. 

Undoubtedly, this will require firms to assemble dedicated teams that proactively work with advisors. To do this, it will require time and patience, since getting to know the ins and outs of an advisor’s business is not something that can happen overnight.

Ideally, however, this dynamic would reach a point in which the firm’s consultants, using the knowledge they have both of an advisor’s business and the clients they serve, could easily answer a variety of strategic and performance-related questions about available third-party managers or products.

That would include, for instance, having experts who can spot when a manager exhibits style drift or whose performance begins to falter, and then have a process in place to notify advisors that these things are happening and make the appropriate recommendations. 

Too Big to Serve 

Massive broker-dealers with thousands of advisors could find it impossible to offer that kind of personal touch, especially when many of them set lofty, albeit unofficial AUM requirements to determine who gets the best service. For those on the outside looking in, they may be left to do much of, if not all, the heavy lifting themselves, including everything from selecting the proper tech tools, conducting market research and performing due diligence.

In some cases, even when larger firms offer more hands-on support, it’s often lacking in expertise, suffering, in part, because there are too many strategies or products from which to choose. So, what many advisors do is make decisions based on Morningstar ratings or solely on past performance. In other instances, too many options could invite paralysis by analysis to set in, which, among other things, could allow portfolios to go unchanged that are in desperate need of adjustment.

Right-Size Firms 

Firms that are large enough to provide strong digital automation and investment manager oversight for advisors but are not too bloated to also offer expert, in-house support teams are the key to serving advisors in today’s environment. 

Libet Anderson is Managing Director of Advisory & Planning at ProEquities, a financial services firm based in Birmingham, Ala.

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