{"id":21523,"date":"2024-03-08T19:38:01","date_gmt":"2024-03-08T19:38:01","guid":{"rendered":"https:\/\/www.thinkadvisor.com\/2024\/03\/08\/11-hot-takes-on-portfolio-management\/"},"modified":"2024-03-08T19:38:01","modified_gmt":"2024-03-08T19:38:01","slug":"11-hot-takes-on-portfolio-management","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/03\/08\/11-hot-takes-on-portfolio-management\/","title":{"rendered":"11 Hot Takes on Portfolio Management"},"content":{"rendered":"<div class=\"media_block\"><a href=\"https:\/\/feeds.feedblitz.com\/-\/873328181\/0\/thinkadvisor\/\"><img decoding=\"async\" src=\"https:\/\/images.thinkadvisor.com\/contrib\/content\/uploads\/sites\/415\/2023\/11\/03_Investment_Management_Portfolio_Diversification_Adobe_640x640.jpg\" class=\"media_thumbnail\"><\/a><\/div>\n<p><button id=\"start-slideshow-top\" data-toggle=\"modal\" data-target=\"#slideshowModal\" class=\"start-slideshow carousel-control slideshow-btn portfolio \">Start Slideshow <img decoding=\"async\" src=\"https:\/\/www.thinkadvisor.com\/assets\/master-template\/images\/market-images\/tasr\/rightarrow.svg\" class=\"prevbtn-img\"><\/button> <\/p>\n<p id=\"first-para\">I&nbsp;recently presented at the T3 conference in Las Vegas. The title of&nbsp;my presentation, \u201cHot takes! All the ways you\u2019re doing portfolio management wrong\u201d was meant to be humorous, but the content was entirely serious.<\/p>\n<p>It\u2019s not a shocking observation that most advisory firms aren\u2019t especially good at rebalancing portfolios. What\u2019s shocking is just <em>how<\/em> bad most firms are. According to an analysis from my firm, Smartleaf, when firms implement a more systematic approach to tax management, they see reductions of over 60% in their clients\u2019 capital gains tax bills. More surprising is that they also see a 60% reduction in the return dispersion of accounts with similar risk objectives.<\/p>\n<p>This shouldn\u2019t be possible. It makes sense that portfolios would have a trade off between taxes and dispersion. The fact that advisors can <em>simultaneously <\/em>improve tax outcomes and dispersion has a sobering implication: most return dispersion is not caused by customization or tax management. It\u2019s just noise. An indicator of just how bad the industry is at the basics of portfolio management.<\/p>\n<p>How do you know if your portfolio management practices are up to standard? Here\u2019s one test. You should be able to document that for most clients, you save or defer more in taxes than you charge in advisory fees. Most advisors fall far short of this standard&nbsp;\u2014 they can\u2019t even measure the value of their tax management, much less show that it is greater than their fees.<\/p>\n<p>What does it take to do better? The key is automation. Almost all elements of personalization and tax management can be automated. And if you automate something, you can do more of it. You can provide every client, of every size, with tax optimization and high levels of personalization. At the same time, you can lower costs and strengthen compliance. Most importantly, you can have more time with clients and prospects.<\/p>\n<hr>\n<p><em>Gerard&nbsp;Michael is president of&nbsp;<a href=\"https:\/\/www.smartleaf.com\/our-thinking\/smartleaf-blog\/year-round-vs-year-end-loss-harvesting\" target=\"_blank\" rel=\"noopener\">Smartleaf<\/a>,&nbsp;a provider of automated, customized, tax-sensitive rebalancing systems.<\/em><\/p>\n<p> <button data-toggle=\"modal\" data-target=\"#slideshowModal\" class=\"start-slideshow carousel-control slideshow-btn portfolio\">Start Slideshow <img decoding=\"async\" src=\"https:\/\/www.thinkadvisor.com\/assets\/master-template\/images\/market-images\/tasr\/rightarrow.svg\" class=\"prevbtn-img\"><\/button><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Start Slideshow I&nbsp;recently presented at the T3 conference in Las Vegas. The title of&nbsp;my presentation, \u201cHot takes! All the ways you\u2019re doing portfolio management wrong\u201d was meant to be humorous, but the content was&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21523"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=21523"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21523\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=21523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=21523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=21523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}