• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>Building a Portfolio for the Independent Client

Related Content

  1. Videos
  2. Articles
  1. 3 Methods to Get the Most Out of Social Security

    Andrew Salata of the Social Security Administration describes how the do-over, voluntary suspension, and pick-and-choose strategies can help retirees maximize their lifetime benefits.

  2. How to Make the Most of Your 401(k)

    In this special presentation, get the answers to key questions about the quality of your plan, whether your savings are on track with your goals, how to allocate assets, and what to do with assets when you leave your job.

  3. Roth Advantage May Be Bigger Than You Thought

    Even if your tax bracket doesn't change, using a Roth can mean 20% or more aftertax income in retirement versus a Traditional IRA , says T. Rowe Price senior financial planner Christine Fahlund.

  4. Ready Your Portfolio for Retirement

    Morningstar's Christine Benz demonstrates how to make a bucket portfolio best work for you, touching on allocation, RMDs, other income sources, and more.

Building a Portfolio for the Independent Client

Truly independent clients may need to take less risk in their portfolios than those clients without bias.

Michael M. Pompian, 10/23/2014

This month's article is the 10th in a series called "Deep Dives into Behavioral Investor Types." This series is intended to help advisors create better relationships with their clients by deeply understanding the type of person they are dealing with from a financial perspective and being able to adjust their advisory approach to each type of client.

As we learned in the last series, there are four behavioral investor types, or BITs: the Preserver, the Follower, the Independent, and the Accumulator. As noted in previous articles, the learning process for each BIT will be a series of three articles:

1. Part I will be a diagnosis of each BIT and discussion of its general characteristics.

2. Part II will be a deep dive into the biases of each BIT.

3. Part III will be how to create a portfolio for each BIT.

This article is Part III of the Independent BIT.

Creating Behaviorally Modified Portfolios
For today's financial advisor, private banker, or wealth management practitioner, creating viable and unique investment solutions in response to the array of financial situations and personalities that clients present is the heart and soul of the job.

Sometimes the job is relatively easy: The client being advised appears rational in his or her approach--that is, he or she seems to understand the importance of asset allocation and has reasonable return expectations. For these clients, the typical method for arriving at an asset allocation is to administer a risk-tolerance questionnaire and use financial planning software to create a mean-variance-optimized asset allocation program.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

blog comments powered by Disqus
Upcoming Events
Conferences

©2014 Morningstar Advisor. All right reserved.