How to Create Meaningful Conversations When Presenting Portfolio Performance to Clients

Root Ready

We explore how advisors can effectively present portfolio performance to clients, especially during periods when their investments underperform relative to major market indices like the S&P 500. Through practical examples and a structured approach, we demonstrate how to transform potentially difficult conversations into relationship-strengthening opportunities.
• Avoiding common pitfalls like lengthy diversification lectures or ignoring client concerns about underperformance
• Framing performance discussions around two key questions: is the discrepancy due to fund issues or asset allocation issues?
• Comparing individual funds to appropriate benchmarks rather than broad market indices
• Using tangible examples like comparable Vanguard funds to help clients understand proper performance evaluation
• Explaining asset allocation strategy in terms of providing optionality and consistency rather than just growth
• Leveraging both underperformance and outperformance periods to build trust and prepare clients for market volatility
• Conducting "lifeboat drills" during good markets to set expectations for inevitable downturns
If you have a question you'd like answered on a future episode, please visit the link in our show notes to submit it.

Chapters

1. Client Portfolio Underperformance Challenges (00:00:00)

2. Addressing Underperformance Head-on (00:03:16)

3. Comparing Funds to Appropriate Benchmarks (00:08:07)

4. Explaining Asset Allocation Strategy (00:10:27)

5. Handling Outperformance Conversations (00:12:50)

6. Point The Underperformance Out (00:17:46)

7. Zooming Out (00:19:02)

8. Giving Your Client Confidence (00:23:01)

9. Final Thoughts (00:25:22)