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Portfolio Management is top focus for advisors, says Fidelity survey

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Portfolio management is the No1 priority for advisors, after ranking No2 last quarter, according to the latest quarterly Fidelity Advisor Investment Pulse survey.

In a sign that advisors are becoming less concerned over things they can’t control, concerns about market volatility and the equity market level tied for the No2 ranking, and attention to the government and economy dropped to No4 after topping the list for the past four quarters. The latest results of the quarterly survey were released today by Fidelity Institutional Asset Management®, a distribution and client service organisation dedicated to meeting the investment needs of financial advisors, institutional investors and consultants.
 
“As advisors continue their focus on protecting clients from a possible market correction and downside risk, they should consider long-term and diversified strategies for portfolio construction,” says Bob Litle, head of Intermediary Sales, Fidelity Institutional Asset Management. “Given the challenges and complexity of today’s environment, advisors who have a consistent approach in making investment decisions with their clients have the potential to create efficiencies in their practices and help investors reach their goals.”
 
With the number of investment options ballooning over the past few decades, choosing investment vehicles for a portfolio has become more challenging. This presents an opportunity for advisors who have in place an effective due diligence process to differentiate themselves.
 
“We’ve observed that successful advisors focus on their framework for evaluating strategies and matching them to clients’ objectives as much as they focus on the products,” adds Litle.
 
With a range of options to choose from, a well-constructed approach to building portfolios may help bolster advisors’ confidence in selecting and combining investments. In addition to using commonly referenced investment selection criteria – such as parent, people, process, performance, and price – advisors can evolve their portfolio construction approach by using a framework that considers how various investment combinations work together. Investment manager selection within a comprehensive portfolio could focus on how the portfolio’s building blocks interact with one another. To do so, think about building a sports team. Instead of picking the best players like an all-star game, choose players that work well together and create a winning team. In the context of portfolio construction, consider managers that have the potential to add value within a diversified portfolio.
 
Advisors should also consider a mix of active and passive investments to help balance the risk tolerance and potential outperformance according to client preferences, and not constrain themselves to style-pure managers, or those with constant weightings to a certain style, market capitalisation, or factor, such as momentum, quality, or low volatility. Advisors may complement a portfolio with other choices that pursue opportunities across styles and exposures.
 
“A portfolio construction approach that focuses on a client’s overall portfolio can help advisors examine the underlying exposures of all investments – and pursue opportunities to create that ‘championship’ team,” says Litle.

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