How to Create Meaningful Conversations When Presenting Portfolio Performance to Clients

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

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