Author: Leighton Langan

A Day in the Life of a Nitrogen Coach

By Chris Quandt, Senior Coach

You’ll probably never hear a Nitrogen Coach say “Drop and give me 20!” Instead, we’re big fans of “Let me show you how our most successful advisors use Nitrogen” and “Let’s make sure you’re getting the maximum value from your Nitrogen subscription.”

So, what exactly IS a Nitrogen Advisor Success Coach? In a word – storyteller. We help advisors not only understand how Nitrogen functions, but why over thousands of firms across the country have made it a central part of their firm including:

  • Why, as an advisor, you’ll benefit from using Nitrogen in your next client meeting. 
  • Why our most successful advisors use Retirement Maps in every single client meeting.
  • Why it’s so important your clients understand the relationship between risk and reward, and how the Risk Number® creates a framework for clients to understand and react to risk appropriately.
  • Why the Lead Generation Questionnaire is the best tool out there to convert your web traffic into actionable leads.

And the list goes on. Our mission is to help you be your client’s hero. The one that continually guides them to financial success and financial freedom. As storytellers, we’re thrilled to share the countless success stories from our advisors who have joined the Fearless Investing Movement. One of my favorite success stories is about an advisor who used the Risk Number to generate a referral in the unlikeliest of places – an unexpected audit! Thanks to Nitrogen’s strict documentation and controlled processes, including Investment Policy Statements and GPA®, the firm was able to showcase their due diligence in understanding clients’ unique profiles and building investment strategies to accommodate them. They passed the audit with flying colors, but what happened afterward is the best part. The SEC examiner who assessed the firm gave them a referral – to their own family member! That’s the power of having Nitrogen at the center of your tech stack.

Now, where can you find a Nitrogen Success Coach sharing great stories like the one above? When we’re not crossing the country visiting a city near you for a Nitrogen Bootcamp, attending an industry conference, leading a webinar, or creating content for Nitrogen Academy, you’ll most often find us chatting with amazing advisors from all over the country. Who knows – maybe our next favorite story will come from you!

Another favorite saying of ours? Nitrogen training is completely free and included in your Nitrogen subscription! Start taking advantage of this wonderful benefit today.

Whether we chat with you on the phone, at a conference, or host you online for an upcoming webinar, we want to say thank you for the incredible work you do to empower your clients to invest fearlessly.

What’s an OCIO?

Chatter about Outside Chief Investment Officer (OCIO) services is growing, and there’s a lot of ambiguity around what an OCIO service entails.

Nitrogen has the luxury of working with a wide swath of the financial service industry including but not limited to advisors, broker dealer home offices, and asset managers. We’ve learned that the term OCIO is used very informally in some instances and very formally in others.

Home offices and compliance analysts largely prefer that asset allocation and trading decisions be outsourced by the investment advisors under their supervision. Home offices believe that the average advisor isn’t elite at managing investment decisions which they ultimately deem a liability to the advisor and home office. In addition, many broker dealers earn more revenue when an internal or external investment management outsourcing solution is used (e.g., TAMP).

Asset managers are happy to provide outsourced solutions because they can better ensure that their investments earn an allocation. Asset manager OCIO services tend to provide value at the advisor firm level (practice management and proposal generation), versus at the end client level.

Advisors choose traditional outsourcing via TAMP services to leverage the intellectual property of strategists and offload the ongoing trading responsibilities.

Still, the more expansive OCIO services purport to offer far more than just outsourced investment management. In fact, technology is driving a revolutionary trend whereby strategists typically beholden to TAMP platforms for distribution are choosing to offer services direct to investment advisors, via Nitrogen. Perhaps most importantly, these OCIO services are able to deliver results for advisors without taxing performance with fees.

For example, Nitrogen recently partnered with Aptus Capital Advisors. Their offering is more akin to white glove concierge services serving investment advisors directly or through the home offices. Think hands on practice management consulting and individualized portfolio management without the TAMP fees. Operating as a consultant or sub-advisor, Aptus’ OCIO model seeks to take over or support the day to day demands of advisors. They provide on-demand access to a team of CFAs, tailored client communicators, and mitigate risks through hands-on management of investments with an eye for risk adjusted and tax efficient returns. All this, without the excessive fees of traditional outsourcing via a traditional TAMP service.

The Market Volatility Toolkit

From the Fintech Frontlines

In March 2020, the outlook on everything was grim. The world was in a state of unprecedented chaos and the market was facing a similar daunting challenge. However, the Nitros you’ll see below rallied to help advisors during this fearful time. The advisors who showed up to make sure clients stayed fearless in this time, have those same clients thanking them years later. Even when the world slowed down, our fintech experts’ interactions with incredible advisors didn’t slow down a bit. 

We’ve recorded best practices that have arisen out of calls during this time, and we thought we’d share the love. 

Painting the Picture with Scenarios

Mitch Dunn showcases how advisors are using Scenarios in Nitrogen to illustrate the potential effects of their decision-making. You’ve always been able to see how a client’s portfolio would have performed during specific market events, but now you can string these events together to create key portfolio narratives.

Checking in with Clients

Alex Wiens demonstrates how to send Check-ins to clients to proactively assess their sentiment on markets and their financial future. Check-ins is an automated behavioral coaching tool that allows you, the advisor, to take the pulse of your clients on a regular basis.

Expanding Your Reach with a Button

Investors are looking for a risk-first approach to their money now more than ever. Chris Quandt shows you how advisors are setting up a Lead Generation Questionnaire on their website to drive growth. With a simple link or a few lines of code, you can embed the Risk Questionnaire into your website, email signature, or social media posts to create a new way for prospective clients to engage with your firm.

Focusing on the Long Term with Retirement Maps

Daniel Michaelsen spoke with an advisor who used Retirement Maps to reorient a nervous client’s perspective. Don’t wonder if a client’s risk preference will allow them to achieve their goals—calculate their probability and build a map to success. Illustrate the bigger picture and even uncover outside assets.

Meeting with Clients Remotely and Securely

Clients desperately need advice and aren’t likely to mosey into an office building to get it these days. Alex Wiens shows you how to set up remote Meetings in Nitrogen! It doesn’t matter if the market is up, down, or sideways: Clients always need guidance and an easy way to get in touch with you.

Nitrogen Meetings Connects You with Clients Anywhere, Anytime

It doesn’t matter if the market is up, down, or sideways: Clients always need guidance and an easy way to get in touch with you. But that doesn’t always mean that they need to make it into your office to get your expert advice.

Sure, you could meet over the phone, but sometimes you really need to show your client a visual of their portfolio to help simplify a concept you want to emphasize. Just using words won’t quite have the same impact.

So if you have a client right now who’s a little concerned about COVID-19, and would prefer not to head into an office building to get your advice, then you need a solution that still allows you to deliver it with the same impact as if you were sitting across from them.

Here’s how your business should adapt when clients want to stay home.

The Allure of Meeting Remotely

Today, people are much more open to the idea of remote meetings. The workplace itself has shifted; from 2005 to 2017, remote workers grew by a whopping 159%.

Outside of remote work, though, it’s easier than ever to connect with family and friends and simulate in-person meetings with video chat.

The use of video chat crosses generational divides, too. According to an AARP survey, 38% of American grandparents communicate with their grandchildren using video chat.

So whether you serve a remote working millennial or a retired baby boomer, the chances are good that they’ll be open to meeting with you remotely.

But video chat only solves half the problem. What if you need to show them some information or demonstrate something on your computer screen? Pointing your iPhone at your computer during Facetime isn’t much of a delightful experience.

You could ask them to download a virtual meeting software like Zoom or GoToMeeting, but then you have to deal with the possibility of additional headaches. Your client has to download the software, launch it, and keep it updated over time.

If you’ve got a client who isn’t particularly tech-savvy, it can be a frustrating process and it can put as much fear into them as the coronavirus puts into the average air traveler. Acting as technical support for Microsoft or Apple isn’t what you signed up for when you became an advisor.

When you want to meet remotely with clients, asking them to add a piece of software to their life and keep it updated just for you doesn’t provide a great experience.

So what’s the solution?

It turns out that it’s pretty simple, actually. You can give virtual advice the easy way with Nitrogen Meetings.

A Fearless Approach to Virtual Meetings

Nitrogen Meetings lets you launch virtual meetings with your clients with two (yep, count ‘em) clicks.

And it gets even better for your clients. Here’s what they need to launch your Meeting on their side:

A computer, tablet, or smartphone

A web browser

That’s it.

You launch a Meeting from within Nitrogen and don’t even need to send them an invitation link that might get lost in spam. Clients navigate to meetmyadvisor.com (a pretty easy URL to remember, right?) and enter a code you give them. Instantly, you’re connected.

Just like using the Risk Number takes the fear out of investing, Nitrogen Meetings takes the fear out of botching the remote advice session.

Safety First

One of the problems with traditional remote meeting software is that your client can see whatever is on your screen.

If you accidentally click to a different client, or receive a sensitive text message or email notification on your screen, they’ll see whatever is happening.

From a security standpoint, those little issues can spell big trouble.

Nitrogen Meetings gives you the safety and security you need, with the simplicity you want. You can only share the specific client information with the client you’re talking to—if you click to another client by accident, Meetings intelligently recognizes it and censors any information from your client’s eyes.

What You Can Do with Nitrogen Meetings

If it’s in Nitrogen, you can share it with a client in Meetings.

Pull up a client’s Retirement Map to show clients how the decisions they make now will impact their retirement goals in the future.

Launch Portfolios to look at a stress test together, and show your client how their portfolio will perform in a market like 2008 (with the uncertainty surrounding the markets right now, it could be a great time for this exercise).

Complete a new Risk Questionnaire together with a prospective client to get them invested right without waiting for them to fill out their answers after you’ve already met.

That’s are only three examples of some of the popular ways advisors use Meetings with clients. If you’ve got a favorite report or analysis that you want to review with a client, you can use Meetings to easily share it with a client.

Take the Advice Profession Global

No matter where you are in the world, or where your client is, Meetings lets you connect.

Advisory firms are no longer limited by geography, and Meetings gives you another tool to expand the people you serve—even if they’re on vacation in the Scottish Isles and your practice is run from Bozeman, Montana.

Or, when the market does something you don’t expect and a client wants to meet with you right away, Meetings makes it simple to give them confidence, keep them invested, and strengthen your relationship.

When times get tough, that’s when a fearless advisor’s value really shines.

We hear from advisors so often about how Nitrogen is helping them manage expectations and calm nerves. Here are just two examples:

As an advisor, you deal with so much more than the markets and you are so much more important to the people you serve than someone who helps them choose investments.

Meetings helps you serve your clients better by giving you another tool to demonstrate your expertise and value, and build relationships that stand the test of time.

Expectations Are The Root Of All…

By Mike McDaniel,
Chief Investment Officer

We pride ourselves in our respect for the markets. We believe that price is truth and that you need to approach investment analysis with humility, or you risk being humbled by the complexity of the markets.

 

Our Risk Number® and corresponding six-month 95% Historical Range is a historical calculation using a variety of statistical inputs, based on the price history (expense ratios, dividends, etc.) at the holding level. This last statement bears repeating; we do not use the antique process of mapping holdings to a set of assumptions at an asset allocation level. Price, at the holding level, is truth. We derive our statistics from each holding’s actual price history because it’s more robust than an asset allocation mapping methodology.

 

The six-month 95% Historical Range is profound because humans make decisions in the short term. Great advisors couple the realities of investor psychology in the short term with the risk capacity discussion, powered by Retirement Maps, to marry both short term and long term probabilities decisions.

 

Even though our six-month 95% Historical Range is a historical calculation that does not explicitly say “here’s what is predicted to happen in the next six months,” we assume that humans may implicitly apply historical probabilities into the future. While we can all recite the phrase “Past Performance Is No Guarantee of Future Results,” we test our methodologies to inform best practices for those who implicitly use the past as an input for what to expect in the future.

 

To that end, we recently completed a detailed analysis of the top 250 holdings in Nitrogen to determine what percent of holdings would have broken out of the six-month 95% Historical Range if applied to the next 6-months. We shared the results of a similar accuracy test, at the portfolio level, in November of 2016. In both reviews, we were forced to look at only the worst markets, peak to trough in a 6-month time period, to even find a material number of holdings or portfolios that broke out of.

 

In this analysis, we calculated what percentage of the top 250 used securities in our system broke below the 95% Historical Range throughout each month. In the vast majority of cases, none of the 250 most widely used securities on our platform broke below the calculated 95% Historical Range, as shown by the “0” below.

 

The highest number of securities that broke below the calculated 95% Historical Range was 4 of 250 (1.6%); the 6-month periods between November 2017 and May 2018. That means that only 4 of the 250 most used securities on our platform fell below the calculated 95% Historical Range established throughout November 2017.

A table that shows the % of the top 250 securities that broke below the 95% probability ranges between 2017-2019.

Continue reading “Expectations Are The Root Of All…” →

New Nitrogen GPA Framework Includes Analysis at the Security Level

Once again, Nitrogen has taken a largely academic body of work and enhanced it to deliver practical insights. For years, advisors have leaned on the Sharpe Ratio to help analyze investments, despite its practical-use shortcomings.

At last year’s Summit we released the Riskalyze GPA®, an efficiency metric for portfolios and models. Advisors have used the GPA to contrast the efficiency of two portfolios, or models, answering questions like “both of these models have similar Risk Numbers, which one is better?”

Advisors were quick to demand the Nitrogen GPA at the holdings-level, and in preparation for some exciting announcements at this year’s Fearless Investing Summit, our Risk and Methodology team got busy working.

Today, we are thrilled to announce enhanced Nitrogen GPA analytics, including holdings-level GPAs. Now advisors can answer questions like “how can I easily determine the best investment in a given sector or category?”

GPA is a quantitative expression of the efficiency of an investment, strategy, or portfolio with respect to risk-adjusted returns. This clearly demonstrates, in a single number, the relationship between historical performance, and downside risk. The primary drivers of the GPA include returns (geometric average returns vs Sharpe’s discrete arithmetic returns) and downside risk, and GPA also takes things like dividends and expense ratios into consideration. Based on months of feedback, additional analysis and our desire to deploy our GPA at the security-level in addition to the portfolio level we adjusted the median GPA a bit. This creates a more diverse distribution of GPAs across our scale from 1.0 – 4.3 and allows additional granularity for advisors and portfolio managers alike. Our algorithm also properly accounts for risk-free rates used in risk-adjusted returns, another shortfall of other metrics like Sharpe Ratio.

The GPA ranking system elegantly highlights how a given investment, model or portfolio stacks up against others of a similar risk exposure.

LEARN MORE ABOUT GPA

Schedule a Demo: