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Meet Growth Goals with Strategic Portfolio Management

An efficient strategic portfolio management (SPM) approach allows advisory firms to accelerate growth. However, optimizing resource allocation has become more challenging as technologies, processes, and expectations have evolved. Strategic portfolio management, sometimes called project portfolio management, is the practice of aligning resources with organizational goals. 

A growing firm comes with its own set of challenges. Effective resource allocation becomes essential to sustain growth as an advisor firm scales and adds more advisors, marketing staff, or other professionals. 

Like balancing an investment portfolio, you may choose to invest in a new program, drop an underperforming one, or realign one that is working. An SPM approach is not the same as project management — rather than overseeing specific tasks, SPM focuses on ensuring the firm is working on the right projects. 

It’s important to be aware of the SPM landscape. Over the years, how organizations approach SPM and resource management has run parallel digital transformation initiatives. 

Pressures to rapidly adapt to new software and frameworks to reach strategic objectives and fluctuating regulatory burdens and labor shortages have made SPM initiatives more critical than ever. Gartner’s 2023 report, Top Trends for Strategic Portfolio Leaders for 2023, reported that the absence of strategic portfolio management will cause 70% of digital investments to fail. 

In this article, we’ll cover the main trends to consider when setting your strategic priorities and managing your project portfolio. 


Strategic Portfolio Management for Advisors in 5 Key Trends

The general SPM process is reasonably straightforward. Portfolio managers must:

  1. Identify strategic objectives and all organizational resources
  2. Set and track metrics for success
  3. Align projects with the organization’s strategic priorities
  4. Manage project prioritization and execution  

In addition, there are more nuanced trends that allow advisors to dive deeper into successful SPM initiatives. Here are our top 5 trends advisory firms should be aware of: 

1. SPM Tool and Process Standardization 

According to Gartner’s 2022-2024 Strategic Portfolio Management Frameworks, Processes, and Tools Survey, SPM leaders report being highly interested in process standardization. Standardization enables organizations to measure portfolio performance better while providing a consistent process to evaluate potential assets. 

With nearly 40% of advisors planning to retire by 2032, standardized processes and tools may relieve the burden of an ever-increasing workload for those who remain. A set of guidelines, combined with automated and advanced analytical tools, accelerates time-consuming tasks and potential troubleshooting. As a result, advisors can bolster their portfolio management strategy without taking on more work. 

As management tools begin to standardize, so too should the firm’s internal practices. Part of resource management is ensuring that its processes are efficient and consistent across the firm. For example, a documented brand voice that cuts across all communication channels – from client emails to marketing materials, can make it faster for everyone at the firm to communicate efficiently. Using templates and scripts can further enhance the process. 

Organizing and documenting firm processes is its own project and will require resources upfront. 

2. Integrated Tech Stacks

Digital transformation is a core element of SPM’s success. However, the rapid evolution of portfolio management software has created a diverse array of legacy and new-generation systems. Developers have designed integrations and APIs to address the decentralized tech stack.

Moving forward, it will be essential for portfolio managers to maintain a tech stack that “speaks” to the other software. This centralization of data allows for improved performance tracking, transparent client communications, and increased efficiency.

Designing a customized tech stack that reduces redundancy, centralizes data, and streamlines tasks often requires thinking beyond project management software. Client relationship management systems (CRM), advisory software, and marketing solutions must also be considered in resource allocation.

Understanding how these programs integrate before investing is also crucial to making an informed decision and optimizing spending. For example, some programs require a third party to work together. Other solutions may have partnerships that enable direct integrations. 

3. AI and Enhanced Analytics

Artificial intelligence (AI) has proven to be a game-changer across industries. For financial advisors, this technology provides investment managers with the ability to rapidly generate content, evaluate data, and scale marketing efforts with ease. The same can be said for project management solutions. AI and in-depth analytics drive many resource management platforms. Ideally, you should be able to easily automate repetitive tasks, gain insight into user behavior (either internal staff or clients), and receive recommendations for optimization. The capability to track projects at every level enables your firm to better position your firm to reach strategic outcomes. 

4. Collaboration and Communication Software

Portfolio management firms that wish to scale require a high degree of collaboration between stakeholders, partners, and colleagues. Traditionally, there has been significant friction in communication and internal data sharing, slowing down the management process. But in an age of high volatility, it’s crucial to be adaptable. Collaboration and communication tools break down internal silos and prompt fluid communication. Furthermore, advisors and clients receive better support. 

Allocating resources to these solutions serves the strategic goal of retention. The 2022 U.S. Financial Advisor Satisfaction Study from J.D. Power noted that technology, training, support, and company culture all contribute to higher advisor attrition rates. On the client side, 72% of clients leave their advisors due to poor communication. Therefore, firms can keep advisors and clients longer by prioritizing initiatives and processes around communication and collaboration. 

5. Emphasis on Sustainability 

Socially responsible and sustainable investments continue to be popular among investors. A recent report from the Structured Finance Association found that client demand is a top driver of environmental, social, and governance (ESG) investing. However, managing regulatory risk remains a critical factor for 78% of investors regarding ESG investing. Corporate sustainability regulations are in flux worldwide as governing bodies attempt to map the best way to encourage environmentally friendly business. For investors, the lack of clarity results in suspicions of greenwashing and uncertainty about what can be considered an ESG asset. 

In addition, different states within the US may have additional disclosure requirements, thus fostering additional inconsistency. For example, while federal initiatives will make it mandatory to publicly report all scope 1 and 2 emissions annually in 2026, California will institute an additional requirement of releasing climate-related financial risk reports

While more documentation provides investors and portfolio managers with increased insight into a stock’s or bond’s viability, the lack of standardization can make clear comparisons between financial products challenging. As a result, it may be prudent to allot resources toward vetting ESG investments and keeping up with regulatory changes. Furthermore, there are likely initiatives advisory firms can take to make their own practices more sustainable and appealing to clients. This can include using carbon-neutral or negative website hosting, eliminating paper, or hiring advisors from diverse backgrounds.

Executing Your Strategic Vision

A financial advisory firm can transfer much of the same logic used in wealth management and investment planning to internal resource management through SPM. The capability of SPM to be adaptable and tailored to each firm allows for advisors to better optimize and streamline processes. 

Standardization, integrated tech stacks, AI, communication solutions, and sustainability are all strategic initiatives that can drive firm growth. 

However, successful project prioritization hinges on knowing what kinds of programs or processes will help a firm scale faster. That’s why we surveyed financial advisors—to discover what hypergrowth firms are doing right. 

Find out what growth strategies the top financial advisory firms are using in our 2023 Firm Growth Survey

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