How To Use Analytics to Win Clients

Written by Shari Hensrud, VP Risk & Analytics at Nitrogen

In the competitive landscape of investment and wealth management, effectively using portfolio analytics significantly enhances your ability to win clients. Analytics are a powerful tool, allowing you to showcase your expertise, build trust, and demonstrate the value of your services.  

Portfolio analytics offer many options, each component telling a part of the portfolio’s story. Ranging from basic measures like performance, to more complex ones like Value-at-Risk. However, analytics alone is not a one size fits all approach to win clients. Not everyone has an appetite for the complex.

The first and most important step to using analytics to win clients is understanding your clients, their needs, and their goals. Start asking questions like: 

• Does my client prefer detailed data or executive summaries? 
• Does my client want to examine the details of the portfolio holdings or prefer to focus solely on the total portfolio value? 
• Do they want to spend time discussing the minutiae or receive simple reassurance that everything is going according to plan? 

The key is communicating with your clients in a manner that resonates best with them.

Portfolio analytics should be seen as a series of chapters in a story. Each chapter builds upon the previous one, and the story can end at any point; it does not need to be told in its entirety for every client.  

All stories should begin with demonstrating your understanding of the client and their goals. This chapter of the story draws from analytics around risk tolerance, goals, and personal preferences. The Nitrogen Risk Number, worst case from the 95% range, and retirement maps are examples of a clear and concise set of analytics that do this exactly. These metrics show the client that you are tailoring the portfolio to their specific preferences with their specific goals in mind.  

For some clients, the story ends here. For others, you may need to go further. Other chapters of the portfolio story that can be added include;

Risk Management Analytics

Risk analytics such as standard deviation, Value-at-Risk (95% range), or stress tests and scenario analyses, allow you to showcase how you manage and mitigate risk. Utilizing these analytics proactively reassures clients about your preparedness to handle risks. 

Historical Performance:

Historical performance is often where advisors start their story, but performance should come later in the story.  Performance can be a double-edged sword and work against you when times are rough or as styles move in and out of favor.  When adding performance to the story the focus should be on consistency and progress toward goals.  Utilizing charts or graphs makes the performance data easily understood and allows for an easier grasp of complex information.

Related: learn more about Nitrogen’s Scenarios tool.

Benchmarking

Performance is often shown against relevant benchmarks.  Ensuring the benchmark is relevant and adding this component keeps clients informed about how their investments measure up, building confidence in your management.  Benchmarking can also create a need to add additional analytics to explain performance differences. 

Advanced Portfolio Analysis

Portfolio analysis can include more straight-forward analytics such as sector distributions, asset class distributions, country or region, yields, financial statistics, or complex analytics such as Sharpe Ratio, Alpha, Beta, Downside Risk, or R-squared.  For some clients, elements of these are important and including them as a chapter of your story enhances those clients’ engagement and satisfaction.

Diversification

Analytics around asset allocation or correlation demonstrate the benefits of the portfolio strategy and how you are working to reduce risk and enhance returns.  These analytics further help clients understand the robustness of the investments and the level of expertise you offer with regard to their investments. 

Market analysis and insights 

Market analytics can identify potential investment opportunities and threats or simply provide the backdrop to a performance attribution discussion. Either way, for those clients with interest in a deeper understanding of the “why” in performance this level of detail can impress clients and underscore your expertise.

Regardless of how many chapters your story contains, keep it informative and educational. By effectively leveraging portfolio analytics, you can provide clear evidence of your expertise, build trust with clients, and demonstrate the value of your services. Starting with a deep understanding of your clients, you can tailor your approach to meet their specific needs and preferences. The strategic use of analytics not only helps in acquiring new clients, but also in retaining existing ones. Focus on transparency, customization, and analytics to set yourself apart in the competitive investment landscape and win clients with confidence. We all have a story to tell but without the power of analytics it can quickly turn into overwhelming words on a page. Learn more about the Nitrogen Platform and how we create the common language between investors and advisors.