Portfolio Management

CHAPTER 16Managing Client Relations

Chapter Outline

1. 16.1 Introduction
2. 16.2 General Recommendations for Client Management
3. 16.3 Meeting Client Needs
4. 16.4 Manager Selection Process
5. 16.5 Securing New Clients
6. 16.6 Retaining Clients
7. 16.7 Case Study
   1. Summary
   2. Problems
   3. Endnotes

16.1 INTRODUCTION

Chapter 15 outlined a number of behavioral tendencies common to individual and institutional investors. These include loss aversion, extrapolation of trends, representativeness, overconfidence, and crowd behavior. This chapter provides recommendations for addressing the adverse consequences of these behaviors, as well as for effective product design and client retention. The goal is to give investment advisors tools to help manage the client relationship—which may be just as important as managing the underlying investment.

Section 16.2 begins with a list of recommendations to address investment decision-making errors introduced in Chapter 15. A discussion of the various roles for portfolio managers and the design of effective investment policies for their clients follow in Section 16.3. Sections offer advice on developing effective sales presentations tailored to specific audiences, as well as guidance for planning meaningful client reviews. A case study is provided in Section 16.7. In addition, this chapter provides guidance for completing the final reports for the individual, defined contribution, defined benefit, and fund cases that accompany the text.

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