Client Portfolios & Spinning Plates

While talking with a wealth management firm this week about their investment proposition to their clients, they made the analogy that managing many client specific investment portfolios is like spinning many different plates. When I asked them to elaborate on this, they made the following points:

  • In their business, whilst there is some commonality, most of the client portfolios are different, as is the case when spinning many different plates.
  • Different types of portfolios, like different types of plates, need different types of attention – in the same way, that the physics of different plates implies the different amount of energy or attention is required to keep them spinning, different portfolios need attention at different intervals – perhaps daily (more actively traded ones) while some can be attended to less frequently (more long term outlooks).
  • When the portfolios are left untouched for too long, like spinning plates they start to wobble, i.e. start to drift from their mandates, or clients get nervous. Too much wobbling gets people nervous.
  • When there is insufficient attention to investment portfolios, like plates, there is an increased risk of a catastrophic failure (i.e. a broken plate or a lost client) either due to movement away from mandates (which could cause regulatory concerns), or clients just deciding that the service (or performance) is insufficient for what they are paying for.

We talked about the challenges in these scenarios in that:

  • Like spinning different plates, managing different portfolios required different workflows, periodicity, and levels of care which creates workflow and management challenges in the form of different amounts of attention to clients and different levels of depth
  • Without visibility of all the portfolios in a visual way, like spinning plates, it means that effort (and nervousness) has to be applied to all portfolios, even if some are just fine.

What we concluded is that the benefits of visualisation in a portfolio / spinning plate environment are informative, efficient, and bring an increased level of confidence and calm. It also then narrows the appropriate workflows to be applied to identified ‘wobbles’ without having to invest all the superfluous time attending to portfolios / spinning plates that are just fine. We worked out that being able to identify the wobbles quickly every day has exponential benefits in terms of risk and productivity benefits.

If you are overseeing and being paid for managing client portfolios, perhaps consider:

a.   Are you able to differentiate your service and attention to cater to each individual client in a scalable manner ?            (each plate is different!)
b.   Can you see all your portfolios (like spinning plates) when you want to and see which ones may be wobbling ? 
c.   How much of your firm’s nervous and work energy (costs) is tied up either worrying about portfolios                                (like spinning plates that you can’t see) because you don’t have the visual monitoring systems ?
d.   What is the overall impact of this on your business both financially, culturally, and from a client confidence                  perspective ?
e.   Just imagine if you had at your fingertips a visualisation of the state of how wobbly each and all of your client              portfolios is at any time so you can channel energies in an optimal fashion.    

In an increasingly competitive world where increasingly clients are the judge of value with what is important to them, do you have the systems or are you blindfolded? Like spinning plates, the consequences are fairly dire if there are too many wobbles.