As part of our preparation and planning for the new Business & Wealth Management Conference in Chicago this October, I recently asked my Inside Information audience a very basic question.  What portfolio management activities provide the MOST value for your time/money/energy/attention, and which activities provide the LEAST value for your time etc.? 

In other words, what do you do to get the most benefit for client portfolios, and what activities are largely a waste of time? 

I proposed several possibilities for the most and least categories, and asked advisors for their opinions on things they think are or are not valuable, and a sentence or two explaining why:

1. Asset allocation

2. Manager/index selection, including alternative investments (which can sometimes take a lot of research, but also might provide more diversification than traditional asset classes).

3. Client presentations and communications (which are becoming more labor-intensive by the hour as clients grow more anxious and demanding).

4. Meeting management skills (effectively presenting quarterly or annual statements, and educating clients about investment issues.

5. Rebalancing (which is not a trivial activity unless you have a good software program that automates the process--otherwise you're mechanically rebalancing annually rather than opportunistically, where most of the value may be added).

6. Tactical allocation, underweighting overvalued asset classes, overweighting undervalued ones, assuming that you can get plausible information on relative valuations.  (I would be VERY interested if any advisor had plausible metrics in different categories, including U.S. equities--where the current and historical PE10 seem to reign supreme.  What about gold?  What about commodities in general?  Real estate?  International equities?)

7. Market timing/technical analysis.  (I don't think it does us any good to flinch from the term reflexively; if it goes into the "least" category, tell me why--or why not.)

8. Detailed tax management of client portfolios, which is now possible using these overlay platforms like Genworth, Envestnet and SEI.  (I've seen papers which suggest that this adds more than 1% a year to the portfolio's bottom line, but the labor cost might exceed that figure.  If you know of other research, I'd be interested to see it.)

9. Applying economic overlay criteria for the portfolio--using econometric tools such as MacroRisk Analytics (which I've written about) and Hidden Levers (which I haven't--yet).  Both use regression analysis to identify which stocks and funds tend to benefit under certain economic conditions, and of course they identify current economic conditions as well.

10. Using derivative investments to put a floor under client losses.

Those are the candidates.  I'm not asking anybody to write a dissertation on any of these topics; just give me your vote and a sentence or two explaining why you put this or that activity in the "most" and "least" category.  You don't have to rank them; you can select one or two to assign to different categories--although it WOULD be interesting if some of you DID rank them. 

Also: are there any other candidate portfolio management activities that I've missed?  (Knowing me, this is highly likely.)

What do you think?

For more on planning, client service, practice management and marketing, or to join the Inside Information community, contact Bob Veres at or go to

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