The Future of Client Portfolios is Hyper-Personalization


Recorded at the FSI OneVoice 2022  Presented by: 

Advisorpedia interviewed Matthew Radgowski, Morningstar's head of Advisor Services, at the FSI OneVoice Conference in February, 2022.

"Hyper personalization is certainly top of mind for advisors and the firms within which they operate today. And I think if we look back for the last decade, we've actually told advisors to focus on engaging with clients don't focus on managing portfolios. And now we're again asking them to hyper personalize each and every one of their client portfolios. And so we need to be very careful as to how we do that making sure we maintain the scale. And so I think it's very important, first and foremost, to start with a financial plan.

Goals are certainly key.

And that's where we should start. I think from there, we can then move into how preferences around things like values and impact ESG and sustainability, how those enter into the equation as well. So it's very important, again, to make sure we have the right balance between that hyper personalization, but maintaining the scale.  I don't mean that just from a profits perspective and the operating margin, I mean, from the time the advisor needs, making sure that scale allows them to engage very individually reinforce those objectives of the client's plan and making sure that again, that they're delivering on the key goals, empowering their success, through that personalization at scale as well.

The challenge of hyper personalization really is around again, making sure you understand the key motivations of the client. But you're able to do that at scale. I think the industry has done a great job of building portfolio management, trading tools that allow you to check box, the preferences of that client, and then impart those on the portfolio. I think the key is, though, to take that up stream a bit to the client engagement.

We've had risk tolerance questionnaires in the market for decades now simple eight questions that got you to your profile. That's just not good enough anymore. And so I think, making sure that we empower advisors with frameworks for discussion, first and foremost, but then client profiling tools that extend well beyond risk tolerance. So drawing out the true motivations for things like climate change things like the ESG factors independently combined, but again, in a framework that allows them to do it systematically. truly understand those values and objectives, start that conversation with the client. And then again, use those tools that have come to market to actually build and trade on those portfolios as well."

Resources: Morningstar

Related: Understanding What Matters Most to Investors