7 wealth management client insights for a personalized investment portfolio

Social Lead for IBM Analytics - Financial Services Sector, IBM

As James Gahagan says in his blog post “3 key market drivers for the wealth management industry,” “Today’s clients want their advisors to anticipate what their financial needs are, and for those advisors to use what they know to tailor financial advice to their specific needs. In addition, clients want convenience and consistencies in how they interact with their advisors and for the experience to be the same, whether it is online, on the phone or face-to-face. Clients also want advisors to be there when they need them, and to leverage all previous interactions to deliver financial advice tailored specifically for them. To anticipate and respond to these requirements, financial advisors need enhanced insight into their clients’ relationship with their firms.

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Do you know your investor? Consider the varying needs of wealth management clients.

1. I need to save for my son’s education.

Education is expensive! Should you let your kids rack up huge student loans to get the education they need, or should you save what you can to lessen the load on your children? Saving ahead is always the best solution, but how—and where—should you invest? Ideally, a trusted financial advisor contacted you shortly after your child was born to give you the options you need to plan for the expenses of education.

2. Are dividends important to me?

Dividends are taxed differently than other investments are. There is no right answer to the question of whether dividends are right for you—every person’s situation is unique. A good financial advisor can advise you by looking at your specific situation, taking into account your goals and risk tolerance. Financial analysts can use analytics to identify market trends and tax implications, making sound recommendations by getting to know you.

3. Which mutual funds should I consider?

There is no shortage of options for you to consider when it comes to mutual funds. You can choose a particular industry, or you choose a fund to suit your moral principles or your risk tolerance—and that’s only the beginning. Your choice of mutual funds depends as much on your personality as it does on their potential for making you money. A financial advisor armed with analytics can find you a mutual fund to suit your specific goals.

4. How much will I need to retire?

Where do you plan to live when you retire? What lifestyle do you expect during your retirement? How much money have you saved? Will you receive a pension? These are just a few of the many questions a financial advisor will ask you. It’s all part of choosing from an array of options to find something perfect for you.

5. When should I start saving money?

A well-known saying—“it’s not what you earn, it’s what you spend”—suggests that you’ll become wealthier if you save your money rather than spending it all. Sure, it would be nice to buy the latest model of your favorite car, but if you invest your money wisely, you might be making enough money someday to buy such a car every year. A trusted financial advisor will take your age, risk tolerance, earnings and expenditures into account, among other factors, to help you decide when you should invest and to help you identify your options for investment. Of course, the younger you are when you begin saving, the more effectively compound interest works in your favor.

6. I can’t seem to save enough for a down payment on a house.

Housing prices in some areas are simply rocketing. In Toronto, I see bidding wars over houses that should be for first-time buyers. The prices people pay make me wonder how they ever come up with down payments! It can be done, but it takes planning, discipline and careful consideration. Your financial advisor can help you find a savings solutions that can best help you achieve your dream of buying a home.

7. Should I pay off debt before investing?

I’ve heard it said that there is good debt and bad debt. Good debt is usually identified as a home mortgage or student loans. That’s not to say, however, that an unaffordable mortgage or crippling levels of student debt are good ideas! Because bad debt is easier to see—to give another common example, it might be the ever-increasing credit card debt whose instigating purchase you’ve already forgotten. Interest rates can clue you into whether a debt is good or bad: They correlate with the risk the financial institution is taking. Credit card interest rates are incredibly high, but mortgage rates can be extremely low, especially if you have built up equity. Your financial advisor can look at your situation to help you decide how to reduce your debt and begin investing.


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