Investment Symbiosis

Investment Management Directors, Matthew Giovinazzo and Kellen Foley, shed light on the transformative potential of investment due diligence. They emphasized the importance of aligning with the essence of investments, just as one must harness the ocean's power when surfing. The goal was to explore how adopting a symbiotic relationship with investments could lead to enhanced practices and valuable insights.

Fighting Investments: A Common Challenge
Investment professionals often encounter an ongoing challenge when managing their portfolios. Whether they are evaluating a client's investment performance or overseeing funds, there is an underlying sense of conflict. However, this presentation aimed to shift this perspective by advocating for a more collaborative and symbiotic relationship with investments.

The Allocation Crisis
The conventional approach to investment often involves relying on a core lineup of funds, similar to Blockbuster's dominance in the DVD rental market. However, it's essential to question the reasons behind these choices. Research showed that 62% of assets remained locked in these core lineups, leading to an average underperformance of 3.8%. It was time to explore how to make investments work for investors rather than against them.

Selecting Target Date Funds
When it comes to Target Date Funds (TDFs), fees and performance are the primary focus. While this approach may save time, it severely lacks differentiation. The presentation suggested considering suitability as a more personalized alternative, as demographics change more slowly than fees and performance.    

Exploring QDIA Shepherding
Introducing QDIA Shepherding, a compelling concept designed to navigate clients through the vast array of Qualified Default Investment Alternatives (QDIAs). This approach enables investment professionals to set themselves apart and address diverse investor requirements, all while potentially streamlining processes and enhancing client results.

TDF Suitability: A Time-Saver
When evaluating the suitability of TDFs, it is crucial to take into account the proportion of investors in the core lineup compared to those with mixed investments, as this can provide valuable insights. Selecting a personalized TDF approach not only has the potential to retain investors but also saves them valuable time in the long term.

Tailoring QDIAs: An All-Encompassing Strategy
Personalized QDIAs introduce a well-rounded approach, elevating advisors' ability to stand out and operate more efficiently.  Giovinazzo and Foley, stressed the importance of gauging the client's level of financial sophistication to pinpoint the ideal QDIA option, whether it's a managed account, a dual QDIA, or a risk-aligned Target Date Fund (TDF). This approach empowers advisors to better serve their clients in a professional and effective manner.

Driving Efficiency in the Core Lineup
The presentation outlined the benefits of consolidating and streamlining lineups to simplify the investment election process and the importance of efficiency overall in core lineups. By leveraging an efficient lineup design, advisors can save time and enhance the participant experience.

Harnessing the Power of Focus List Managers
Focus list managers emerge as key allies in the quest for investment excellence. Advisors can tap into an extensive focus list, effectively saving precious time on research and due diligence. By skillfully negotiating exclusive share classes with these managers, advisors can unlock substantial savings and create a distinct advantage in the market.

Instead of battling against investments, investment professionals are encouraged to embrace them as valuable allies. By adopting a symbiotic relationship with investments, advisors can differentiate their services, drive efficiency, and save time, ultimately benefiting both clients and advisors. When the "way it's always been done" is no longer good enough, challenging the status quo can lead to transformative shifts in investment practices.

To view the presentation slides, click here!

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