CIO Support and Investment Consulting Services
On top of managing and growing an advisory business, understanding and meeting client and industry fiduciary requirements pose a significant challenge for many. Research conducted by Envestnet* found that advisors who demonstrate their concern for and dedication to serving the needs and goals of their clients have a unique opportunity: leveraging client trust in an effort to deliver more comprehensive advice and support that will enable deeper, more lasting relationships. By providing investment intelligence in key areas such as asset allocation strategy implementation, manager research and due diligence, and overlay management on specific investment solutions, PMC’s highly objective team of portfolio consultants can help advisors remain dedicated to their clients’ best interests, empower them to enhance their standard of care with clients, and reduce the time and effort involved in complying with regulatory demands.
CIO Support and Investment Consulting Services
The PMC Consulting Team can guide advisors through the various decisions that need to be made to build an optimal portfolio, such as choosing from the vast selection of investment managers thoroughly vetted by the PMC Research Team. PMC consultants can also help financial professionals design and monitor wealth management programs and ensure they consistently meet fiduciary responsibilities. Drawing on more than 20 years consulting on institutional and individual investor portfolios, the PMC Consulting Team is ready to assist advisors with a full arsenal of creative ideas and solutions to meet even the most complex and unique client requirements and financial circumstances.
Proposal and Manager Mapping
Constructing client proposals involves balancing the practical needs and goals of the investor with an optimal and suitable mix of investment solutions, chosen from the available universe of managers. The PMC Consulting Team can assist advisors in this process, helping them create refined, customized investment solutions uniquely tailored to a particular client’s asset allocation strategy. In addition, PMC can help advisors further fine-tune the chosen strategy to include additional asset classes (e.g., emerging markets, real estate or high-yield), and the mix of investments comprising the portfolio can be blended to deliver the desired risk/return profile.
In most of its proprietary portfolios, PMC acts as a “manager of managers”: identifying specialist money managers, mutual funds, or exchange-traded funds (ETFs) and combining them to form unique, value-added solutions designed for a broad range of investors. These proprietary solutions—which include mutual fund wrap portfolios, multi-manager accounts, and separate accounts blending manager models and ETF programs—are constructed using a multi-faceted approach. First and foremost, PMC will establish the strategic asset allocation against which the portfolio’s performance is assessed. These baseline allocations are derived from PMC’s capital markets assumptions and asset allocation process. Then, PMC portfolio management and research teams collaborate on the selection of separate accounts, mutual funds, and/or ETFs for the portfolio, taking into consideration overall portfolio objectives and operational factors such as investment minimums. Each portfolio follows one of three performance models:
Asset class representative. PMC’s portfolio managers select a specific manager to represent each asset class in a portfolio. For example, if a portfolio model requires a 25% allocation to large cap value, only a manager(s) categorized as large cap value is selected for that slice of the overall allocation. Each asset class in the portfolio is then filled by a manager or managers this way.
Sub-advised. Specialist sub-advisors are hired to manage certain PMC portfolios. Under this approach, sub-advisors that most closely align with portfolio objectives set by the PMC Investment Committee are screened and evaluated. After extensive due diligence, one or more are then selected to manage the portfolio. Sub-advisors we have selected to manage PMC portfolios include Neuberger Berman Fixed Income LLC and Schroder Investment Management North America Inc.
Returns-based style analysis (RBSA). Using advanced optimization techniques, this approach involves analyzing returns of each of the underlying funds in a portfolio against the strategic asset allocation, determining the effective asset class exposures of each fund, and blends a weighted combination of the underlying funds to match the target asset allocation model. RBSA provides the opportunity to employ active mutual fund managers who do not fit neatly into a single style box category and pursue potentially profitable investment ideas outside that style box, while still allowing the portfolio manager to effectively control the overall asset class exposures and therefore the risk of the portfolio.
* Envestnet Asset Management, 2010. The Fiduciary OpportunityTM: Succeeding in a Changing Advisory Landscape.