Automating Comparative Portfolio Analyses for Financial Advisors: Save Time and Optimize Client Portfolios

As a financial advisor, conducting a comparative analysis of your clients' portfolios against your models is crucial. It helps you identify the right strategy to meet their financial goals and risk tolerance, and effectively communicate this to prospects and clients. But let's be honest—it's time-consuming.

But doing this comparative portfolio analysis manually involves gathering data, running calculations, and building reports - usually in excel or some other point solution. All of this takes away from the time you could spend advising clients or growing your practice.

In this post, we’ll explore how automating comparative portfolio analyses with tools like Investipal can save you time, increase accuracy, and help you deliver better results for your clients.

What is Comparative Portfolio Analysis?

Comparative portfolio analysis involves comparing a client’s current portfolio against a model portfolio to ensure it aligns with their investment goals. The analysis helps financial advisors uncover discrepancies in asset allocation and demonstrate a better way forward to help optimize client portfolios for risk-adjusted returns.

Traditionally, this is a manual process, requiring data extraction, performance calculations, and report generation. It’s labor-intensive, but essential for guiding clients toward more optimized portfolios.

Why is Manual Portfolio Comparison So Time-Consuming?

Manual portfolio comparison presents several challenges that can eat up your time:

• Time-Intensive Data Collection: Gathering client information from various account statements and brokerage reports is tedious and repetitive.
• Complex Calculations: Calculating risk metrics such as volatility, beta, Sharpe ratio, downside capture, and Value-at-Risk requires manual effort, which increases the risk of human error.
• Reporting: Once calculations are completed, you need to transform the results into client-friendly reports, which is yet another time-consuming task.

How Can Automation Simplify Portfolio Comparison for Advisors?

Automation can eliminate much of the manual effort involved in portfolio comparison. Here’s how it works:

• Instant Data Extraction: Automation tools like Investipal use Optical Character Recognition (OCR) to instantly extract data from client account statements and brokerage reports. This eliminates hours of manual data entry.

• Real-Time Risk Analysis: Automated tools instantly calculate key risk and return metrics like volatility, Sharpe ratio, and tracking error, giving you immediate insights.

• Backtesting Multiple Models: Investipal’s backtesting engine allows you to compare client portfolios against multiple model portfolios in real time, helping you identify optimal strategies.

• Automated Reports and Proposals: Once the comparison is complete, Investipal generates customizable, white-labeled proposals that are client-friendly and professional. These reports include detailed comparisons and actionable recommendations for portfolio adjustments.

By automating these processes, you not only save hours but also improve the quality of the insights you provide to your clients.

How Does Investipal’s Portfolio Analysis Tool Work?

Here’s a breakdown of how Investipal’s portfolio comparison tool simplifies your workflow:

1. Automated Data Extraction‍
   • Investipal’s OCR pulls relevant data from client account statements, saving you hours of manual labor. The tool extracts everything you need, from asset allocation to cost basis.
2. Comprehensive Portfolio Comparison‍
   • Investipal allows you to compare client portfolios across 25+ risk and return metrics, including annualized return, volatility, max drawdown, and tracking error. This gives you a detailed view of how a client’s portfolio stacks up against different model portfolios.‍
3. Strategy Selection‍
   • Investipal allows you to quickly change portfolios and run a new analysis. This lets you cycle through models to identify the optimal strategy, or make tweaks if needed to create a custom strategy.‍
4. Proposal Generation
   • ‍Investipal automatically generates professional, white-labeled proposals that are easy for your clients to understand. The reports detail portfolio performance, risk exposure, and actionable steps, helping you build trust and enhance transparency.

Benefits of Automating Portfolio Comparison for Advisors

Here’s how automating portfolio comparison can benefit you and your advisory business:

1. ‍Save Time
   • ‍Automating tasks like data collection, calculations, and reporting allows you to complete portfolio comparisons in minutes instead of hours. You can handle more clients without sacrificing quality.‍
2. Increase Accuracy‍
   • Automated tools reduce the risk of human error in calculations, ensuring that all performance metrics and risk assessments are accurate. This boosts the reliability of your recommendations.‍
3. Scale Your Practice‍
   • With automation, you can handle more clients and portfolios without increasing your workload. This enables you to scale your advisory business more efficiently.‍
4. Improve Client Relationships‍
   • Automation allows you to focus on high-value tasks, such as building relationships with clients. Automated reporting also enhances transparency, giving clients a clearer view of their portfolio’s performance and future opportunities.

Ready to Automate Your Portfolio Comparison?

Manually comparing portfolios takes too much time and can lead to costly errors. Automating this process with tools like Investipal not only saves time but also increases accuracy, allowing you to provide better, more consistent advice to your clients.

Ready to streamline your portfolio comparison process? Schedule a demo today and discover how Investipal can help you automate your portfolio analysis and grow your practice.