Working with an ETF strategist is a new and unknown process for many financial advisors. Consider this 5-step process when choosing and working with an ETF Strategist:

Step 1: Client Profiling:

What are your preferences for:

  • ETFs or Mutual Funds
  • Expenses
  • Risk tolerance
  • Investment objectives

Step 2: Portfolio Construction:

Consider using new asset allocation techniques so your investing can be more flexible and dynamic. Examples include:

  • Combine ETF strategic strategists with tactical ETF strategists
  • Combine global or equity strategists with ETF fixed income strategists

Step 3: What to consider when choosing an ETF Strategist:

  • Is the organization stable and will it likely continue to be that way while managing your clients’ money?
  • Do they possess sound, fundamental investment beliefs that are being shaped into a consistently applied process?
  • Are the data and decision making processes and people responsible for them reliable and intact?
  • Does the historical record of the investment performance demonstrate consistency of style and persistence of skill that produces a value add?

Step 4: Ongoing ETF Strategist, Monitoring, and Evaluation:

  • Monitor progress to goals
  • Review ETF strategists’ trade rationales
  • Understand ETF strategist investment decisions

Step 5: Portfolio Review:

  • Consider rebalancing
  • Review with client:
    • Investment objective
    • Bias
    • Preferences
    • Goals
  • If anything has changed, review ETF strategist options
  • Focus on ETF strategist retention
  • Use multiple strategists to create diversification for client

Key items to remember in the process:

  • Show your clients their profile findings that helped you determine the appropriate asset allocation
  • Help your clients understand the ETF strategist search and selection process and how the selections were made based on their individual needs and goals
  • Demonstrate your plan for the portfolio by showing them the risk/return illustrations of how the ETF strategists will combine to diversify risk and enhance overall return


Check out the full Channel!