An Overview of Various Steps That are to be Performed for Successful Portfolio Management
If you are really serious about succeeding with your plans of proper portfolio management
then it will be necessary to take into consideration all relevant aspects. By using services of a portfolio manager you will be able to ensure that all relevant aspects ranging from asset management to risk management, financial management, tax planning and estate planning are taking into consideration.
In this context, we will examine procedure of financial planning that a portfolio manager undertakes to make sure investors achieve their investment objectives.
Procedure of Financial Planning
Financial planning is carried out according to a well-defined procedure consisting of several steps. Let us look at what these steps are.
Step One: Creation of Scope of Work
The first task involves the creation of scope of work for planning that is to be performed as part of portfolio management.As such, the portfolio manager will develop a letter of understanding that will provide information on things like:
- Total time frame of the engagement
- Responsibilities portfolio manager will have to carry out
- Compensation that is to be paid
- Process for resolution of conflicts
Step Two: Information Collection
In this step, your portfolio management team will be collecting information with respect to your financial objectives, investment horizon as well as other relevant priorities which can prove to be useful in judging the appropriateness of different investment options.
Step Three: Analysis of Financial Information
In step three, wealth manager will be analyzing your current financial position and try to understand the goals you want to achieve so that a plan of action can be developed accordingly.
Moreover, such analysis will also help portfolio manager decide whether financial goals you have can actually be achieved.
Step Four: Determination of Investment Strategies
Here strategies are identified that will facilitate successful achievement of financial goals you have. Your portfolio manager will be providing details of these strategies as recommendations and in addition to it, the manager will also explain the same so that you get a clear idea of benefits and drawbacks these recommendations would have.
Step Five: Reach an Accord
After all the details have been shared and you understand the same, next thing to do will be to reach an agreement about how all the plans are to be implemented.
Here steps will also be taken for creation of a time frame within which you can expect successful implementation of your financial goals.
Step Six: Final Review
In the sixth step, the relevant details are thoroughly reviewed to ensure there are no gaps left in plans that have been developed.Moreover, a time frame will also be agreed upon between portfolio management
team and the investor with respect to evaluation that is required. The review will also be the right time to implement changes as per changing scenarios.
The Bottom Line
From above details, it must be clear that having a well-planned procedure is very important for proper portfolio management and helps in successful achievement of your financial goals.