In our new web-based platform, Portfolio Lab, we introduced our new Scenario Analysis feature. Scenario Analysis allows users to run simulations of proposed portfolios against a client’s current portfolio and see how the proposed position would have held up during historic market events. In this article, we will discuss a few ways that advisors can leverage this simulation tool when meeting with clients.

What is Scenario Analysis?

Scenario Analysis is a simulation tool that allows users to test how a proposed portfolio would have behaved during historic market events.  Users can also compare the proposed portfolio to their client’s (or potential client’s) existing portfolio, and visualize how the proposed solution will better serve that client in meeting their investment goals.

How can I leverage Scenario Analysis in client meetings?

One of your most important jobs as a financial advisor is to address and manage any fears that your clients may have. There are so many “what ifs” when it comes to investing, and that may hinder some clients ability to see the big picture.

What if the market crashes again? What if there is another war? What will Brexit mean for my portfolio?

Scenario Analysis helps answer some of those questions by actually showing how your proposed portfolio would have held up during previous market turbulence. For instance, if a client is still recovering (financially and, likely, emotionally) from the 2008 market crash, it can be immensely helpful to demonstrate how your proposed portfolio would have behaved.

Alternatively, if a client is considering taking on a little more risk in hopes of increasing their returns, this simulation can be helpful in confirming their newfound aggressive confidence. Showing what could happen if the market dips again might cause them to reevaluate.

Scenario Analysis

How can I learn more?

To see how Scenario Analysis might benefit your practice, please visit our Contact Us page or request a demo here:

Request a Demo