CRM2 primer: Talk performance like a pro

Having the performance talk at your next client meeting? Ace it with part two of IFIC’s three-part series aimed at helping advisors ensure clients get the most from the new reports they’ll soon receive under CRM2. (Part one has tips for better conversations.)

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To talk performance, IFIC offers these pointers:

• Show your client the return information on the performance report, explaining why his personal rate of return is unique (based on deposit/withdrawal timing, dividends and interest, and market value changes).
• Compare the personal rate of return with the target rate, and, if the target wasn’t met, explain why. Consider with your client whether adjustments are necessary.
• Explain “benchmark” and how it relates to the personal rate of return. IFIC offers a helpful analogy: a student compares her mark (personal rate of return for a fund) to the class average (return of a group of similar funds).
• Explain why the personal rate of return differs from the benchmark (for example, each uses different time periods and calculations, and the personal rate includes fund costs).

For plain-language explanations of target rate, benchmark and rate calculations, see the IFIC series, part two.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.