Sean Alford, Investment Solutions Manager and Senior Financial Planner of CFO4Life, had a dilemma.
His client wanted to implement some changes to their manager lineup.
Using HiddenLevers stress testing and portfolio analytics, Sean found several good options, but from the beginning he knew there was something better. After a bit of digging, Sean came across the perfect fit: a successful hedge fund with a 20-year track record. But his client, having never invested in a hedge fund, was skeptical.
Rather than let his client settle for a typical portfolio, Sean used HiddenLevers to build out this hedge fund as a structured product, modeling the strong return history to show his client how this product lowered risk, increased expected return and lowered his correlation to the market.
When Sean presented the hedge fund, he was able to show his client the benefit of using this fund. With HiddenLevers Sean helped his client feel more comfortable with using an alternative security, and made adding this product to the client’s current allocation a no-brainer.
“My big ‘ah-ha’ moment with HiddenLevers was learning how to use custom assets to build structured products, and private equity investments. HiddenLevers made it easy for my clients to understand complex alternatives that are not supported in other platforms,” said Alford. “Stress testing as a whole is powerful for advisors and end client, but especially when it comes to these less common products.”
HiddenLevers from Hello-to-Close
Whether helping clients understand the value of alternative securities, breaking down risk/reward, or easing nerves in times of volatility, HiddenLevers helps advisors communicate with clients and prospects in in a meaningful way.
As HiddenLevers users since 2015, CFO4Life integrated the HiddenLevers workflow into its daily practice, using the risk tolerance questionnaire to engage clients and prospects on the topic of risk. “With prospects we use the questionnaire to start relationship off on the right foot,” said Alford. “This helps us set expectations upfront which helps when the market is up, but also when it’s more volatile.”
The CFO4Life team uses the generated risk score as a baseline and applies portfolio stress testing to understand what type of experience clients are looking for.
When the market takes a turn, the CFO4Life team uses HiddenLevers stress testing to reassure clients there is nothing to fear. Alford and his team show clients how a 20% correction doesn’t translate into a proportionate loss.
“We use stress testing to show clients how their portfolio could only lose 10% in a 20% downturn and seeing this play out this really eases their concerns,” said Alford. “HiddenLevers helps us set expectations so there are no surprises for clients – this is a normal price you pay, risk premium.”
Using Stress Testing to Win Prospects
Like HiddenLevers’ most successful advisors, CFO4Life uses stress testing with HiddenLevers proposals to win new business.
“HiddenLevers proposals make the decision easier for the client because we are showing factual data that this is a good decision and this will improve their situation,” said Alford. “HiddenLevers proposals are such a great prospecting tool.”
With the HiddenLevers workflow has helped the CFO4Life team win over numerous prospects. By entering the prospect’s advisory statement then comparing this to the CFO4Life recommendation, prospects clearly see the benefits of a CFO4Life strategy.
“Prospects really like the risk profile statistics and how the better performing portfolio is clearly highlighted within these stats,” said Alford.
With its easy-to-use interface, clean reports, and the ability to set expectations up front, HiddenLevers helped the CFO4Life team win new business and create unique, effective strategies for clients.