Suppose… you had a non-performing stock (salesperson).
If you had a stock that hadn’t performed as expected, how long would you hold onto it? Six months, a year, 18 months? Maybe it’s performing like the rest of the stocks in a similar portfolio but not growing as you expected. What do you do with that individual stock? What do you do to the entire portfolio when it’s under-performing?
The answer is simple – you manage it!
As portfolio manager, you:
- Set metrics for success and standards for each of those metrics.
- Conduct research/due diligence to make sure that you are adding investments to the portfolio that are consistent with your investment and long term financial goals and risk standards (Cash, Income, Income with growth, Aggressive growth, International growth or a Hybrid)
- Determine your strategy on buy, hold or sell
- Establish a method of inspecting what you expect
- Gain intelligence from the information you gather from quarterly reports and you determine next steps
- You either buy, hold or sell based on the information you have and the impact that an investment is having on your ability to achieve your goals
What can be accepted as true is that every portfolio is perfectly designed for the results it generates. There is cause and effect. If you are not happy with your results, you change your objectives or portfolio management strategy, right?
Well then, how about the portfolio of investment advisors you have on your team? As program/sales manager you have objectives that you have set out for the entire team/portfolio and when you added investments (people) you had performance expectations. Based on performance, what has to change if anything? Are individual performers pulling their weight or are they a drag on the performance of the team? When you assess your investment in each of the individuals on the team, where do you need to buy, hold or sell? Finally, when you assess the managers managing the portfolio, how effective are they?
You have the awesome responsibility to the stakeholders to put together the best portfolio in order to maximize return on investment. Failure to do so creates a failure in fiduciary responsibility.
See you tomorrow.