I believe all practitioners have the same problem I’ve faced when attempting to educate prospective clients regarding the elements of portfolio design. In my years of teaching the graduate Wealth Management class at Texas Tech, I’ve had the privilege of reading many fine papers; however, Ms. Winkelman’s is undoubtedly the most creative. I believe you will agree and will find it a useful tool in educating clients on the subject of diversification. Enjoy.
Hello, and thank you for meeting with me today. First, I want to applaud you both for investing in your future and sharing your goals with me. My focus today is to go over with you some tips and review some details about your current portfolio you might want to review further.
My hope for this presentation is that you leave with more knowledge and feel comfortable to ask any questions now, or that may come up later. So, let’s get started.
Yes, those are refrigerators. Before you run away, let me explain.
Not to worry, I haven’t completely forgotten why your meeting with me. The reason for the refrigerators is to help explain some of the investment terms that we will be discussing today. So first, what do you notice that’s different about these refrigerators?
The refrigerator on the left seems plain and simple, but gets the job done. The one on the far right, looks as though it has some additional bells and whistles that might perform additional tasks you’d find beneficial. The group in the middle showcases the 3 different refrigerators that look as if they may range from simple to elaborate. Do you think there’s a cost difference between these if purchased brand new and from the same store? Probably so. The simple refrigerator costs less than the one with all of the bells and whistles, and you would expect that because you are getting more because of the additional options.
Why does this matter? Well, when you are looking at a portfolio, what I’d like you to do is think of it as a refrigerator and what you need in order to meet your goals. While the elaborate refrigerator may look appealing, you may not need the additional options; nor would you want to pay more for when it is not needed. Also, the simple one may not provide you enough space or options, so you could choose something that fits in the middle. None of these options are good or bad, we just need to make sure your option is the best fit for your needs.
Staying on the idea of the refrigerator, let’s now take a look at some more investment terms.