At JNBA Financial Advisors, we’re passionate about sharing our insights on wealth management. Usually, that means educating and informing our clients through meetings, calls, emails, events, and online resources. But we also like to share our expertise and outlook with our industry. This week, Mark Evans, JNBA’s Chief Investment Officer, is featured in the Wall Street Journal’s “Advisor Voices” column, where he shared lessons that advisors – and individual investors – can learn from institutional investors.
Institutional investors – those who oversee endowments, pensions and hedge funds – differ in many ways from financial advisors who help individuals and families invest and manage their wealth. As Mark – who has deep expertise on both sides of the fence – shared in his column, though, advisors can harness institutional investment best practices for the work they do with their individual clients. For example:
- Practice patience. Institutional investors are required to follow lengthy, sometimes even cumbersome processes in their decision-making. On the plus side, though, this prolonged timeline can remove emotion from the investment process.
- Pay attention to correlation, especially as it relates to building diversified funds. Technology on the institutional side has historically helped analyze correlations. Today, advisors can also use technology – coupled with annual checkups – to view portfolios in aggregate to see sector biases or redundancies and consider if additions are actually offsetting risk or not.
- Look for creative solutions to addressing clients’ needs and goals. Institutional investors often need to look for opportunities off the beaten path, and while some advisors may not have the same variety of options available to their clients, it never hurts to think outside the box.
Of course, clients’ needs and goals will always drive advisors’ strategy, but as Mark notes in the column, one thing remains clear for both advisors and institutional investors: “Having a well-established investment process, and a commitment to stick to it, is a recipe for success.” Read the full article on WSJ.com for more details.