Since 1928, the months of September, October, and November have been consistently more volatile than the annual average, according to Marketwatch, with October charting a whopping 25-percent annualized volatility of daily returns, six percentage points above average.1
Of course, with that volatility often comes questions and concerns from clients. They’re watching the news as the market ping-pongs, and maybe they’re looking at their accounts a little more closely, with concern about their financial future. When emotions get high, it can be difficult for clients to stick to their plan. This fear of the unknown is a powerful driver of one of the worst investing behaviors: not staying invested. But volatility doesn’t have to mean client anxiety or impulsive decision making.
BlackRock’s Scenario Tester can help you stress test a portfolio to see how it might react against market events. The tool, which is available for Envestnet users who subscribe to BlackRock’s Advisor Center, is simple to use:
- Input a client’s portfolio, and then select the scenarios that matter to them or the asset classes you may want to consider adjusting.
- Within minutes, you’ll have the ability to test past events and market shocks that your client is likely to recall and understand.
- You’ll then be able to create client-friendly reports that illustrate how their portfolio might perform under the various scenarios they’re concerned about.
Sharing this information with your clients will help show how different market scenarios may impact their portfolios and jumpstart important conversations about how to proceed. Running Scenario Tester is quick, so you can easily update the filters and execute it multiple times – on the spot – as additional questions arise. Having that data on-hand makes it easier to prepare together for the things that matter most to your clients and to help them understand the decision-making process.
While Scenario Tester can be helpful in stress-testing portfolios, it can also serve as a springboard for 2020 planning conversations, enabling proactive planning and ongoing discussion. Oftentimes it opens up new opportunities for you, the advisor, to expand your relationship with your clients with a better understanding of what they’re concerned about and how you can address their needs.
Scenario Tester is available for subscribers within Advisor Center, along with other BlackRock tools like 360° Evaluator and Tax Estimator.
To learn more about how you can leverage our financial wellness platform, including subscription offerings like Scenario Tester, contact your Envestnet sales team at 855-769-0806.
