Template:Case Study on Incorporating Security Selection Into Your Implementation Strategy

From Planipedia

At this stage you can proceed with the creation of an IPS or you can elect to use the Security Selection feature where you will be able to select specific securities to fulfill the client’s target asset allocation. The additional investment products will appear in the IPS you produce for your client.

For Islamic clients, you will want to discuss their attitude towards shariah-compliant assets. Check out this example on moving the specific securities based on their shariah-compliance.

Example Problem One:

Your client has asked you to create an investment strategy for her, including the selection of appropriate products for the detailed accounts. Allocate {{{cash product}}} of a cash product called {{{Account 1}}} to her {{{account 2}}} account. Also, keep {{{Recommended dollar amount}}} of one of her existing products for her target portfolio.

Solution Using the Security Selection Screen:

Select one of your existing clients and click on Security Selection under the Implementation section. You will notice the information you created on the Asset and Liabilities screen is pre-populated. You now have the option to balance the current portfolio to the target portfolio.

First we will allocate the Trimark Interest Fund to her non- registered account:

1. Click on the Select button under the Choose Fund column, beside the Non-Registered account.
2. In the drop-down menu for Asset Class choose the Cash option.
3. The fastest way to search for a fund is by Product Code using the radio buttons to the right. Use AIM1533 as the Description.
4. Click Search.
5. Click the Select button beside the only product returned

In the detailed Asset Information screen, simply enter {{{cash product}}} in the Market Value field, since this is the amount of the account being allocated to this product. Click Save to return to the Security Selection screen.

You’ll notice also that in the second section of the Security Selection screen, the new cash product has been included for her {{{account 2}}} investments at a value of {{{cash product}}}. All of the client’s previous products currently have {{{allocated amount}}} allocated in the Recommended account allocations.

Originally, she had a certain $ amount of a fund in her open account, and we are going to recommend that she keep 25% of it in place. To do this, scroll down to the second section, and under the Balanced Funds – Dynamic Focus + Balanced Series, for her {{{account 2}}} account, set the Recommended {{{money}}} Amount to {{{recommended amount}}}. Click Update.

Since the asset classes shown can vary wildly from the core and corporate websites, complete the allocation to match the target asset allocation.

TIP: a handy tool to help you complete the allocation is on the third section of the Security Selection screen. The first two columns identify the current and target asset allocation in terms of percentages and dollar amounts. The third column shows how much of each asset class you have actually recommended so far using the Security Selection screen, in dollars and percents. And finally, the last column shows the variance between the recommended portfolio and the target portfolio (red being a deficit, and black being even or a surplus). So by looking at this last column, you can quickly see how much of each asset class you have yet to allocate.

After completing the “Security Selection”, click on the “+/-” button, as seen in the top, right hand corner of Figure 3.30. This will move your recommended portfolio of products to complete the target portfolio in the Asset Allocation screen. Thus the overall rate of return of the recommended products will be used in any reports you produce for your client.

Return Home where your data summary will be displayed. You’ll then go to the Documents and Reports Section and select Your Working Documents.

1. Click on the title called Preparing Reports – Investment Management. Click on the Radio button beside Investment Policy Statement.
2. Click on the Generate Document link. The IPS will take approximately 1 to 2 minutes to generate. Hit the Refresh button periodically until the completed document is ready for you to download.
3. Finally, when the document has completed calculating and is ready to view, click the Download button.

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