#2: Our Tools and Their Purpose

Advisors who subscribe to InteractFA will use the tools we offer in different ways. This post, along with others, will describe how we use them at Equius Partners. In the near future, I hope to add a discussion board for subscribers to share experiences and ideas with all of us.

It’s important to note that these tools are a supplement to other tools such as financial planning software, Monte Carlo simulations, and portfolio simulation tools like Dimensional’s Return program. I have designed them to help convey core investing principles such as broad diversification and the power of markets, asset class diversification, the need for patience in long-term investing, the madness of market timing, and the importance of systematic contributions to the portfolio, among other high-level principles.

We purposely avoid getting down into the weeds of portfolio construction, fund selection, and rebalancing, for example, because our goal is to simply (but importantly) “set the table” for those other discussions. We believe these tools, if presented effectively, will make all those other discussions more meaningful and durable over time and dramatically increase the chance that your clients’ will stay the course and meet their investment objectives.

The Posters

Our “bread and butter” at Equius has always been the posters. We’ve display 4 of them in our lobby, side-by-side, so they are part of the decor—albeit very unique from the other art and pictures on our walls.

Prospects and clients (who haven’t seen them before) are always very curious about what they are and what they represent. This curiosity is critical.

After welcoming them to the office, introducing our team, offering a drink, etc., we walk up to the posters. Starting with the first one and each one thereafter, we simply ask “What do you see?” I can’t overemphasize the importance of simply letting prospects stare at the poster and describe what they see as the prominent feature(s) of each one. (As I’ll continue to mention in other posts, we never use posters or client handouts with returns in the cells.) This begins the process of “self-education”—a more meaningful and durable process than sitting through an investment presentation with a PowerPoint deck.

We then facilitate a discussion of each poster by asking a series of questions that lead us to the lessons we’re trying to impart. I’ll describe how we facilitate these discussions in more detail in subsequent posts.

The Index Matrix App

At Equius, we typically use the Index Matrix app for group presentations using a large screen TV or for one-on-one meetings with clients in our offices. This allows a deeper dive into the principles we emphasized with the posters. The app is particular effective with 401(k) participants to show the potential of regular yearly contributions.

With the app, you can select certain periods and, if you like, show clients the index returns. You can look at nominal and real returns. You can move them through three different period ranges across the full matrix. With a laptop or tablet, you’re always ready to visually demonstrate many of the principles underlying your approach.

Client Handouts

The handouts are miniature posters designed to be used in one-on-one discussions for sketching and personalization. You and the client can make notes on the handouts and they can take them home for further study or to share with others.

Frankly, my solution for handouts at this time is not optimal. At $13 each, you’ll probably use them only for your biggest clients or prospects! 🙂 But I’m working on a solution that will drop the price dramatically. It’s unlikely at this point that I’ll private label them, but I’ll offer some solutions that might be a good alternative. Stay tuned.

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