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    In The News

    Why financial advisors never really used beta, and why they are right

    By Ron Piccinini, PhD Director of Product Development How can you tell if someone went to Harvard? They will tell you within five minutes of meeting them, as the popular joke goes. Similarly, ask any freshly-minted finance MBA or CFA candidate about portfolio construction, and chances are high that you will hear about ‘beta’ in pretty short order. As most advisors know, beta is the key statistic in Modern Portfolio Theory (MPT), and has something to do with the volatility of a stock or asset class relative to the market. According to the Theory, the expected return of a stock depends solely on its sensitivity to the equity risk premium, a.k.a. ‘beta’. If your client needs a higher expected return on her portfolio, you should increase the allocation to ‘high-beta’ assets. Conversely, you should increase the portion of ‘low-beta’ assets for that hypothetical client seeking lower expected returns. In an informationally efficient market, high expected returns should not be available without taking high levels of risk, thus beta became a measure of risk along the way. If the only source of expected returns comes from an asset’s sensitivity to the market (beta), then only stocks with betas greater than 1.00 will provide greater returns than the market, and since risk and return go hand-in-hand, it follows that high-beta stocks are the riskier ones. Pretty simple isn’t it?
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    In The News

    Covisum's president, Joe Elsasser, CFP®, featured in Financial Planning

    It's no secret, Joe Elsasser, our company president uses Covisum technology to reinforce measurable value for his own clients in his personal financial practice. He was recently quoted in Financial Planning:
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    Marketing

    Seven Steps to a Successful Financial Seminar

    Many people are hungry for financial information they can trust. Financial seminars are a great tool to get in front of these people, but planning and executing a successful seminar can be a lot of work. Covisum® is dedicated to helping advisors and their clients create a shared vision for the future. We understand that it is easier for a client to stay on their current path, rather than create a new one. However, with the right plan, you can help prospective clients as well as grow your business. One way to grow your business is to host a seminar and position yourself and your firm as trusted advisors. In my role as a Certified Financial Planner™ at Sequent Planning, I’ve been using seminars successfully to build business for a number of years. So, what does it take? Follow these seven steps to a successful financial seminar:
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    In The News

    SmartRisk Tutorial  

    Designed specifically for financial advisors, SmartRisk helps you set proper downside expectations with your clients. Join Marisa for a quick demonstration of the software. Learn more.
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    Risk

    Portfolio risk: how much value is in the tails?

    Investors know that time in the market is their friend. Stay in the market for a long period of time, and good things will happen, even in times of high volatility.
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    Risk

    How do you explain asset interaction to clients?

    Ultimately, our goal is to build client relationships and help clients achieve their financial goals. Listen to our experts explain asset interaction in this short video clip from, "The Advisor & The Quant."
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    Risk

    Making heads or tails of tails

    By Ron Piccinini, Ph.D., Director of Product Development An investment’s failure or success is impacted by the worst and best trading days — more than you might imagine. Understand the true value of “tails.” Investors know that time in the market is their friend. Stay in the market for a long period of time, and good things will happen, even in times of high volatility. A supporting statistic is often presented: if you miss the best days, your overall return will be dramatically lower.
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    Risk

    SmartRisk terms revealed

    Asset interaction. Drawdown analysis. Reward/risk ratio. Know the terms that will help you wow clients with SmartRisk™. SmartRisk™ doesn’t just deliver better risk estimation for your clients’ portfolios. It delivers it in a way that is easy for both you and your client to understand. Learning just a few terms used in the software and its easy-to-read reports will help you interpret the calculations and explain them to clients — not just so they understand, but so they understand in a context that truly resonates with them, influencing their behavior.
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