Prof. Ruggero Bertelli's advice to communicate the value of the portfolio to your client
✔️ Behavioral Finance - Prospect Theory: From Theory to Practice
✔️ How to communicate the value of the portfolio to the end customer
✔️ Understand the client's goals and build a tailor-made proposal
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We see things from our perspective.
The investor sees things as he is used to, the consultant can make him change his perception by changing the focus of attention.
The reality is the same, but it depends on our perspective.
This is also true in financial markets and in explaining the perception of portfolio value.
Find out in a simple way what the Value Function is
It represents the customer's utility and in a very simple graph it explains how an investor perceives losses on the financial markets.
Emotionally, the losses weigh twice as much as the gains.
For example a + 2% is perceived as a + 2%. While a -2% is perceived as a -4%.
Interesting right?
And if instead the gains were double the losses, what can we say about an investment portfolio?
Why according to the Value Test is the S&P 500 an INDEX that has value and generates value over time?
From 1974 to date, the maximum drawdown was around 56% while the maximum upside was 131%.
If we do the report EARNINGS and LOSSES it will be greater than 2 and this indicates that the gains are capable of recover losses and generate capital gains.
Here is the distribution of the S&P 500 ... from the symmetrical point of view we have a certain probability of making or losing money, but we note that the average is positive and "pleasant".
Where will 2021 go?
If we are in 2008, the future is interesting, at its peak in 2019 a little less.
Pay attention to where we position the Value Funtion and where we start from .... the utility and disutility are different.
We have to get the customer used to rolling time windows.
It counts the return over the recommended time horizon, which the instrument provides.
We make our investors perceive the time value because TIME brings RETURN
Deepening
MiFid 2
The module Ex-Ante Financial Advisor was designed to allow the financial advisor to devote himself more to his clients and to cultivate successful relationships, remaining competitive in the market and to the strong evolutions that MiFid 2 made financial advice.
Model wallets
To speed up the process of creating the various investment ideas according to the client's needs and objectives, there are a series of risk-based asset allocations, which are defined as model portfolios, based on indices.
Behavioral Finance
Our research and development focuses on risk management, the intelligent use of correlation and the development of efficiency indicators based on behavioral finance, which allow us to look beyond the performance of individual financial instruments such as i mutual funds and / or ETFs.
Statistical indicators
It is possible to further customize the portfolio with the best funds and / or ETFs that the user considers most suitable according to the various parameters such as volatility, the Sharpe index, the DIAMAN Ratio And many other statistical indicators.
≠ Markowitz
We have created financial software complementary to traditional platforms using innovative methods and models with respect to the mean and variance criteria adopted by Markowitz.
Ruggero Bertelli
Ex-Ante Advisor and Associate Professor of Economics of Financial Intermediaries at
the University of Siena, where he teaches Banking Techniques
and Credit Risk Management.
Vice – President of Prader Bank.
Member of the advisory committee of the closed-end fund Euregio minibond
of PensPlan Invest SGR.