Email FacebookTwitterMenu burgerClose thin

Guide to Strategic Portfolio Management for Your Advisory Firm

Strategic portfolio management refers to a suite of processes advisors can use to streamline and grow their businesses.

Building a successful—and sustainable—business often begins with developing systems that allow you to operate as efficiently as possible. Strategic portfolio management (SPM) encompasses various processes that financial advisors and other organizations can use to ensure that their actions align with their goals. Pursuing this type of approach can facilitate growth and allow you to better meet the needs of your clients.

SmartAsset’s Advisor Marketing Platform can help you add new clients at your desired pace. Sign up for a free demo today.

What Is Strategic Portfolio Management?

Strategic portfolio management is a term that describes how advisory firms and other business organizations select and prioritize which programs or projects they invest resources in to reach specific objectives. Within the context of this term, resources can include your time and capital, as well as the other members of your firm.

At its core, a strategic portfolio management approach is about finding balance and deploying what you have effectively and efficiently to maximize return on investment. It requires firms to carefully consider how available resources will be used and whether a particular use aligns with the company’s broader goals.

Essentially, you’re asking yourself:

  • What things should we be doing to advance the firm’s goals?
  • When should we be doing those things?
  • Is what we’re doing justified by the level of return being generated?

Strategic portfolio management takes a broad view of what an organization needs to do to move forward. While senior management may be the primary players in executing strategic plans, everyone in the organization can be impacted by the decisions being made.

How Strategic Portfolio Management Benefits Financial Advisors

Strategic portfolio management is not specific to the financial services industry, but adopting this approach can benefit advisors on multiple fronts. Here are four common advantages of using SPM when deciding where to invest your firm’s resources to grow your client base or increase revenues:

  • Trend identification. Financial services is a constantly evolving industry and savvy advisors understand the value of trendspotting. Strategic portfolio management can help advisors analyze trends and evaluate which ones may be appropriate to capitalize on, based on the firm’s goals.
  • Pivoting. When disruptions occur, advisors need to be able to think on their feet and adapt as needed. The recent pandemic is a notable example of how disruption can affect day-to-day operations. Lockdowns prevented in-person meetings, forcing advisors to lean into virtual meetups, calls, emails and chat to stay connected with clients. When you have a strategic plan in place that includes contingencies for the unexpected, disruptions can be less threatening to the health of your business.
  • Goal prioritization. When you have multiple goals you hope to accomplish but a set pool of resources to work with, prioritization is critical. Strategic portfolio management requires you to evaluate each goal and ask yourself whether it truly aligns with your firm’s vision and if so, where it fits into your priority ladder.
  • Increased returns. If your firm has a limited budget or capital to work with, there’s no room for those resources to go to waste. Using SPM can help you determine how to allocate your available resources to generate the best return possible, using a data-driven approach.

How does any of this benefit your clients? Strategic portfolio management can allow you to direct your time, energy and other resources to the projects and tasks that help your firm run as efficiently as possible.

Implementing Strategic Portfolio Management

Financial advisors implementing strategic portfolio management.

Making SPM work for you begins with some strategic thinking. There are certain questions you may find helpful to ask as you consider what your firm’s strategic portfolio might look like.

  • What are we trying to accomplish, both in the short and long term?
  • What resources do we currently have available to assist in strategic planning?
  • Are any of our firm’s resources being underutilized, or are there resources that may need to be redirected to further our goals?
  • What metrics will we use to track our progress?
  • Which projects or programs make the most sense to pursue, based on our goals and the resources we have to work with?
  • Once a project is selected, how will we allocate resources to it?
  • Does our strategic portfolio include contingencies or allow for flexibility in the face of disruptions?
  • What processes will we follow in executing projects and how often will we revisit our progress to ensure that projects are on track?

In terms of specific uses for strategic portfolio management, there are several scenarios where it can prove beneficial. For instance, you might use SPM to determine how to apply capital or reallocate resources if your firm’s objectives change. It can also be helpful when you need to automate and streamline business processes, facilitate communication with other members of your team or ensure compliance with regulatory guidelines.

If you’re wondering how you might go about doing all of this, you don’t have to figure it out alone. There are multiple companies offering tech solutions to assist advisory firms and other businesses in developing and executing strategic portfolio management. Some of the options you might consider include Apptio, ServiceNow and Planview

These and similar platforms can provide you with a comprehensive suite of tools, which may include visualization, collaboration, forecasting and modeling tools, among others. When comparing the various SPM providers, it’s helpful to consider what’s included and the pricing, as well as the level of support you’ll have access to and integration with the other elements of your tech stack.

Frequently Asked Questions

What Is the Purpose of Strategic Portfolio Management?

Strategic portfolio management is designed to help organizations create a unified approach to achieving goals that fully maximizes all available resources in the most efficient way possible. Financial advisors can use SPM to identify their priority goals and the action steps required to achieve them.

What’s the Difference Between Strategic Portfolio Management and Strategic Project Management?

Strategic portfolio management allows organizations to determine which programs or projects are likely to yield the best results, based on the resources allocated to them. Strategic project management has a more granular focus and looks at projects on an individual level, from initial planning to execution.

What Are the Main Challenges to Strategic Portfolio Management?

Some of the biggest obstacles associated with strategic portfolio management include a lack of clearly defined goals, misuse of resources and a failure to properly track performance using predetermined metrics. Utilizing SPM tech solutions can help you identify the potential shortfalls of your plan so you can take action to correct them.

Bottom Line

Financial advisors using strategic portfolio management to evaluate how to drive new leads to their business.

When approached correctly, strategic portfolio management can help advisors execute plans for growth that produce results. It may be worth exploring if you’ve been frustrated by your past efforts to scale or simply need a more cohesive method for advancing your firm’s goals.

Tips for Growing Your Advisory Business

  • Strategic portfolio management can help you evaluate ways to allocate your marketing budget to drive new leads to your business. In addition to social media marketing and email marketing, you may be considering other options, like direct mail or digital ads. You might also lean toward using a lead generation tool. SmartAsset AMP (Advisor Marketing Platform) is our holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • Utilizing tech solutions can make the various aspects of running your advisory business easier. There are different types of software programs you may incorporate to handle the various operational tasks that go into keeping your business afloat. For example, there’s wealth planning software, financial planning software and compliance software, amlong other choices. Understanding what the different options are designed to do for you and what you’ll pay for them can make it easier to decide what to include.

Photo credit: © undefined, ©, © Meepian