for Financial Planners

CRM2 and its Implications

CRM2 mandates a performance report showing the overall Internal Rate of Return of a portfolio. This requirement had several CFPs requesting a more detailed report to show their clients: The performance of an individual portfolio may be lackluster in spite of the skill of the portfolio advisor. As many CFPs manage multiple portfolios for their clients (e.g. A TFSA and RRSP), the true overall performance of can only be analyzed on a client's cumulative portfolio, while performance data may only be readily available for an individual plan. The overall performance of the portfolio may seem mediocre compared to the commonly expected 6.8% annualized return (Stocks for the Long Run, Jeremy J Siegel), but the performance may be impressive when compared to the actual return of a comparable portfolio involving the same cash flows over the same period. The returns from a portfolio may seem unimpressive right after a severe downturn, but the portfolio itself may be well constructed in spite of cyclical economic effects.

The CRM2Plus Solution

Using CRM2Plus, producing a thorough report that addresses the above concerns is fast and straightforward. Detailed reports showing returns over various (quarterly, one year, three year, and five year) periods can be created, with customizable start and end dates. Users can aggregate portfolios for analysis: If you need to show a client their returns for an individual investment plan, of all of their plans combined, or an aggregation their entire household's financial assets, aggregated reports can be produced at the click of a button. Benchmark Comparison portfolios based on the timing and cash flows of your portfolio can be created and analyzed to give a client an accurate picture of the performance of a realistic alternative investment plan. A report showing the historical Portfolio value vs. the cumulative amount invested can be produced, making cyclical downturns stand out from the general portfolio trend. A counterfactual portfolio with alternate investment timings and amounts can be created, allowing you to show a client what would have happened if they ignored your advice and cashed out during the crash, or started investing aggressively during a bubble. These tools are all built into the CRM2Plus, so it's easy to produce reports containing these differing analyses in a matter of seconds.