INSIGHTS

On January 12, 2011

Fixed Income Portfolio Analysis for Advisors

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An Interview with AAM’s Portfolio Construction Team


We sat down with Mark Gregg, Vice President of Portfolio Analytics at AAM, to learn more about the fixed income portfolio services offered by Advisors Asset Management (AAM).

Q. What does your team of portfolio analysts do?
A. We provide fixed income portfolio services for advisors and their clients, ranging from new portfolio construction to full scale fixed income portfolio analysis. Our team reviews investor statements and offers the advisor suggestions based on the investor’s financial situation.


Based on the individual’s goals and risk tolerance, we look to improve the portfolio in ways that make sense to the investor. At times we’re able to increase the credit quality of the portfolio, enhance the income, shift the duration, and/or provide tax losses or gains. Again, we do this based on what is best for their client, so if no changes are needed, we return the portfolio as is.

Q. Do you just focus on bonds?
A. Well, most of our focus is on income-oriented bond investments such as corporates, municipals, government and asset-backed debt, etc. Because of our vast experience and knowledge of the debt markets, we are able to incorporate other investments into portfolios, such as mutual funds, unit investment trusts and structured products; where appropriate. We are also able to integrate equity products into our reporting to give advisors and their clients a more complete picture of their portfolio holdings. However, we do not offer equity-based advice.


Our Portfolio Construction Team also provides additional financial services for advisors such as online portfolio monitoring through our Monitored Portfolio Solutions system (MPS) as well as credit analysis.

Q. What are your current asset allocation recommendations?
A. We maintain core allocations for our house accounts, but really, it’s dependent on the advisor and the investment parameters they provide us for their client.

Q. How do you give advisors a competitive edge?
A. Fixed income portfolio analysis requires a personal touch and the judgment of experienced professionals. That’s what we are; a behind-the-scenes bond resource for advisors. We provide custom, private-label reports advisors can give directly to their clients. That lessens their workload and allows advisors to focus on acquiring new assets and attracting high net worth investors. We work as a member of the advisor’s team to build their book of business.

Q. What costs are involved?
A. There are no additional costs involved. AAM provides advisors with access to the bond markets, which includes competitive fixed income offerings and trading support. If agreed upon by the advisor, we should receive the bond trades on a transactional basis.

Q. How do advisors get started?
A. Generally, advisors work with their personal AAM Advisory Consultant to access our portfolio tools for advisors. Advisors can fax or email their statement to us, or simply provide us with the client objectives over the phone, if it’s a cash account. Advisors can also email PortfolioHelp@aam.us.com, which will come directly to the Portfolio Construction Team.


To conduct a review, we require the client’s statement, state of residency, tax bracket, and account type along with other pertinent investment details, such as investment objectives, portfolio restrictions, risk parameters, etc. Sometimes, advisors are hesitant to give us their client statements for privacy reasons; however, they can simply omit the client name and account number as we do not need that information to complete our review.


Once this information is received, we can typically turn the portfolio around in 2 to 3 business days.


Feel free to leave any other questions you have for AAM’s Portfolio Analytics Team in the comments section below.

This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the disclosures webpage for additional risk information. For additional commentary or financial resources, please visit www.aamlive.com/blog.