Changing a client's strategy: the record trail from conversation to trades
When a client changes strategy, a small RIA should record why, when the client agreed, and the date the new strategy takes effect. Update the IPS and get it signed, close the old strategy on the account with an end date, trade to the new one, and link the trades to the change. Anyone looking at the account later should be able to see which strategy applied on any given day, and why it changed.
A client retires and wants to move from growth to balanced. The advisor agrees on a call, places the trades the next week, and changes the account's model in the system. A year later someone asks why that account underperformed the growth model in the spring. The record shows balanced. It doesn't show that it was growth until 12 April, or why it changed.
The trail to leave
| Item | Example |
|---|---|
| Reason | Retired; wants lower volatility and some income |
| Client's agreement | Call on 8 April, confirmed by email 9 April |
| Effective date | 12 April |
| Old strategy | Growth, ended 11 April |
| Updated IPS | Version 3, signed 15 April |
| Trades | Placed 12 April, linked to the change |
The routine
- Record the reason and the client's agreement, with dates.
- Set the effective date for the new strategy.
- End the old strategy on the account. Don't overwrite it.
- Update the IPS and get it signed.
- Trade to the new strategy and link the trades to the change.
- Check billing, if the new strategy affects the fee or exclusions.
A worked example
Take a hypothetical two-person RIA with a client moving three accounts from growth to balanced. The advisor notes the reason and the call date. The operations lead sets 12 April as the effective date, ends growth on each account the day before, and trades all three on the 12th. The updated IPS is signed on the 15th. When the client asks at year end why the spring numbers look different, the account history answers it in one screen.
What are the common gaps?
- The old strategy overwritten, so history shows only the new one.
- No reason recorded.
- The IPS still describing the old strategy.
- Trades with no link to why they happened.
When is this overkill?
It isn't for a real strategy change. For a small tweak inside the same strategy, a short note on the account is enough.
How Advorra fits
Advorra keeps each account's strategy of record as a dated history in its Strategy Journal, fills and versions the IPS from the strategy with signed copies on record, and links trades on the blotter to the strategy. So which strategy applied on any day, and why it changed, stays visible. See the product page, or read about versioning and the strategy of record and when to update an IPS.
One thing to do this week: pick one account that changed strategy this year and check whether its history shows the old one.
An operations routine, not investment advice.
Questions advisors ask
Do we need a new IPS for a strategy change?
Usually yes, or at least an updated one, since the allocation and objective often change with it. Your procedures decide.
What date should we record?
The date the new strategy takes effect, which may differ from the conversation date and the trade date. Record all three if they differ.
What if the client asked by email?
Confirm the change with them directly, record it, and keep the email with the record.
How do we show which strategy applied in the past?
Keep each strategy on the account with a start and end date, rather than overwriting the old one.
Is this investment advice?
No. It is an operations routine.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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