How to Define Your Value Add to Discerning Clients

Written by: Andy Hyer, Dorsey, Wright & Associates, a Nasdaq Company

With the rise of roboadvisors, advisors must bring more value to the table to earn each client’s business.

It’s a major shift from the days when strategic asset allocation was every advisor’s greatest offering. But today, almost everywhere you look, this service is provided online—for free. So how can today’s advisors compete? What can you offer from the very first interaction with a prospect that sets you apart, ensures value for your fees, and gives your prospect the assurance that your offerings have the potential to deliver very real, long-term value?

The solution is simple. And while it may feel a bit like treading new waters for advisors who have built their practices around traditional strategic asset allocation, when you dive into the details, this solution will not only feel familiar, but it will give you a new degree of confidence in your ability to deliver stronger outcomes for your clients.

What is this simple solution? At Dorsey, Wright & Associates , a Nasdaq Company, we use the DWA Research Platform and its asset class ranking tool called DALI (Dynamic Asset Level Investing). Based on the reality that every asset class goes through bull and bear markets, DALI leverages these inevitable market shifts to marry tactical and strategic asset allocation, using real-time research to analyze the relative strength of market sectors, asset classes, regions, and even individual stocks. It then allows advisors to identify and capitalize on market opportunities based on actual market trends. Unlike tools that attempt to forecast where stocks are heading tomorrow, DALI ranks the relative strength of any given asset compared to other similar assets to quickly and easily pinpoint buy and sell signals based on the asset’s upward or downward momentum. And while DALI can certainly be used as a pure active management tool, many advisors, especially those struggling to combat the threat of roboadvisors, are using it today to bolster their client portfolios with the strongest possible assets and introduce a whole new level of diversification.

The process of DALI is a lot like a giant arm wrestling match.

Instead of picking specific assets based on intangibles such as quarterly forecasts, DALI takes a representative sample from each asset to create an equation-based Relative Strength Matrix that clearly shows the winner and the loser. Here’s an example:

Emerging markets are very strong right now for the first time in years. To leverage this trend, you want to recommend adding an emerging market ETF to your client’s portfolio. Using DALI, you have all the talking points you need. You can sit down with the client and present a visual representation of 1) the upward momentum of emerging markets compared to other asset classes, and 2) which emerging markets are exhibiting the greatest strength. Based on the numbers, you recommend adding a Latin America ETF to leverage this opportunity. Using DALI, you can then compare the 23 available Latin America ETFs to identify which ETF is exhibiting the greatest strength at the moment based on actual numbers. The evidence of the trend is clear, making it easy for your client to understand the reasoning behind your recommendation. The process has suddenly gone from conjecture to fact, all because DALI painted a very clear picture of where the strengths and weaknesses exist across the market. Just like in arm wrestling, the winners and the losers are crystal clear.


Using the information provided by DALI, you can then allocate your client’s portfolio accordingly, as well as identify buy and sell signals to adapt it in the future. You can even set up email alerts to tell you when those signals occur, eliminating the task of monitoring each asset. Best of all, you can inject a disciplined approach to tactical allocation into every client’s portfolio. The beauty of the approach is that it’s a true marriage of tactical and strategic planning that incorporates the strengths of both methods to build a more diversified, adaptable portfolio.

Every investor would like to believe there’s someone out there with a crystal ball—an advisor or market guru who can see into the future to tell them what stocks to buy today to create a fortune tomorrow.

But while that crystal ball simply doesn’t exist, DALI is a simple, straightforward tool to help any prospect or client understand how you can add value to their portfolio—without introducing greater risk. It may not feel as magical as a crystal ball, but it just may be the key to getting them on your books and adding stable, significant assets to your AUM.

To learn more about Relative Strength and the Dorsey Wright Relative Strength strategies, download the whitepaper Point & Figure Relative Strength Signals , or contact us here. To learn more the DWA Technical Research platform, click here to take a free 21-day trial.

Dorsey, Wright & Associates, LLC, a Nasdaq Company, is a registered investment advisory firm. Neither the information within this article, nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products. This article does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.

The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Relative Strength is a measure of price momentum based on historical price activity. Relative Strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon.

Past performance, hypothetical or actual, does not guarantee future results. In all securities trading there is a potential for loss as well as profit. It should not be assumed that recommendations made in the future will be profitable or will equal the performance as shown. Investors should have long-term financial objectives. Advice from a financial professional is strongly advised.