Building a Custom Overlay

The two overlays that are discussed on this site are ones that can be put on top of multiple types of passive investments that use the S & P 500 as a benchmark.

Of course not all investments use the S & P 500 as a benchmark and while the two overlays on this site can be used as a general stock market overlay, if you have a particular investment you would like to use a tactical overlay on to provide drawdown insurance for your clients, that can be done.

For example, you may have your own custom moderate portfolio you like to use for clients that has a certain profile. The firms that created the two tactical strategies you’ve read about on this site, can create a custom overlay that is more specific to your moderate portfolio.

The idea of offering clients a tactical overlay for 35 basis points as an example, is very powerful from a marketing point of view.

Feel free to beta test this with clients who you have in a buy/hold platform.  Show them the drawdown chart of that strategy going back to the last two crashes and then ask the if they’d be willing to pay 35 basis points for a tactical overlay that would go on top of the strategy in an effort to mitigate the next big drawdown.

We already know the answer to the question of whether your client would opt for the tactical overlay. The answer is that the vast majority would.

If that is the case, then using a tactical overlay will give you a significant competitive advantage over other local advisors how are offering similar buy/hold investment options like you are offering.

If you want to talk with someone about creating a custom tactical overlay for your firm, please click here to sign up.