Portfolios & risk
The proposal is a sales document
It is built to win the relationship. That is a different job from describing what the client is about to live through.
Published
What proposals are optimized for
Clarity, confidence, and comparison against whatever the client has now. They are persuasive documents and there is nothing wrong with that.
The problem is that they become the client’s expectation, and they were not written to be one.
What they systematically understate
How the portfolio feels in a bad period. Charts of long-run outcomes compress the experience of the intervening years into a line that only goes one way.
A client who has seen the line does not expect the years.
The hypothetical problem
Any illustration of what a strategy would have done is subject to real constraints under the Marketing Rule, and for good reason. It is straightforward to construct an illustration that is technically accurate and functionally misleading.
If the proposal only shows the destination, the client will experience every step of the journey as a deviation from plan.
What to add
The historical drawdown for a portfolio of this shape, and how long recovery has taken. In currency, not percentages.
A plain statement of what would have to be true for this to be the wrong approach.
What to remove
Anything implying a result. Any comparison chosen because it flatters. Any precision the underlying analysis does not support.
The commercial objection
That this loses business to a competitor with a more confident document. Sometimes it does.
It loses the clients who were buying confidence, and those are the clients who leave in the first difficult period. That is a filter rather than a cost.