Having made wine for 25 years and owned a Syrah vineyard for a decade, I’m deeply aware of the critical importance of annual vine pruning approaches. I had great fun considering similarities between the entire risk management process throughout design, implementation, and ongoing monitoring client portfolio goals and vine management. Proper pruning requires a unique combination of hands-on experience with region terroir, varietals, weather patterns all combined into what is referred to as, institutional knowledge. With vine pruning, you’re looking backward to predict the future but must combine it with the current vine health, climate, and overall winemaking goals.
As I share this, I’m certain more experienced advisors quickly connect those approaches with their own world of client service, risk management, and portfolio goals. Ultimately, advisors utilize a combination of risk assessment tools and data from past stress testing for how portfolios react during volatile times to share with clients how they will fare during various scenarios. Unlocking the vine's secret world is similar to the challenges of obtaining how clients feel about risk. The selection in vine management of those spurs to leave and which to prune is similar to which off-cycle versus on-cycle assets to consider pruning relative to risk, return, taxes, and expenses in various asset classes and sectors.
Imagine a world in pruning (let alone wealth management and advice) where you’re able to factor in the past while incorporating current and forward risk scenario analysis with applications. In both worlds you're seeking to identify which shoots (assets/sectors) will be most successful in yielding the optimal fruit result relative to making wine (portfolio design results across risk, return, taxes, expenses) they seek to ultimately sell.
It’s fascinating to see how critically important pruning is in both winemaking/vine canopy management, as it is in client portfolio #riskmanagement. In both instances, in vastly different environments, professionals are creating the shape of what is going to last a lifetime but that requires tending each and every moment of working together.
(NOTE: The rainbow picture included is the Roush Family Syrah Vineyard in Kenwood CA - named “Villa Della Luna” and taken just after spring pruning)
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