Tutorial: Personalized Recommendations

Note: Specific investments described herein do not represent investment decisions made by Global Predictions. The reader should not assume that recommendations identified or investing concepts discussed were or will be profitable. Specific securities and recommendations referenced or displayed in graphics provided herein are for illustrative purposes only.

We think Personalized Recommendations are the most useful part of the entire PortfolioPilot product. Let's dive in to see how it all works!

Note that Personalized Recommendations are only available to Gold or Platinum subscribers (both available with a 2-week free trial).

Understanding the Recommendation Engine Structure

The Recommendation Engine is a sophisticated, multi-layered system that takes into account your investment preferences, capital markets assumptions, and your current portfolio to generate personalized recommendations to try to improve your portfolio. It generates many potential suggestions and then methodically checks to see if they would actually improve your Portfolio Score, paring them down to the set of recommendations that you would actually see. The system is built on top of Global Predictions' forecasting infrastructure and portfolio management tools, personalized for you. Read more here.

Setting Your Investor Preferences

When you first onboard with PortfolioPilot, you’ll set your investor preferences. These preferences are critical as they inform the personalized recommendations you’ll receive. Make sure you accurately define your investment goals, risk tolerance, and import your full assets in order to get the most suitable recommendations. These preferences are used whenever the recommendations are generated, and so different settings will generate different outputs. The preferences can be updated in the Settings -> Investment Profile tab.

Navigating the Personalized Recommendations

Upon accessing the Recommendations page, you’ll encounter various filters to refine the suggestions further. These filters work in conjunction with your investor preferences. Each of the following descriptions are written assuming that there are recommendations generated (note: there are some cases where recommendations may not be generated like low-tracked portfolios, no cash, large risk mis-match, missing data, too many immutable assets, etc).

Score-based Recommendations (calculated to increase your Portfolio Score):

• Main Personalized Recommendations: Targeted suggestions for the most significant overall improvements to your portfolio that PortfolioPilot has identified (as measured by the Portfolio Score).

• Portfolio Overhaul: Offers a broader suggestion by applying 10 iterations that often demonstrates a larger, cumulative impact on your score.

• Next $1,000: Provides accessible recommendations for investing an additional $1,000 to enhance your Portfolio Score with just a few additional buying opportunities (taking into account the same set of inputs as the Main Personalized Recommendations above).

Note: recommendations may appear conflicting every once in a while, but that is fine - sometimes it makes sense to reduce a position now in your portfolio, but if the portfolio grows it makes sense to increase it.

Other views on updating your portfolio

Note: these three views are meant to be helpful, other methods of modifying your portfolio, but are not calculated using the Portfolio Score. When using these tools, please add the securities to a Draft portfolio and check the overall Portfolio Score impact before making any investment decisions.

• Lowest Performers: Identifies the five securities in your portfolio with the lowest forward-looking capital markets assumptions (as a reminder, capital markets assumptions can be toggled between Global Predictions' models and market expected returns (CAPM) in your investor profile).

• Top ETFs: Points out the ETFs with the highest capital markets assumptions over the next year (picked from a large universe of ETFs beyond just those that may be in your portfolio).

• Diversifying Suggestions: Offers options to introduce more diversity into your portfolio, with the goal of enhancing its resilience. Each suggested ETF comes from a specific asset class that is less well represented in your portfolio.

Using the Personalized Recommendations

Here’s a step-by-step guide on how to interact with the recommendations:

1. View Your Score & Recommendations: Check your current Portfolio Score and review the personalized recommendations.
2. Evaluate Recommendations: Click on “View Details” for an in-depth analysis of how each recommendation could impact your Portfolio Score and all its component scores. e.g. a recommendation could increase your Risk-adjusted Return score in a big way, but decrease your Downside Protection score.
3. Act on Recommendations: Select “Add to Draft” to see the sizing and recommended transaction amounts. A confirmation screen will appear for you to finalize the amount you wish to adjust in your draft portfolio.
4. Add more: once you accept any recommendation into a draft portfolio, all recommendations will automatically recalculate and new ones will appear with the updated portfolio context. Continue adding to your Draft Portfolio until you are satisfied with the end result
5. Ignore Unwanted Suggestions: If a recommendation does not align with your strategy, click “Ignore” to stop seeing it.

Confirmation and Execution

Once you decide to act on a recommendation, you’ll get a confirmation prompt to add it to a Draft Portfolio. The Draft Portfolios are like a sandbox in which you can play with the recommendations and add/remove items from your portfolio without risk of executing a trade (we have read-only access to any connected accounts for security reasons). Once you are ready to actually make a trade, tap the "Get order" icon in the top-left quick actions bar to create an Order Execution List that shows the difference between your Draft portfolio and your Net Worth Portfolio (or another Asset Group and/or securities account). You should research these changes to see if they make sense for you, before you go execute them in your own brokerage account. Note that PortfolioPilot does not calculate the tax implications or the transaction costs associated with making trades, which are key variables worth considering before executing any transaction.

Best Practices

• Regularly update your Investment Profile (e.g. risk preference, model assumptions, etc) and Net Worth items to reflect any changes in your financial situation or investment strategy.
• Use the portfolio management tools to understand the potential long-term impact of recommendations on your portfolio.
• Take advantage of the portfolio overhaul feature periodically to consider more significant adjustments for optimizing performance.
• Always consider any diversifying suggestions for downside protection instead of just focusing on maximizing upside from potential returns.
• Research any trades you would like to make, including thinking about tax implications and transaction costs.

Final takeaway

We have tried to build PortfolioPilot's Personalized Recommendations feature to be an interactive tool designed to give you a competitive edge in portfolio management. By fully engaging with this feature, we hope you can make informed decisions that align with your investment goals and market outlook. Lastly, we're here to help, as we believe the key to successful portfolio management is a blend of utilizing cutting-edge tools and staying true to your investment principles.

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