Less Chaos, More Clarity: 5 Tips to Streamline Your Trading Process

Trading probably didn’t become complicated for you overnight. Like most advisors, you probably started out with clear expectations of what trading would be like: You’d raise some cash here, run a rebalance there, and update a couple models every now and then - simple. But then, the new accounts started piling up, one-off situations arose, and “temporary” workarounds became permanent. You may have started relying on some very risky methods to remember things - sticky notes, spreadsheets, emails, and maybe even a string tied around your finger. 

It’s easy to feel like complicated problems need complicated solutions. The good news is that you probably don’t need a more complicated system, you likely just need cleaner workflows for your firm’s trading tasks.

To help, we’ve gathered together a list of five things you can do today to help simplify and organize your trading processes. 

1. Tag noteworthy accounts so that they’re easy to find. 

Every client is unique, and so are their accounts. An account may have upcoming contributions or distributions, it may be transitioning out of non-model holdings, or there may be other restrictions to keep in mind. You and your trading team simply don’t have the ability to remember every relevant account detail before placing a trade. 

Instead of spending time digging through notes to help you remember everything, consider using account tags to make those special cases visible. Most custodians have a “custom category”, “tag”, or “custom field” area to easily and quickly add these notes, view them while trading, and filter or sort by these tags to make trading more efficient.

Some examples of account tags could include:

• “Do Not Trade” or “DNT”

• “Distribution” for accounts with recurring distributions

• “Contribution” for accounts with recurring contributions

• “Transitioning” for accounts transitioning into a new portfolio

Through the use of account tags, important account information becomes filterable and is sitting directly in front of you or your trading team, saving you time and giving you peace of mind. 

2. Establish a schedule for recurring trading tasks. 

When there are trading tasks that happen on a recurring basis, consider creating a schedule for these tasks and blocking off time to handle them. By establishing a regular cadence for as many tasks as possible, you are able to get ahead of tasks instead of pushing them off another day or relying on last-minute custodian alerts.

Each firms’ schedule will look unique, but an example of a schedule could look like this: 

• Weekly Tasks 

  • Monday - Review & invest recurring contributions

  • Tuesday - Review & raise cash for upcoming distributions

  • Wednesday - Invest excess cash 

  • Thursday - Process model changes

  • Friday - Assign new accounts to models

• Monthly - On the first Monday of the month

  • Process model changes

  • Look for Tax Loss Harvesting Opportunities

A consistent schedule provides:

1. Confidence that recurring tasks won’t be forgotten

2. Clear expectations for CSAs, advisors, and traders

3. Easier delegation and accountability 

4. Fewer surprises from custodian alerts

3. Create an objective procedure for every trading task. 

Quality and precision in trading is key. 

There are times when you may hire additional trading help, you need to delegate, or maybe you just need a reminder of how to do a trading task. When these situations arise, objective and specific instructions help to ensure proper, quality execution of trading tasks. 

When creating trading procedures, think objectively and document the specific steps that need to be taken to complete the task. Consider questions like: 

• What information is needed? 

• Who is responsible for the task?

• Where do you click and what do you need to do in the custodian platform? 

• What exceptions are there? 

• What needs to be checked before execution? 

• What needs to happen after execution?

• How is completion documented? 

Creating and implementing objective trading procedures allows you to improve quality control, delegate tasks when needed, and seamlessly scale your firm in the long run. 

4. Create - and actually use - a comprehensive trade request format.

A trade request comes through - “Please buy stocks in the Smith’s account.” 

Okay… which Smith account? Which stocks? How much money should be used? Does cash need to be raised to buy the stocks? Are there any special cases to keep in mind? Should dividends and capital gains be set to be reinvested? 

Few things bring the trading process to a screeching halt like an incomplete trade request. Creating a standardized trade request format that everyone in the firm uses eliminates back and forth, reduces the risk of trade errors, and creates fluid delegation. 

Your trade request format could look something like this: 

1. Account Number: 

2. Action (Invest/Raise Cash/Rebalance):

3. Amount: 

4. Restrictions (Exclusions/Gains Limit):

5. Due Date: 

6. Other Special Notes: 

Your trading team doesn’t immediately know what’s going on in your head and your future self may forget what you were planning to do. By implementing a standardized trade request format, there is greater clarity for you and your team - your trading team doesn’t have to try to interpret what you mean, and you don’t have to worry if they’ll interpret it correctly. 

5. Give unique, clear names to your models and strategies.

Here’s a brain teaser for you: 

You see a trade request on your screen. It reads “Invest the Smiths’ IRA into Model 1”. You open your custodian’s platform, look at the models, and see the following potential options. Which model do you invest the Smiths into?

1. Model One

2. Model 1 - New

3. New Model 1

4. Model 1 - Updated

5. Model 1 - NEWEST

Your models are part of your firm’s intellectual property and brand. They should have names that are unique to each other, descriptive, and consistent. Not doing so is a recipe for communication failure with a side of trade errors. 

When naming your models, consider incorporating your brand and information that helps to identify the strategy. Clear naming: 

• Reduces the risk of trade errors and miscommunication

• Makes internal conversations easier

• Helps CSAs and trading teams identify the correct strategy

• Strengthens your firm’s brand

• Gives your clients a more polished experience

These 5 recommendations focus on removing unnecessary decisions from your trading process to remove guessing, improve efficiency, provide clarity, and ultimately help to scale your firm’s practice in the long run. When expectations are clear, information is easily found, and processes are repeatable, you can delegate with greater confidence. Instead of putting band-aids over everything, create a process that fixes root issues and prevents problems down the road.

If you read this and thought, “Our trading process could definitely be improved,” you’re not alone. At Sage Trading Collective, we help financial advisors take the day-to-day work of trading off their plates and build processes that make trading clear, consistent, and easy to manage. 

Want to spend less time managing trades and more time managing your clients? Fill out our interest form below to tell us about your firm, your current trading process, and where you could use additional support. From there, we’ll work together to determine if Sage Trading Collective is the right fit for your team. 

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