What factors are contributing to the recent 20% drop in assets under management for Altruist's model portfolios?

Introduction

The recent 20% drop in assets under management (AUM) for Altruist's model portfolios is a critical issue that demands immediate attention. This analysis will systematically identify, validate, and address the root causes while considering both short-term and long-term implications for our product strategy.

I'll approach this problem by first clarifying key details, ruling out external factors, and then diving deep into our product ecosystem. We'll break down the metric, gather relevant data, form hypotheses, and conduct a thorough root cause analysis. Finally, we'll develop a comprehensive plan to validate our findings and implement solutions.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking this might be a recent trend. When exactly did we start noticing this 20% drop in AUM?

Why it matters: Understanding the timeframe helps us correlate the drop with specific events or changes. Expected answer: The drop occurred over the last quarter. Impact on approach: A sudden drop would suggest an acute issue, while a gradual decline might indicate a systemic problem.

• Considering user segments, I'm wondering if this affects all portfolio types equally. Are we seeing uniform declines across different risk profiles or investment strategies?

Why it matters: This helps us identify if the issue is global or specific to certain portfolio types. Expected answer: The decline is more pronounced in higher-risk portfolios. Impact on approach: Uneven impact would focus our investigation on specific portfolio characteristics or user segments.

• Given the nature of AUM, I'm curious about the breakdown between new investments and existing account values. Has there been a change in new money inflows or is this primarily due to market performance?

Why it matters: This distinguishes between user behavior changes and external market factors. Expected answer: Both factors contribute, but there's a noticeable decrease in new investments. Impact on approach: A decrease in new investments would shift our focus to user acquisition and retention strategies.

• Thinking about recent changes, have we implemented any significant updates to our portfolio management algorithms or user interface in the last few months?

Why it matters: Recent changes could directly impact user behavior or portfolio performance. Expected answer: A new portfolio rebalancing feature was launched two months ago. Impact on approach: This would lead us to investigate the impact of the new feature on user trust and portfolio performance.