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PerformanceCHECK™
Every investment portfolio should be monitored. The best person to do this is the
portfolio’s owner, but often people have neither the time nor knowledge to do it
effectively. That’s where Second Opinion’s PerformanceCHECK™ comes in.
There is overwhelming evidence that the long- term return from a carefully monitored
portfolio is higher than that of a portfolio where there is no systematic procedure
to monitor performance. Consider the performance of individual investors’ portfolios
relative to the performance of pension plans or people with significant wealth:
these portfolios have investment managers that are required to explain their performance
relative to their goals.
As a result, the returns on these investments are on average more than 2% higher with lower risk! In fact, in most cases, when individuals neglect to monitor their portfolio it not only under performs compared to professional investors, it also under performs against appropriate benchmarks.
So how exactly is a portfolio monitored?
- The portfolio is reviewed on a quarterly basis against an Investment Policy Statement which sets out the investment strategy, the target rate of return, the benchmarks, the fees, the asset classes that will be used, the rebalancing process and the evaluation process.
- When the portfolio has underperformed (or over performed) relative to the appropriate benchmarks, full explanations are sought and corrective action recommended. This is accomplished via a process called Attribution Analysis, whereby the return is broken down into components that explain how the return was achieved. It is not enough to know what your rate of return is; you should also know why that return was achieved.
Second Opinion’s PerformanceCHECK™ includes:
- Coordinating with your advisor to ensure that a proper Investment Policy Statement is in place.
- Assistance in choosing the appropriate benchmark for individual asset classes and for the portfolio as a whole.
- A quarterly review of your statements and explanation from your financial advisor as to the reasons for deviations from the benchmark returns.
- A review and report of all management fees and commissions.
- An opinion as to whether or not your portfolio managers are adding value.
- Advice on income tax efficiency.
- A full monitoring report every three months which breaks your return down into components to explain why your portfolio performed the way it did.
Why wait any longer? Ask for a Second Opinion on your portfolio’s performance today.