Defining goals and
Know your client's personal benchmark
A goal must be defined, otherwise progress is purely happenstance. Most investors have a general idea of their investment goals, but can’t quantify a realistic target in relation to historical market behavior over time.
At Flexible Plan Investments, Ltd. we’ve developed a process called OnTarget Investing; a set of tools designed to establish and maintain realistic investor expectations over the life of their portfolio, with the added value of holding managers accountable for their performance.
Flexible Plan’s OnTarget Investing process combines investor input with analysis of historical investment scenarios to set a reasonable goal over an investor-specified time period. We then remove the guesswork as to whether a portfolio is performing as expected by providing illustrated quarterly reports that track portfolio performance and progress in relation to that target goal, helping connect the understanding between advisor and investor.
In addition, these reports can provide a definitive and reasonable benchmark against which to measure portfolio progress. Everyone knows that the S&P 500 Index is not an appropriate benchmark for investors. No financial professional would place all of a client’s assets in an investment that fell more than 50% twice in less than ten years. Yet, financial firms and the media persist in using this gauge of investment performance.
“Why?” Before OnTarget Investing was developed, there was no customizable alternative. Now the power of technology and advanced Monte Carlo analysis make it possible to create a custom benchmark for every investor—the OnTarget Monitor.
The OnTarget technology is so powerful that we use it periodically at Flexible Plan to separately evaluate our strategies and those of our third-party managers. The OnTarget methodology is utilized to determine inclusion in our portfolios and their continued availability. It helps answer the question of whether a strategy is broken or simply out of sync, eliminating guesswork and arbitrary choices and placing everything in a historical perspective.
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