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All of this can be avoided if you transition the expectations you put on your adviser from trying to beat “the market” to constructing a portfolio to generate a target return designed to meet your specific goals while taking as little risk as possible. These goals can include maintaining a particular lifestyle in retirement, building up a targeted estate value, or funding a charitable giving plan.
The benefit of goals-based benchmarking is that it removes emotional biases such as performance chasing.
When it comes to utilizing this approach, have a look at how you are strategically positioned, including global diversification, how your portfolio did during the worst crash since 2008, and how on track you are to meeting your target return. For those who haven’t made a financial plan, it can be a great first step in helping determine what that target should be in context of current market conditions.
Finally, remember that while it is human nature to want to compare ourselves against others, doing so often only adds to our anxiety and can lead to poor decision-making. Ultimately, this means giving up on trying to beat everyone else and instead to start running your own race.
Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax and estate planning.