What is a Realistic Investment Performance Benchmark? upd April 2015

You make your financial advisor accountable for beating the stock market. You make the S&P 500 index fund your proxy for the performance of the […]

Why Use Paladin Investment Performance Benchmarks – Updated September 2014

Paladin surveyed 550 investors to determine why they used a Paladin Investment Performance Benchmark to monitor their financial advisors’ performance. Following is a brief description of […]

The Fiduciaries Default Investment Choice

Several high profile class action law suits are now winding their way through the Federal Courts alleging high costs, sustained under-performance, and failure to properly disclose and account for revenue sharing and other “under the table” payments in pension and 401(k) plans. The Fiduciaries have only themselves to blame. These issues should never have been on the table.

All relevant fiduciary standards including the 1974 Employee Retirement Income Security Act (ERISA), the 1994 Uniform Prudent Investor Act (UPIA), the 1997 Uniform Management of Public Employee Retirement Systems Act (MPERS) and the 2006 Uniform Prudent Management of Institutional Funds Act, and Restatement 3rd of Trusts (Prudent Investor Rule) have embedded language suggesting that Passive Investment Strategies such as Index Funds, Asset Class Funds, and Exchange Traded Funds (ETF) should be the appropriate implementation of a fund’s investment policy. Fiduciaries ignore this at their peril. […]

What is an Investment Performance Benchmark?

A Benchmark is a performance goal. Your advisor is paid to produce results that beat the performance of your benchmark. If your advisor does not beat the performance of your benchmark you might as well invest in the index funds that make up the benchmark and reduce your fees by 75%.

Let’s say the investment performance of your stock portfolio was a positive 10% for the past 12 months. You think, “not bad, a double-digit rate of return”. However, what if the stock market is up 20%? Instead of being up 10% you have lagged the market by 10% – a complete reversal.

When your financial advisor says the stock market is up 20% he is usually referring to an index fund that is supposed to represent the performance of the market. Two frequent examples are the Standards & Poor 500 (S&P 500) and the Dow Jones Industrial Average (DJIA).  […]