Ray Lucas • Worcester, MA
Integrated Financial Partners • Lincoln Financial Advisors Corp.
A challenging part of an actively managed investment approach can be during periods of time such as we have now—a strong bull market for equities.
When the market continues to move higher, some people tend to measure active management returns just like a mutual fund or any other investment—looking at indexes published every day.
While an investment portfolio may have delivered very positive returns, if it did not, say, exceed 30% in 2013, it is absolutely amazing the short-term memory that some clients may have. And these are the same clients who may have lost faith in the future of the U.S. in 2008. They may be asking about an increase in equity market exposure at a relatively high point in the markets, historically never the right time to ask those questions.
This is why it is so important to thoroughly take clients through the planning process and establish benchmarks—reasonable goals and objectives, time horizons, and expected rates of return.
Measurement should not be against broad market indexes such as the S&P 500 but against a client’s own account and baseline. While those conversations still may come up occasionally, laying a solid foundation of expectations makes them far less frequent and, when they do happen, easier to manage.
Disclosure: Raymond J. Lucas Jr. is a registered representative of Lincoln Financial Advisors Corporation. Securities and advisory services offered through Lincoln Financial Advisors Corp., a broker-dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies.
Following publication of this article, Mr. Lucas was registered with LPL Financial LLC, effective 2016.
Photography by Greg Anthony
