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Portfolio Performance and Measurement Reporting

Do you receive regular portfolio performance reports (not account statements) that clearly measure your performance against the appropriate benchmarks and disclose exactly what you pay for the performance of your investments?

In order to make good financial decisions, it’s important to remove emotion from the picture. The only way this can be done is to:

  1. Set clear and realistic goals
  2. Create meaningful measurement
  3. Have defined consequences for failure


Most investors do not set clear and realistic goals…so there is no meaningful measurement, and no defined failures or consequences.  This contributes to decisions being emotional in nature, which is often a potentially devastating flaw.


Set Clear and Realistic Goals; Have an Investment Policy Statement

An Investment Policy Statement (IPS) should contain at least the following information:

  • The time horizon for your investment strategy
  • The income needs from your investment amount
  • A decision-making policy for how investments will be made
  • An asset allocation (diversification) model your investment will follow
  • A provision for how frequently and how your investments will be monitored and reviewed
  • A realistic rate of return goal which is relative to an appropriate benchmark

Without an IPS, there is no clear communication about what is expected and how those expectations will be met. Investing without an IPS is like driving across a foreign country with no map, no directions, and no preferred destination. It could be an adventure…but may not have the desired results!

For Meaningful Measurement, Use Portfolio Performance Reports

Monthly statements are not adequate for most reporting. High-end private asset management firms to the very wealthy use customized performance reports, typically issued at least quarterly. They should contain detailed performance summaries so you know exactly your precise rates of return:

They should also contain detailed and simple descriptions of your asset allocation, to ensure your balance is accurate, as required by your IPS:

The reports should also show each holding in each account that composes your total investment portfolio. This way, whether you have 1 or 100 accounts, you’re always looking at the big picture and can easily determine if you are achieving your goals.

Many firms are hesitant to provide this type of service as it is both expensive to administer as well as too revealing of the true results each investor is obtaining.  Without this type of reporting, however, it is impossible to determine accountability. At Synergetic Finance, we issue these reports and provide customized service that clearly advises our clients on the true performance of their portfolios.

Consequences for Failure – Hire Slow and Fire Fast

There has never been an argument for why a company should fire slowly. If they did, many would go out of business due to lazy or dishonest employees, or simply from an economic slowdown. Investors should react no differently if their portfolios are not doing what they were intended to do.

As an example, if your Investment Policy Statement says your time horizon is 3 to 5 years and your rate of return expectation is to exceed the S&P 500; you should give your chosen investment plan three years to confirm whether or not it is reaching its stated goal.  If it is not, you need to make a change. Giving an investment strategy three years to perform is ample time to determine whether or not it is meeting most of your goals. The key is to follow through on your plan, be methodical, and not let emotion interfere with your better judgment.

We hope this article about investment principals was informative. Please contact us so we can review the possibilities for securing and increasing your personal wealth while enhancing your retirement. Thank you!



Synergy Financial Management, LLC

701 Fifth Avenue Suite 3520

Seattle, Washington   98104

ph: 206.386.5455

fx: 206.386-5452