New Performance Reporting

Quinn Waddington - Nov 29, 2016
Last week I wrote about the new reporting with regards to the cost of investing.  While that is a very important topic, the most important question is how much value you are receiving for that cost.

New Performance Reporting

 

Last week I wrote about the new reporting with regards to the cost of investing.  While that is a very important topic, the most important question is how much value you are receiving for that cost.

 

There is obvious value in having a person you can trust to work with in building and executing a financial plan to help you achieve your goals and there is also obvious value in buying and selling investments, record keeping, providing information and investor insurance but one of the most important pieces of value comes from the performance on your investments and how they compare with your long-term financial plan.

 

The new performance reporting hopes to standardize and clarify the tracking of performance in your portfolio.  In the past, some companies used time-weighted returns while others used money-weighted but the new reports will all be done using the money-weighted method.  While there are pros and cons to each method, the money-weighted method was chosen to make the returns more specific the individual clients.  Every company using the same method will allow you to compare returns on an “apples to apples” basis.

 

As the returns will be calculated starting Jan. 1, 2016, there will only be one year’s history on the performance reports.  This isn’t to say that old performance is wiped clean but they had to start somewhere so unfortunately the reports will take time to build up performance history.

 

It is widely known that Account Statements are usually very hard to understand and make it difficult to track performance and transactions so these reports should simplify that by putting not only the annual gains/losses for each account on one report but also deposits, withdrawals and performance history.

 

Lastly, all of the performance on the reports is specific to the client and includes their costs so the reported performances will always be net of fees.  This way you will know exactly how your own investments faired.

 

As stated at the beginning, the most important information to be taken from this report is how your performance measures up to your long-term financial plan.  You will always have a neighbor whose account went up 50% last year but everyone has a different risk tolerance and situation (and some people tend to exaggerate or only tell the good side of the story).  If you are satisfied with your financial plan and your results are in line with it then you should feel great with whatever that performance is. 

 

If you don’t have a financial plan to compare your results with then you should get one…now!

 

Contact me today (or in January when you receive your report) and we can help determine how your performance matches up.  quinn.waddington@canaccord.com or (604) 643-0874