Don’t allow this to be confused by comparisons with academic benchmarks. You want to make money, you don’t care how the advisor compares to colleagues in the same category, do you? For example, if one advisor recommends a Japanese equity fund and it is the top fund in that category, that sounds great. If, however, all Japanese equity funds lose money over a five year period, why are you invested in any of them? So you are invested in the best of a horrible lot. I do not see how that advisor decision provided you value.
Will the investment recommendations your advisor provides, make you money? Again, that is the acid test. An advisor can answer that best by revealing if they are making themselves money. Equity markets, over time, provide the best investment return. The world’s equity markets, over the long term, provide a 6% return, net of inflation. That should be the only benchmark you need. Sure, look at the TSX, the S&P500, the Nasdaq but do you make in excess of 6% real return? If you do, you are investing well, if you don’t, you are failing yourself.
Do the advisors do what they say they will do? This is credibility. Everyone will make errors, will have short term hiccups. This is the world of investing, after all. This is the world of educated guesses, of prediction. It’s not about avoiding error. It is about having an approach where an error or three doesn’t sink the overall portfolio or doesn’t sink it for long. Credibility is about acknowledging the error. Being clear an error was made and pointing out corrective action.
In summary, The Greedy Farmer Investing Service simply reveals what I do for myself. My record is my report card and is you assurance that The Greedy Farmer’s interests are aligned with yours.