Pension Performance Review.....

From our experience there are three major reasons why many pension plans underperform:  

Most people have not had their risk profile thoroughly assessed and this may result in clients taking unintended investment risk with their pension portfolio or not maximising the gains available. Also most people, when asked, believe that market timing is a critical aspect of investment performance but extensive research shows that only 1.7% of investment performance is determined by market timing.

*On the other hand, the same studies show that 92% of performance is actually determined by the allocation of assets in a portfolio. That’s why it’s important to review your asset allocation on a regular basis.

The importance of asset allocation was emphasized by economist and Nobel laureate, Harry M. Markowitz, the father of Modern Portfolio Theory. In 1952, Markowitz published a paper called Portfolio Selection, which appeared in a publication of the Journal of Finance. The landmark paper established the foundation for a theory of portfolio management that stresses the importance of asset allocation over market timing and investment selection. Over subsequent decades, his theories were tested and proved valid, which led to his Nobel Prize – along with two associates – for economics in 1990. In many cases, the typical Financial Adviser does not understand or use Modern Portfolio Theory in their work with clients. In many cases, the typical Financial Adviser is just trying to sell financial products.

Many people are not getting value for money because they are paying higher charges than necessary for the administration of their pension plan and receiving poor service. One reason is because most people started their pension plan before pressure from the Government and the buying public forced in more competitive and better value charging structures.

Unfortunately, many people do not address this problem because they are too busy or do not understand the extent of this issue. They think their pension sales person is taking care of their affairs and would make changes to their plan if necessary. That's why it is important for you to take charge of your pension plan now before it is too late.

Acting now could make a huge difference to your future financial security. It could enhance the performance of the investments in your pension and lower your management fees. That is why we urge you to consider The Pension Performance Review™.

*Determinants of Portfolio Performance™, published in the Financial Analysts Journal in July/August 1986 and updated May/June 1991, Gary P. Brinson, L. Randolph Hood, and Gilbert Beebower.