Our Super-Diversified Portfolios have delivered industry-leading performance *. It's impossible to say these returns are the best in the industry but they are certainly among the best we can find!
There is a lot to consider when evaluating performance such as the amount of risk in the portfolio, the period of time, the market environment, and more. The performance of our Super-Diversified Portfolios show well in light of all these considerations.
In the accompanying graph see a comparison of our Super-Diversified portfolio performance to that of multiple comparables. Furthermore, if you would like to see how our Super-Diversified Portfolio compares to your portfolio, click here to request a portfolio review.
* per Portfolio Peer Review Performance Report dated December 31, 2016 produced by SuggestUs Asset Risk Consultants.
Super-Diversification versus Competition ?
Performance results backed by research
In addition to delivering industry-leading results since 2010, Patton's Super-Diversified Portfolios are backed by research extending to 1972. Investing is a marathon, not a sprint. An investment strategy must be designed to weather a wide-range of market environments. Research indicates that results since 2010 are consistent with returns that could have been achieved over decades of time.
Luck or Design + Discipline?
Great short-term performance can happen by luck but great long-term performance generally only happens by design and discipline. The performance of Super-Diversification has been the result of design and discipline. Its concepts and disciplines are supported by mathematics and extensive research that have proven to work for decades and we expect to continue working for decades.
Long-term investment success is achieved by identifying the most successful investment principles, implementation of the same, and having the discipline to stay the course. There have certainly been shorter periods of time when the performance of Super-Diversification has lagged behind a more traditional strategy...that's the reality for every investment strategy. Having the discipline to stay the course during these times can be difficult for some investors but has proven rewarding long-term.
Our competitor's performance
Why don't other advisors report their past performance? We believe because it's not worthy of reporting!
Do some research, search the internet or inquire directly with other advisors, and you'll find that performance results are difficult if not impossible to find for our competitors. You will find that many investment advisors write a lot about their investment process and philosophies but typically omit performance results and any proof that their investment strategy works well.
When inquiring directly with an advisor, they may show you a sample client portfolio with the names hidden. This then begs the question of whether or not this one client was the one with the best performance or was this representative of all their client portfolios. Some advisors will try to explain that each client is different so there is no one performance to report. This may be true but the industry has guidelines about how to report such performance.
The bottom line is that a very few advisors advertise performance. From what we've seen this is for very good reason! We believe the benchmarks we have used when comparing our performance to the industry are the best available and likely over-estimate how the average adviser is actually performing.
Performance for long-term investorsInvesting is a marathon and not a sprint. If you want to chase the hottest trends, Super-Diversification is not for you. Super-Diversification is designed and built to win the marathon but it will not win every sprint. There is no investment strategy that works best all the time; this is one of the most challenging realities for many investors.
frequently asked questions
No. There is not a legal requirement that 401(k) plans have an investment advisory. Regardless, the vast majority of plans do have an investment advisor.
An investment advisor can often provide services that other plan service providers cannot. A 401(k) plan is an investment vehicle for its participants. There are typically 1,000ĺs of investment options to choose from to make available to participants in the plan. The plan needs an advisor with extensive experience to help select the appropriate 15-25 funds.
As an advisor to the plan, Patton provides a wide range of services including:
- Plan design
- Fund selection
- Recordkeeper and administrator searches
- Annual plan reviews
- Named fiduciary
Other service providers, such as the recordkeeper and administrator, can provide advice to the plan but typically they have NO legal fiduciary responsibility to provide advice that is only in the best interest of the plan participants. Patton, often as the only service provider serving as a fiduciary to the plan, MUST provide only advice thatĺs in the best interest of its participants otherwise Patton could face legal consequences.
Pattonĺs goal is to help every participant accumulate as much money as possible for their retirement with as little effort and anxiety as possible. To help accomplish this goal, we do the following:
- Initial Participant Education Meeting
- Ongoing education via newsletters and videos
- One-on-One Participant Consultations
In addition to the above services, Patton is glad to assist participants in any way possible to help them meet their retirement goals.
Yes. We serve as a fiduciary to the plan requiring us to provide advice that is only in the best interest of the planĺs participants. We state this in writing in our agreement.
Note that most other service providers, such as recordkeepers and administrators, as well as most stock brokers, insurance companies and agents, and mutual fund companies do NOT serve as a fiduciary.
Transition from one recordkeeper to another can be very beneficial to the plan and its participants but it does require some effort on everybodyĺs behalf.
A transition typically takes about 60 days. Patton manages the entire process so that it is always clear what is need from whom and what needs to happen next. During this time, the point of contact for the plan sponsor (employer) will invest roughly 8 hours in the process. This will include a handful of conference calls, gathering information from the existing recordkeeper, scheduling participant education meetings, and communicating with participants.
Open architecture means that the plan recordkeeper allows nearly any investment fund to be selected and made available in the plan to its participants. This is important so that the best funds can be selected for the benefit of participants.
Some recordkeepers limit the list of funds that can be selected from. Often these are higher cost funds and/or proprietary funds that often do not serve the best interest of participants.
An independent advisor is one who is employed by a firm that is NOT a broker firm, insurance company, mutual fund company, recordkeeper, or similar firm. Employees of these other firms most often are very limited in what they can offer to a plan and its participants (they can only offer their company as the recordkeeper, they are compensated more to have their firms funds available in the plan, etc.).
An independent advisor can instead offer the services of any recordkeeper and recommend any investment funds for the plan with no limitations or alternative motives. This positions the independent advisor to provide the best advice possible to the plan and its participants.
Low costs. Index funds tend to be the lowest cost funds available. There is an index fund available for nearly every asset class (type of investment). Furthermore, extensive research has demonstrated that low costs funds simply produce higher returns that higher cost funds.
It is important to note that not all index funds are created equally. For example, some index funds are higher cost than other index funds that follow the exact same index. There are 1,000ĺs of index funds today to choose from and careful analysis must be done to select those that are best for a plan.