In Personal Benchmark, Widger and Crosby define ways
financial advisors can execute a program of embedded behavioral finance
that is fueled by what matters most to their clients, and can protect
against irrational investor behavior. The book demonstrates how advisors
and investors can improve their investment experience and increase
returns formerly sacrificed to emotional, rather than rational,
decisions. Their approach reduces investor concerns about “the economy”
by shifting their focus to “my economy” by taking a goals-based
investment approach.
The book also aims to help close the behavior gap that exists among
investors. According to the 2014 update of the 30-year study by DALBAR,
the nation's leading financial services market research firm, the
average equity investor underperformed the S&P 500 Index by -7.42
percent annually for the 30-year period ending December 31, 2013. The
study reported the average stock market investor’s annualized return for
this period was +3.69 percent, compared to +11.11 percent for the S&P
500 Index. According to Widger and Crosby, this behavior gap exists
because in periods of volatility, investors tend to sell paper losses at
bottoms and pile back in at market tops. This suggests that individual
investors feel the pain of loss more than the pleasure of gain.
“Dr. Crosby and I wrote Personal Benchmark to enable
the conversation between advisors and their clients to change,” said
Widger. “Over my 30-plus years in the investment management industry, I
have seen the focus shift away from investor goals to relative returns,
such as trying to beat industry indices that bear little relevance to
their lives. Goals- or outcomes-based approaches are not new ideas, but
there is a new consciousness emerging about them. It’s time to return
them to common practice, and we believe Personal Benchmark can
be an important tool in making that happen.”
“Our view is that Personal Benchmark is the most
hopeful behavioral finance book out there,” said Crosby. “For so long,
the behavioral finance conversation has been mired in negativity about
all the ways in which investors are hopelessly irrational. We agree that
humankind isn't exactly logical all of the time, but we believe that
those quirks can be harnessed for investor benefit when the focus turns
to personal goals and considers investors’ best interests.”
“In a business where investment returns and investment benchmarks have
been analyzed thoroughly, the subject of personal benchmarks and their
construction, suitability, and measurement is in its infancy,” said
Robert C. Doll, Chief Equity Strategist and Senior Portfolio Manager at
Nuveen Asset Management. “Taking principles from behavioral finance—for
example, creating a disciplined approach that reduces the emotional
temptation to buy high and sell low that plagues so many—this book makes
a great contribution to financial advisors and their clients in seeking
to create satisfactory investment experiences."
“This book is an exciting advance on how behavior research can and
should influence investment decision making,” said Carl J. Schramm,
University Professor at Syracuse University and former President of the
Kauffman Foundation. “Its focus on how the individual investor and their
advisor begin with developing a personalized set of economic
expectations and managing a portfolio in the context of the investor's
own economy is an important and actionable insight."
"This book is an ode to a commonsense realization—investing is a social
science rather than a physical one,” said Jason DeSena Trennert,
Managing Partner and Chief Investment Strategist at Strategas Research
Partners. “Combining tried and true investment techniques with
cutting-edge research on behavioral finance provides a wonderful new
approach for those charged with managing other people's money."
Personal Benchmark is divided into three parts:
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Part 1, “Why Do We Need to Look at Investing Differently?” examines
why we need to look at investing differently. The need emerges from
the idea that advisors tend to be optimists (Chapter 1, “Freedom in
the Market and Advisor Responsibility”), while investors tend to make
financial decisions based on less than informed or rational bases
(Chapter 2, “Investor Emotions and Financial Decisions”). Moreover,
risk is seen as inherently personal, necessitating a shift in how risk
is measured and managed (Chapter 3, “Risk, This Time It’s Personal”).
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Part 2, “What Is the Personal Benchmark Approach?”, provides
an introduction to the Personal Benchmark approach, including an
overview of Brinker Capital’s multi-asset class investing philosophy
(Chapter 4, “Brinker Capital’s Multi-Asset Class Investment
Philosophy”), using the concept of “buckets” to create a segmented
approach to investing (Chapter 5, “The Power of Buckets”), and
outlining the practices for actively managing investment performance
(Chapter 6, “Selection of an Active Investment Manager”).
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Part 3, “How Can We Execute a Purpose-Driven Investment Strategy?” describes
how a purpose-driven investment strategy can be executed. In this part
of the book, Widger and Crosby begin with an overview of Brinker
Capital’s goals-based approach to planning and monitoring the
investment portfolio (Chapter 7, “Using a Goals-Based Approach”) and
encouragement and guidelines for pursuing your Personal Benchmark
(Chapter 8, “Pursuing Your Personal Benchmark”). The remaining two
chapters provide practical tools for the advisor to use, including an
easy-to-use explanation of investing according to the Brinker Capital
approach and Personal Benchmark (Chapter 9, “Providing an
Easy-to-Understand Explanation”), as well as an introduction to the
Personal Benchmark solution (Chapter 10, “Leveraging a Scalable
Offering for Investors and Advisors”).
For more information about Personal Benchmark, please
visit http://www.personalbenchmarkbook.com.
Contact the publicist:
Sadhika Salariya
Publicist
ssalariya@wiley.com
201-748-6782