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About the Book

Personal Benchmark: Integrating Behavioral Finance and Investment Management outlines the ways in which a program of embedded behavioral finance, fueled by what matters most to you, can be your protection against irrational financial behavior. The investment advisory conversation needs to change in order to better align with investor goals, and in this book, you’ll learn how to improve your investment experience, increase returns formerly sacrificed to misbehavior, and worry less about “the economy” as you become increasingly focused on “my economy.”

This new way is coming none too soon, given that for the 30-year period ending December 31, 2013 the average investor underperformed the S&P 500 Index by –7.42 percent annually. This figure comes from the 2014 update of Dalbar’s 30-year study, which 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.

This book strives to educate on how an embedded approach to behavioral finance principles into an investment management offering can improve an investor’s experience.

Why Do We Need to Look at Investing Differently?

Part 1 examines why we need to look at investing differently. The need emerges from the idea that advisors tend to 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”).

What Is the Personal Benchmark Approach?

Part 2 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 active managing investment performance (Chapter 6 “Selection of an Active Investment Manager”).

How Can We Execute a Purpose-Driven Investment Strategy?

Part 3 describes how a purpose-driven investment strategy can be executed. In this part of the book, we begin with an overview of our 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”).

Audio Excerpts

Co-Author, Chuck Widger, answers the question, “Why Personal Benchmark, and why now?”