Why aren't returns posted on your financial statements?

In his Thursday blog entry, Dan Richards spoke of clients wanting to get a "...an easily comprehensible reading on how they've done over the past year and since they began working with their advisor." The President of Strategic Imperatives, a consulting firm that works on marketing strategies for financial advisors, was describing the public's increasing consciousness of needing to be accurately updated of their returns every year as a means to assess their portfolio's performance. I, genuinely, hope this is the case. Intuitively, people that don't have relationships with a full-service brokerage might believe this would just go without saying. Why wouldn't a client's returns be posted on their financial statements?

Contrary to Richards, my personal experiences have shown that the public generally is quite ignorant that their returns aren't published, generally accepting approximate numbers given to them by their advisors. Even if the lack of information is regarded with healthy disdain, it is accepted with a strained reservation that we have no choice but to follow the status quo.

By Mr. Richards so eloquently pointing this out as a concern for clients, it will help advisors begin to take heed. Well...the ones that follow him anyway, which are some of the better ones....or aspire to be better (you get the point). Therefore, I appreciate his insight and the blog post.

How much an issue this is to clients is tough to say. Posting returns and other performance measurement statistics on clients' statements was a suggestion put forth in the Fair Dealing Model, a report put out by a committtee of the OSC a few years ago. The conclusion of the report were suggestions and never really gained much traction. Warren MacKenzie, President of Second Opinion Investor Services, and other fee-only advisors founded a petition at http://www.showmethereturn.com/ in order to illustrate to the good people at the OSC the importance the general public places in having this sort of transparency. When I talked to Warren a couple months ago, this petition had only collected a couple thousand signatures. I, myself, rose at the Investors' Forum this past October and asked David Wilson (President of the OSC) and Susan Wolburgh Jenah (President of the Investment Dealers' Association) why it wasn't mandatory for firms to publish their clients' returns on their statements, while at the same time drawing attention to this particular petition. Their respons was that it was too cumbersome a process to actually implement, and they had bigger things on their mind. It's hard to argue they don't have bigger problems. However, the only logical response is for us, at the grassroots level, to hold financial advisors accountable for displaying such a level of transparency. If it's a mainstream expectatation, financial advisors will have no choice but to yield to the demands of their client base.....Or risk losing a great client. As Richards described it, doing this will allow a financial advisor to be "competitive." Obviously, he, too, is aware of how saturated this industry is.

Read the blog (http://www.strategicimperatives.ca/blog/?p=56). Put in a request to your advisor to implement some sort of portfolio tracking template. It'll help immensely with reaching your personal finance goals. You deserve it.