The top conversations on APViewpoint last week were started by Michael Edesess and Manish Malhotra. They generated thoughtful discussions on why DALBAR is “dead wrong” on investor versus fund performance, and a powerful new tool to comply with the DOL's fiduciary rules.
Michael Edesess’ article on The Fallacy behind Investor versus Fund Returns (and why DALBAR is dead wrong) received 48 comments as it continued into its second week. APViewpoint members agreed with Edesess’ conclusion that we do not really know whether the typical or average investor underperforms the mutual funds they own because of bad market timing. However, they could not agree on a strategy to measure the degree to which emotionally-driven buy-high/sell-low behavior is taking place in markets. Advisors discussed the different studies that have examined this question, and they noted that the most insightful research reports used a transparent methodology and acknowledged that their calculations relied on estimates. They agreed that studies on such complex questions should always acknowledge potential sources of bias in their analyses, and concluded that too many financial industry publications use “mathematics not as a means to solve problems or derive answers, as it is used in the sciences and technology, but as a sales tool.”
APViewpoint hosted another well-attended webinar on July 28, A Powerful New Tool to Comply with the DOL's Fiduciary Rules, presented by the founder and CEO of Income Discovery, Manish Malhotra. In this presentation, Manish discussed challenges that advisors need to overcome during the retirement-income planning process to comply with the new DOL fiduciary rule. He introduced Income Discovery’s interactive toolset, and explained how it can help advisors ensure that their recommendations serve their clients’ best interests. Manish explained that Income Discovery’s products use an objective methodology to create personalized optimal-income strategies. He said that those tools help advisors select strategies that reduce the risk and amount of income shortfall, and increase the average legacy/bequest. Manish will be answering questions about his presentation in this follow up conversation, and a replay of the webinar can be viewed here.
Marianne Brunet is a financial markets analyst with Advisor Perspectives.
