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Judge whether a private client's investment programme is working, using performance reports and periodic reviews

CFA® Level III · Private Wealth Pathway · Investment Planning · L3.PW.4.d

The idea

Success is measured against the client's goals, not just a market index. Good reporting shows returns net of fees and ideally after tax, comparison with a suitable (often custom) benchmark, risk, attribution, costs and progress on each goal, such as each sub-portfolio's funded status. Time-weighted return is the right tool for judging the manager, while money-weighted return reflects the client's own experience including the timing of contributions and withdrawals. Reviews should be regular and also triggered by life events, market shocks or goal changes, and may lead to rebalancing or revising the policy statement. The trap is declaring success because the portfolio beat an index while an essential goal has drifted out of reach.

In the app: 1 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.

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