Advisors are supposed to beat somebody or something. Those numbers become the chief yardstick to determine if the advisor is good or bad. Without tools to evaluate risk or choose between alternative strategies, investors are left with just one number to compare performance. If those figures alone determined a successful investment plan, we could all buy one copy of Money Magazine each year, pick the single, top-performing mutual fund, and go sailing. Unfortunately, the Money Magazine approach is often the worst way to form a strategy.
Every strategy has certain performance implications.
The word strategy implies a conscious effort to achieve stated goals. They are not interested in maximum performance. Their concern is to at least meet their minimum acceptable return levels without taking excessive risk. They want a comfortable and stress-free retirement. What's more, both risk and returns will be driven far more by asset allocation than stock selection or market timing.