At BWFA, we believe that performance should never be measured by numbers alone.
While absolute returns—the simple measure of how much a portfolio has gained or lost—can seem like the most obvious benchmark, they do not tell the full story. True investment success must be evaluated through the lens of risk-adjusted returns, which weigh not only the outcome but also the level of risk taken to achieve it. Put simply, a portfolio that generates strong gains while exposing investors to extreme volatility or downturn risk is not necessarily superior to one that achieves moderate returns with stability and discipline.
For this reason, we evaluate our strategies against blended benchmarks designed to reflect the goals and structure of each investment strategy. Too often, investors look only to the S&P 500 as a yardstick, which can create a distorted view of results. The S&P 500 represents only large-cap U.S. equities, yet most diversified portfolios include bonds, international equities, and other asset classes. By comparing our portfolios to blended benchmarks tailored to the specific mix of investments, we create a fair and meaningful framework for evaluation. This allows us to measure not just whether returns are competitive, but whether they have been achieved responsibly and in line with client expectations.
Further, when projecting financial planning outcomes, we utilize very conservative portfolio return assumptions so that a client’s long-term performance has the best opportunity to outpace their financial projections.
BWFA manages portfolios across three primary allocation strategies each designed to serve different client objectives. (See page 9.) All of our strategies are diversified, where we spread the risk across different investment areas and avoid taking big bets in any one area.
Across all strategies, our assessment process emphasizes alignment with client goals and careful attention to market conditions. We monitor results not only in terms of returns but also in terms of how well the portfolio has navigated periods of stress, whether risk exposures have remained appropriate, and how the portfolio compares against its blended benchmark over different time horizons. This comprehensive view provides a more accurate picture of how client wealth is being managed, beyond the headline numbers.
By focusing on risk-adjusted performance and tailored benchmarks, BWFA ensures that success is measured by more than just short-term results. It is measured by the consistency, discipline, and resilience of our strategies—qualities that allow our clients to move forward with confidence, knowing that their portfolios are positioned to meet both today’s challenges and tomorrow’s opportunities—and most importantly, to actualize their personal life goals.
