Focus On Your Benchmark... Not Theirs


We live in the 24 hour news cycle. Bored with what you’re watching? No worries, there’s 499 more channels vying for your attention. When it comes to business news, the providers need to work hard to grab and hold on to it. You get flashing lights, bells and buzzers. Seems like everything is BREAKING NEWS! There are stock tickers along the bottom of your TV screen with constant updates. All the while, just like in sports, they give you something to help keep score. They’re the benchmarks.

Whether it’s the TSX composite index or the Dow Jones Industrial Average, benchmarks exist to give you something to compare against. Want to know if your US mutual fund is outperforming? Check the S&P 500 benchmark. How about your bank stocks? Pull up the TSX financial index. There are benchmarks for just about everything. The only thing you won’t find a benchmark for is the thing that should truly matter the most to you… your personal goals.

When I first meet with new clients, we get into what I refer to as, a discovery talk. They’re wide ranging conversations around family, goals, dreams, concerns and experiences with investing. We look at what brought them to where they are today, and where they’d like to be in the future. Before getting into what we’re going to do and how we’re going to do it, I talk to my clients about their “why”. I want to understand the essence of what’s motivating them. As the saying goes; when your why is strong enough, you will find your how.

Most clients say that it’s a very different type of conversation than they expected, but also very eye opening. It helps them to clarify their life goals and in turn, allows us to design and implement a personalized plan to achieve them. We know what we are working towards and these goals become the benchmarks that we track progress against.

Some goals are financial and some are personal. Some are short-term and some may be decades off. As part of the plan we lay out and prioritize the steps we need to take. They can often cover areas including how much to save, how to address risk, business succession plans and retirement and estate planning. We create realistic tasks, objectives and time frames. It becomes a roadmap made up of checkpoints along the way.

Creating goals-based benchmarks is a much more effective way to ensure that your wealth management strategy is on track to meet the goals that really matter to you. These could include; paying off a mortgage, funding your child’s education, travelling the world or maintaining your lifestyle through retirement. If we know that your retirement plan involves saving $1,000 per month, and you’re actually putting aside $1,100, you’re beating your benchmark. If your goal is to eliminate bad debt within a year but you end up doing it earlier, there’s another benchmark you’ve outperformed. It’s so much more rewarding to know that you’re on track to achieving the retirement you deserve than it is to see how you’re doing relative to the S&P 500.

In the end, the TSX and the Dow Jones are going to do what they’re going to do. We really have no control over them. Stop benchmarking the success or failure of your plan against something that’s both irrelevant and out of your hands. Focus on your benchmarks, not theirs.