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  • Brian Schroeder

Stuck in the Grey Zone?

If your plan’s peer rankings are better than the 25th percentile over the last 10 years, you should be pleased with the people and processes that delivered those results. Conversely, if your rankings are worse than the 75th percentile, you might be looking for a change in personnel, strategy or structure.


But if your long-term performance has just been mediocre bouncing around the grey zone, what should you do? Simply being average is sometimes a comfortable place to be, “after all, it could be worse.” But it can also be much better.


If you have had the same investment consultant or OCIO the entire time and followed their advice, you are already getting their best and brightest ideas. Therefore, in order to improve, they need their client to be the catalyst with additional input, data and motivation to improve.

Here is the cannot fail, dual method for improving your investment performance.


1) Discover Your Investment Consultant’s Strengths and Weaknesses, then Coach them up!


Investment consultants have 5 primary duties that impact returns:

  1. Strategic Asset Allocation

  2. Tactical Asset Allocation

  3. Rebalancing

  4. Active Manager Hiring

  5. Active Manager Firing

The simple truth is that investment consultants tell you very little about their own value-add concerning these 5 duties. In fact, the typical performance report tells you nothing about their own value-add. Read Decoding Investment Consultant Alpha to learn how this “performance reporting magic” is crafted.


Demand from your investment consultant to quantitatively document their value-add in each of these 5 duties. This will tell you and the investment consultant where improvement may be needed and then apply the findings.


2) The Hawthorne Effect, or Applying Proper Supervision & Motivation


Many plan sponsors and their investment professionals have cozy and familiar relationships. Know Your Client (KYC) policies, trust and mutual respect between providers and clients are important to success. But there is also downside to long-time and comfortable relationships. As a client, you may lose some objectivity in judging performance, and the investment consultant may lose concern over the quality of their service.


The Hawthorne Effect is the phenomenon of those being studied altering their behavior due to being studied. There are managers and supervisors because workers may tend to shirk and become less efficient if not being properly monitored. 


Unless a plan sponsor client has extensive knowledge in statistics and stays current in all the financial markets, they are outmatched by an investment consultant or OCIO that is also the creator of the performance reports. 


Having an independent monitor will ensure comfortable relationships do not cloud objectivity. An independent monitor will also not be outmatched by performance reports that put the best foot forward, promise food around the corner, and use statistics to muddy the water.


An independent monitor will also raise your account in your investment consultant’s priority. When it comes to entering and exiting strategies or funds, becoming a higher priority client makes a difference.


3) A Special Offer for Institutional Investors


The “Covid Crash” created the worst quarter in US stock market history. An unprecedented event demands an unprecedented offer.


This special offer analyzes the five duties of your investment consultant going back to 2007 with updates through 2022. This stretch incorporates the before, during and after of two of the greatest financial events in history bookending the longest bull market run. There is no better time period for analyzing your investment results seeking ways to improve future results.


There is just a one-time fee no matter how many managers you employ. It’s my first, best and only deal to help plan sponsors improve their due diligence, governance and performance.





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