Great returns? Compared with what?

When your adviser tells you your portfolio had a banner year, check what he's holding it up against.

By The Mole, Money Magazine's undercover financial planner

(Money Magazine) -- "I don't like how you do business." "You're being unprofessional." "I'm so mad at you, I didn't sleep."

These are just a few of many comments I've gotten over the years from colleagues in the financial planning industry. What did I do to deserve them? Simple: I showed that their clients, in many cases, weren't doing as well as their planners said they were.

Here's what I do. I look at the portfolio that a planner has prepared for a client and divide it into three asset classes (domestic stock, foreign stock and bonds) and determine what percentage of their portfolio each asset class makes up.

Then I take three comparable broad index funds and multiply their 2006 returns by those percentage figures. What I've found is that few planners could beat this simple three-way blend last year.

Of course, that hasn't stopped planners from telling clients how great their expertly chosen mutual funds have been performing. If you do your own investing, there's no reason you shouldn't run this calculation.

If you have an adviser, show him your results. If he says you can't benchmark your portfolio against these asset classes, consider getting a new guy. Top of page

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.