What should be considered when checking an advisors track record?
Start by considering the length of the track. Sprinters aren’t necessarily successful distance runners. Sensational performance in a short time span, bluntly put, may reflect little more than extraordinarily good luck. Or, of more concern, it may reflect someone who takes greater risks than you may be comfortable with over the long haul. Or it could reflect specialization in markets that, in a given period, were especially active. Track records can be much more meaningful when you examine a longer track. This provides more information about how an advisor has performed over the landscape of continuously changing market scenarios. And, very important, performance in less-than-spectacular years may be indicative of the advisor’s risk management skills. That’s crucial, particularly in markets that tend to be cyclical.
