Financial advisors do their clients a grave disservice when they focus too closely on market returns instead of engaging in true wealth management, according to David Loeper, chief executive officer of Wealthcare Capital Management in Richmond, Va. "All this return measurement really has nothing to do with a client's wealth," he says. "All that's doing is really misleading clients to think that it does." Loeper insists that looking at a performance report of an investment as a guide to a client's wealth is "like going to the doctor when you're already dead."

In some cases, portfolios with high returns compared to a benchmark may not actually be adding more cash to the client's pocket, depending on the timing of contributions and other market factors, Loeper says. And in other cases, the portfolio may be large but it doesn't match up with the client's values and how that person really wants to live his or her life.

Another problem is that the focus on returns keeps many clients convinced that they need to have all their money in investment vehicles, instead of potentially enjoying it. Many financial advisors say they want to help clients reach their goals and achieve their dreams but that often is not the case with return-driven wealth management, Loeper says.

In a white paper entitled "Measuring Temperature with a Ruler: Is Your 'Wealth Manager' Really a 'Return Manager' in Disguise?" Loeper, along with his colleague and co-author Perry Chesney, shows, mathematically, that what appears to be strong returns can actually be a weak wealth builder for clients.

Chesney adds that while investors are often worried about what might happen if their investments underperform their expectations, they also need to think about the problem of overperforming as well. Having too much money might not seem like much of a problem. However, it can be if money that isn't needed for retirement is stuck in the investment plan instead of being used to improve the client's life now.

While the industry is fond of telling people they are not saving enough, "to give up your life now to try and be wealthy when you're old" is just as much of a mistake, Chesney argues.

But, Loeper notes, rarely are clients told to save less, even if their life choices make that a better option overall. He gives the example of a person who loves their work and never intends to retire. Why, he wonders, should that person be saving as much as someone who plans to retire the day they turn 65? While its commonly accepted wisdom that "the average American isn't saving enough," Loeper argues that the sentiment is "some expert's opinion of what people should do, and not what they personally value."

After all, Chesney adds, "everything in the financial planning world is a trade off." Individuals can choose to work longer or save less. They can choose to leave less to their children or other heirs, or on the other hand, lead a different retirement lifestyle so they can leave more. Unfortunately, "nobody is spending enough time talking about those tradeoffs," Chesney says.

Another problem is that "the clients come to us seeking advice about the choices in their life," Loeper says. They want to know when they should plan on retiring, and what kind of lifestyle to expect. They want to know if they can afford a new luxury car, or if they can take less risk in their investments.

Nevertheless, Loeper says, the financial planning process as it exists now expects the client to define all those things in advance without weighing all the options.

"Would you retire earlier if you could, if the only price was a little bit less in your travel budget? Would you take less risk if you left behind a smaller estate?" Loeper says.

With many traditional financial plans there is just as much of a chance the client will end up with more money than they need than less, and yet return-focused planners do not discuss how clients could then enjoy more of their money sooner.

More is not necessarily better either way, Loeper says. "More savings is not necessarily better," he says. "More return is not necessarily better."