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.

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