Regulators are increasingly looking for ways to protect plan participants.
Therefore to be a fiduciary today requires more than just being independent and objective.
They also must protect assets.
Let me illustrate for you what I am getting at.
The following charts are made available by Crestmont Research.
This simple chart illustrates that if a loss beyond 20% grows, then the gain required to make-up for the loss grows exponentially.
Why is this such an issue?
Participants' greatest fear is principal investment loss.
We also know that stock returns do not come in the form of averages.
Earning investment gains in stocks depends on the type of secular cycle and the trend in the Price to Earnings Ratio.
Lastly, we can see from looking more closely at secular bear market cycles that they can involve significant losses/gains.
This is why it is so important to focus on absolute returns.
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