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 author of a new white paper called "Measuring Temperature with a Ruler: Is Your ‘Wealth Manager’ Really a ‘Return Manager’ in Disguise?" and his colleague Perry Chesney.

"All this return measurement really has nothing to do with a client’s wealth. All that's doing is really misleading clients to think that it does," Loeper, chief executive officer of Wealthcare Capital Management in Richmond, Va., said. He said that looking a performance report of an investment as a guide of 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, he said. And in other cases, the portfolio may be large but it doesn’t match up with the client's values and how they really want to live their 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. Loeper said that 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.

In the white paper Loeper shows, mathematically, how what look like strong returns can actually be not that much of a wealth builder for clients.

Another issue, as Chesney, a senior managing director of Wealthcare Capital pointed out, is 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 over performing as well. Having too much money might not seem like much of a problem, 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 said.

However, Loeper noted, rarely are clients told to save less, even if their life choices make that a better option overall. He gave the example of a person who loves their work and never intends to retire. Why should that person be saving as much as someone who plans to retire the day they turn 65, he asked.

While its commonly accepted wisdom that "the average American isn’t saving enough," Loeper said that sentiment is "some expert’s opinion of what people should do, and not what they personally value."

"Everything in the financial planning world is a trade off," Chesney said. Individuals can choose working longer or saving less. They can choose leaving less to their kids, or having a different retirement lifestyle so they can leave more. Unfortunately, "nobody is spending enough time talking about those tradeoffs," he said.

Loeper said another problem is that "the clients come to us seeking advice about the choices in their life," he said. 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.

However, Loeper said, the financial planning process as we know it 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 said. 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, Loeper said. "More savings is not necessarily better. More return is not necessarily better," he added.

Spending time talking about average returns has no real impact on an individual client’s goals, Chesney said. That's why financial advisors who really want to help their clients manage their wealth need to "change the conversation."