* Much though it pains me to defend the 'investing theory' status quo.....
The claim that "Only in finance do we define risk as volatility" is putting the cart before the horse. Surely academics were always perfectly aware of the long list of risks faced by an investor. But since much of their work focused on price volatility (variance, beta, etc) vs returns they started using the term 'risk' as a short-hand label instead of 'price volatility', assuming everyone would know that is what they were referring to. They did not define 'risk' to BE price volatility.

* I agree that "the principal criticism is that active managers contribute no alpha once their fees are factored in", but I don't agree that these conclusions are dependent on the returns being 'adjusted' or 'correctly adjusted' for risk. Am I mistaken in my memory that the major reporter of mutual fund returns (??Dilbert??) uses actual returns? And the mutual funds still under-perform.

Is not the point of measuring risk-adjusted returns to 'explain' the underperformance?

* I'm glad to see above that my issue with 'cash' is gaining currency at long last. The existence of cash in a portfolio (i) destroys all the academic work measuring the returns of individual investors, (II) destroys the logic of William Sharpe's famous article, and (iii) redefines 'the market'.

* Whether or not you benchmark returns that are risk-adjusted, the debate of active vs passive should not be determined by the professional money managers. They face a long list of headwinds not faced by retail investors.