Updated Monday, July 28, 2014 as of 12:26 PM ET
Blogs - conVERESations
Difficult Times Demand More Sophistication
Friday, August 19, 2011
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I delayed writing this ConVERESation because I was watching the down day on Thursday where the indices gave back most of the gains in this up-and-down summer mania. I wanted to find the right thing to say, but it turns out that there's a LOT to say:

--  This is one of those periods when emotions rule asset prices and any effort to invest rationally is doomed from the start. 

-- The global political leaders and voters are interfering in the complicated process of cleaning up our European and U.S. debt messes in a way that boosts rather than harms the fragile new shoots of economic growth.

-- Your best work in these markets is not agile trading but keeping your clients from joining the herd, the people who, lurching from panic to panic, will inevitably find ways to buy high and sell low and sabotage their returns by giving in to the emotion of the moment. 

I'm reading the economic reports written by economists and astute observers like John Mauldin, Robert Shiller, Mohammed El-Erien and others (you can find most of this on http://www.project-syndicate.org/, which collects economic commentary) and was once again struck by how much more informed and sensible their evaluations are than what the average consumer is getting in the press reports.

And then it hit me. These reports are also orders of magnitude more sophisticated than what we are hearing in our professional conferences.

Why? 

I think we're being victimized by another kind of economics. The press and the people who put on our conferences want to attract the broadest possible audience, which leads to a kind of race to the bottom. Who can do the best job of appealing to the (more populous) low-end of the planning profession? Who can dumb the news down so that it's digestible by the person who has trouble spelling (or pronouncing) macroeconomics?

Unfortunately, this affects the quality of our debates. Your clients are exposed to an echo chamber which does little more than convey the current mood of the herd, along with speculation on what is spooking it. Our politicians hear from voters whose understanding of the U.S. economic policy framework has been dumbed down to: "debt is bad," and "maybe we can eliminate government debt by reducing foreign aid."

The race to the bottom at professional conferences can greatly affect the average attendee's conference experience since (my estimate) roughly 70% of the benefits of attending a national meeting lies in the interaction with other advisor attendees. 

At a conference that specifically targets the most thoughtful (and difficult to please) upper 10% of the profession, you would get fantastic hallway conversations at every turn. At a conference that tries to convince an insurance salesperson that he's a financial advisor, you get a less satisfying dialogue.

I actually didn't make up that analogy. 

An upcoming national conference this fall has apparently hired people to make phone calls to drum up attendees.  One of them called me, apparently not realizing that I'm not an advisor. 

I decided to have a little fun (and also get him off my back), so I told the earnest young man on the other end of the line that all I did in the financial services world was sell equity-indexed annuities that offered the highest commissions, mostly to older people whose sales resistance was low.

I thought that would make him go away. Not so! 

The telephone solicitor reminded me that I was indeed part of a larger community of financial advisors and this meeting would be relevant to me as well. In the course of our conversation, it became abundantly clear that he didn't really care whether the attendees of his conference were real advisors: he (and the organization that bought his services) wanted bodies, preferably warm ones.

Make no mistake. We are going to sail through a lot of these volatile periods over the next five to 10 years and the profession needs to brainstorm better ways to deal with them that won't harm clients and their investment goals. We need to better understand what's going on. And consumers deserve to be told more than just which way the wind is blowing today. Our political debates require more informed voters.

The deeper and better our conversations, the more likely we'll all get out of this difficult economic period undamaged. As a journalist, as a conference presenter, as a manager of an annual conference, I pledge to take up this challenge in the years ahead -- as I think I've tried to do in the past.

More importantly, I plan to point out who else is and is not participating in that challenge, by actually naming names, which I have not done here.

What do you think?  Am I right or am I wrong? 

______________________

For more on planning, client service, practice management and marketing, or to join the Inside Information community, contact Bob Veres at Bob@BobVeres.com or go to http://www.bobveres.com/.  For more information about the Business & Wealth Management Conference (October 13-15), go to http://www.signupforconference.com/.  (Fair warning: it targets the upper 10% or higher of the advisory profession.)

 

 

 


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