While the original mission of the Alpha Group was to pressure portfolio and fund managers to provide more current information about their funds, today the group serves as an informal roundtable to its members' practices. In addition, it seeks out new research in investment and planning areas.
During the two-day visit, Alpha Group members met with Texas Tech students and participated in a Q&A session. The entire student body was invited to come with questions. As a founding member of Alpha, I have always appreciated the wealth of knowledge I gain from my fellow members each time we meet. I thought that the discussion that took place between Next Gen planners and Last Gen veterans was so informative-about both generations-that I should share some of it with you.
Q: As the next generation of planners, what should we be focusing on to serve our clients best?
John Cammack, retired executive, T. Rowe Price: Think about the technological world that we live in. None of this was available when we started out. When we communicated with clients, it was by phone or face-to-face. You have amazing technology so that you can work with your clients anywhere, anytime and anyplace. While your clients have access to anything and everything, our clients needed to work though us to get important financial information.
Through technology, you will find new and innovative ways to work with middle-market clients, people who really need your advice. Don't underestimate the value of social networking in your practice, but concentrate on using it effectively.
How much personal financial advice can be delivered through technology? Consider the smartphone applications that allow us to get access to data already. Learn how to maximize the use of technology, while maximizing the personal service and delivery of advice.
Q: So what's new today on the forefront of technology?
Mark Hurley, president, Fiduciary Network: Neuroscience technology. In our discipline, it studies how we respond to financial decision-making, taking the field of behavioral finance so much further.
Think of it this way. Let's say you guys are physicians. Physicians "practice" medicine. We call it "practice" because it's always changing, and they are always adapting. For example, we used to have "Ear, Eye, Nose and Throat" specialists. Today the eye is its own specialty because we have learned that functions of the eye are not necessarily related to the ear, nose and throat.
This certainly applies to our profession as well. You will always be practicing and adapting to the changing environment. Consider that you are a contributor trying to add to a body of work. You will need to balance the human element of the mind with the technical body of knowledge out there.
Ross Levin, president, Accredited Investors: I'd like to expand on that. Get in touch with the "why" of things. It's not just how we make decisions, but why. How, for example, does behavioral finance work in our lives outside of money? Why are we predictably irrational?
As a financial advisor, it is tempting to run to a solution before you even frame the question. You guys are all in a pretty rigorous financial planning program. You're smart, but can you think?
Jim Budros, principal, Budros, Ruhlin & Roe: I think that advisors are client advocates, helping clients make rational decisions. There are so many issues that retirees face. For example, when to take Social Security, decisions on healthcare and liability. While we have the basic guidelines, the key is to assist the client in making the best decision for him or her.
Levin: Right. You need to respect the behavioral side of the discussions. You will always be helping them make suboptimal decisions. There is no such thing as an optimal answer. Don't think optimally.
David Bugen, principal, Regent Atlantic: It's really not our role to tell our clients what their values are, only to point out what their options are. Know your core competencies and capabilities. Work to manage people for longer-term environments.
Cammack: Is our job optimizing for the client or sustaining the behavior?
Q: How did you all do in the last two years of market volatility?