What financial advisors can learn from Warren Buffett and Berkshire's 2023 annual shareholder meeting

May 8, 2023 9:45 PM

A ticket for the 2023 Berkshire Hathaway annual shareholder meeting.

What does a carnival look like for investors?

In this year's edition of the Berkshire Hathaway annual shareholders meeting, dubbed the "Woodstock of Capitalism," the answer includes:

A remixed Alicia Keys and Jay-Z song, Empire State of Mind, about one of America's most lauded companies — replacing "New York" in the lyrics with "Berkshire"
A goofy homemade movie with actress Jamie Lee Curtis
Employees in giant gecko and giant pink flamingo suits
Hordes of people snatching up Buffett-branded souvenirs in a Black Friday-like mad dash across a makeshift mall
The CEO of Activision Blizzard, in which Buffett is a large investor, casually chatting with CNBC on live television behind the shoppers
CEO and Chairman Warren Buffett holding forth for hours with his friend and business partner, Vice Chairman Charlie Munger, on the world economy, America, holdings at Berkshire, family and success in life.

Much of Wall Street attended alongside citizens of Main Street. The official dress code was "casual," but many wore suits as though they were going to church or a business conference. Some resembled tourists on vacation, while others were startup founders and corporate executives. Apple CEO Tim Cook, Microsoft co-founder Bill Gates and Citi CEO Jane Fraser were among the high flyers at the event, according to CNBC, in its second year back in person since the pandemic.

Lines outside one of the entrances to the shareholder meeting were already long at 5:39 am.

Eventgoers from around the planet arrived as early as 4:00 a.m. to stand outside of downtown Omaha's CHI Health Center on Saturday; the line eventually snaked down several blocks before the doors opened at 7:00 a.m. All told, more than 30,000 people attended, Barron's estimated, including this reporter. CNBC recorded an exclusive online broadcast of the entire event, leaving out the presentation and votes on shareholder proposals at the end, where all proposals were voted down.

Arriving audience members rushed to find seats inside the packed meeting area.

Inside, the atmosphere was celebratory and chaotic at times but also solemn. In an uncertain political and economic world, many attendees were hoping to lap up wisdom from capitalism's beloved poster children, who have lived through the Great Depression, World War II and other crises of global history with consistency in their business outlooks and enviable investing success.

"We had a competitive broadcast going out somewhere in the U.K.," Buffett joked, referring to the coronation of King Charles III in England that same morning. "We've got our own King Charles here today," he added, referring to Munger — to roaring approval and laughter.

Buffett is turning 93 this year on August 30 and Munger turned 99 on January 1, so many attendees were wondering if this was the last time they'll see the dynamic duo together on stage — although as a running joke between them, that's been the concern of investors for decades now.

Young and old, mostly male but sometimes female, from babies to elementary school-age children to young adults to the elderly — all who came to see the famed Oracle of Omaha were silent as they listened, with the exception of one toddler-sized girl on the floor who began wailing for her mother and had to be rushed out of the room by an annoyed man who appeared to be her father — all as Buffett and Munger spoke in turn and took questions from shareholders.

An excited shopper tries on Berkshire merchandise at the event as others make purchases.

For financial planners, the takeaways go beyond the boxes of See's Candies, a Buffet favorite and holding, and signed copies of books by Berkshire scholars on Buffettology.

For Mike Caligiuri, a certified financial planner who is the founder and CEO of registered investment advisor Caligiuri Financial in Columbus, Ohio, the meeting's openness to questions by shareholders of any age reveals the importance of truly listening to investors' needs and concerns — even to those of children, such as a 13-year-old named Daphne Kalir-Starr who asked Buffett what might be the most incisive question of the day.

See's Candies on sale at the meeting, with Warren Buffett posing in a John Travolta-style disco suit on some candy boxes.

Daphne asked if Buffett was concerned about the U.S. dollar losing its status as the global reserve currency, and what investors should do about that risk.

"The truth may also be that it takes an innocent child's courage to say the 'quiet part out loud,'" said Caligiuri, who followed news of the event online.

For Jan Valecka, a financial planner who attended for the first time in person this year, the simplicity of Buffett and Munger's emphasis on "no nonsense, plain vanilla investing" and long-term gains was the biggest takeaway. Valecka said she was impressed with Berkshire's approach to shunning dividends, as Buffett said he believed it was better to reinvest that money back into the company and reward loyal shareholders with better returns.

"I was amazed that the auditorium was full and I watched people sit for 3 hours straight hanging on every word," Valecka said. "Investors are always looking for the secret and it is using common sense and being long term in your investment strategy." Valecka is the owner of Valecka Wealth Management, a firm affiliated with LPL Financial based out of Dallas, Texas.

Below are four more business and life lessons out of Omaha for financial advisors.

Disclosure: this reporter is not a shareholder in Berkshire Hathaway, but was invited to attend the annual shareholder meeting as the guest of a class B shareholder.

Question your career choices

Munger was unsparing in his condemnation of many wealth managers, whom he felt had chosen their career for the wrong reasons. It could negatively affect "American civilization," he believes.

"We don't need as many wealth managers as we have," he said, saying there were too many people investing money now who are simply trying to outsmart each other and wasting their talent in the industry when their talents could have better served society in other ways.

"I don't like everyone going into wealth management out of MIT or something."

Buffett, for his part, called the world "overwhelmingly short-term focused," adding that most publicly owned companies hold quarterly meetings in which they report to analysts about growth of top-line metrics, a practice that can stunt long-term growth.

"Yes, we have been bad examples. And I want to say that I didn't realize wealth management was going to get so big when I went into it. And I want to apologize for what's happened," Munger said.

Get toxic people 'the hell out of your life'

"The toxic people who are trying to fool you or lie to you, who aren't reliable in meeting their commitments — the great lesson of life is, get them the hell out of your life and do it fast," Munger said.

"Do it tactfully, if possible, too," Buffett added, playing good cop to Munger's tough talk.

"I don't mind a little tact, or even a little financial cost," Munger conceded. "But the question is, getting them the hell out."

For financial advisors unhappy with their current employer, that could be a good reminder to re-evaluate if they want to stay or go.

On the other hand, don't be toxic yourself, Buffett said. "I've never known anybody that was basically kind that died without friends. And I've known plenty of people with money that died without friends, including their family."

In estate planning, success comes from healthy relationships

An estate planning lawyer from Fort Worth, Texas, asked Buffett for his advice on how to help families with their plans.

"In my family, I do not sign a will until my three children have read it, understand it, and made suggestions," Buffett said, adding that solutions depend on the family in question. Communication earlier in heirs' lives was crucial, though.

"You're dealing with human beings and the biggest thing you want is, you want your children to get along," he said. Otherwise, once they read the will, "within about fifteen minutes, each one of them [has] a lawyer."

"If you want your kids to have certain values, it's important that you live those values. It's important that you talk about them. They're learning from you from the day they're born, what you're really like. And don't think that a cleverly drawn will, will substitute for your own behavior."

Marketing is everything

Ever the consummate salesman, Buffett seamlessly slipped from discussing the world economy and digging into earnings to making a sales pitch for his many businesses. His confirmed successor Greg Abel, the vice-chair of Berkshire Hathaway's noninsurance operations who was bookishly subdued at the morning Q&A alongside a nervous-looking Vice Chairman of Insurance Operations Ajit Jain, will have to work on developing the Buffett level of charisma that has become nearly as famous as his legendary reputation as a value investor.

Earned reputation is the best marketing for everyone, Buffett believes. "You should write your obituary and try and figure out how to live up to it."