For the past several months, I've been working on a new conference, The Business & Wealth Management Forum in Chicago (Oct. 13-15), (sign up here), creating a "dream team" program schedule that includes Don Phillips Bill Bengen, Harold Evensky, Stephanie Bogan, Michael Kitces, Tom Giachetti, George Tamer, Mark Tibergien, Matt Lynch, David Reichart, Michael Aronstein, John Rogers, David Marcus, Jerry Miccolis and Gary Miller.

It will also feature a new session we just added yesterday on using software to incorporate macroanalytic forecasts into client portfolio design, using regression analysis of stock/fund/ETF performance against a variety of different economic conditions and changes. (Conference registration cost: $395.)

One speaker who won't be there is Michael Lewis, author of 'Liar's Poker' and 'The Big Short' (and 'Moneyball'), who gave a terrific presentation at the Northern California Regional Conference last month. 

Lewis worked on Wall Street right out of college, and he did a terrific job of helping the audience define the cultural boundary between financial planners and brokers. 

'Liar's Poker,' he said, was basically about how ridiculous it was that the large brokerage firms (in his case, Salomon Brothers) would hire a kid out of college, an art history major who knew nothing about finances, and set him to work giving financial advice to institutions and wealthy people, deploying significant amounts of capital in the American economy and paying him hundreds of thousands of dollars to hide his ignorance. 

When the credit default crisis swept through Wall Street, Lewis became interested in Wall Street all over again, which led him to write 'The Big Short.' 

"I had no idea that Wall Street could ever get more absurd than it was when I worked there," he told the audience.  "Back then, if a big Wall Street firm designed a zero sum trade, you did NOT want to be on the other side of that trade.  But with all the amazing losses from the credit default swaps and CDMOs and everything else, Wall Street had somehow become the dumb money." "Incredibly bright people had created doomsday bonds that brought down the finances of the bigger firms," he added.

As some of you know, 'The Big Short' focuses on the people on the other side of the big trades, who made billions taking positions that were being sold at high commissions by Wall Street brokers. 

"These were the people who realized that the insurance on the collateralized bonds was being sold much too cheaply," Lewis told the audience. They were all independent thinkers, but most importantly, none of them had any financial incentive to just put their heads down and keep selling stuff without looking too closely at it.

And that, ultimately, is what Lewis believes was the key lesson of the book, and perhaps the key difference between Wall Street and the RIA world: that Wall Street's incentive structure is (this is the term he used) "badly screwed up."  He said that the Wall Street executives and brokers just kept telling themselves, as the crisis mounted, "Just let it last until the end of the year, and I'll get my bonus."

Then they would say, "Just let it last one more year, so I can get my next bonus." 

"If you incentivize people not to see something, they won't see it," Lewis said. "It is amazing what people won't see if they're paid not to."

Meanwhile, the government has been bailing out Wall Street every 10 years or so.

"We have a capitalist system except for the highest-paid capitalists, who enjoy the benefits of socialism," he said. "They were massively subsidized, and as soon as they got back on their feet, they started undermining the people who were trying to fix the problem."

"It's like a patient in the emergency room who wakes up and immediately attacks the doctor who saved his life."

At the end, Lewis said that he fully expects another crisis within 10 years, at one point saying "I can tell you that the next collapse is being built now, though we can't see it yet. When people are rewarded for behavior that is just horrible for society, then the one thing you know is that this will happen again and again and again. 

"Today, on Wall Street," Lewis told the audience, "you can get rich doing creative things that are absolutely disastrous for investors and society."

This calmly certain prediction of another major financial catastrophe within the next 10 years by somebody who knows Wall Street better than any outsider is making that macroeconomic portfolio design session at our conference look better and better.


 For more on planning, client service, practice management and marketing, or to join the Inside Information community, contact Bob Veres at or go to


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