Surviving & Thriving in the New

World of Financial Advice

By Ben Carlson

1
 Agenda
1. How We Turned Blogging Into a Business

2. The Rise of the Machines

3. The Most Important Thing

2
 Blogging as a
Business Model?

3
 Financial Advisor Snapshot

• 310,000 financial advisors (down from

325,000 in 2008)

• Half of all advisors are over the age of

55

• An estimated 100,000 advisors will

retire in the next decade

• Wirehouses control around 50% of the

market

• Almost 12,000 Registered Investment

Advisors (RIAs)
5
 Big Ideas We Believe In
• Investors are compensated for the risks
they bear & some risks pay better than
others

• Asset Management has to be tied to

goals to work effectively

• Less is more, costs & taxes matter,

forecasting is unreliable & performance
is mean-reverting

• Client fit is everything

• Behavior will determine client success

or failure
 “The art of film is film
but the business of
movies is everywhere.”
-Kay Kamen
Blogging as a Business?
 Personal Brands
Percentage of Affluent Individuals
Who Can Identify a "Favorite Brand"

80% 2007-08 2014-15

67%
61%
58%

47%
40%
37%

28%

Fashion Brand Jewelry Brand Luxury Hotels Retailers

Source: Scott Galloway

 Building Trust
1. Everyone is in Sales: It doesn’t matter how smart you are if
you can’t communicate your value-add.

2. Know Your Stuff: Be so good it becomes impossible for

people to ignore you.

3. Consistent Messaging: “My job is to write the exact same thing

between 50 and 100 times a year in such a way that neither my editors
nor my readers will ever thing I am repeating myself.” – Jason Zweig

4. Personality Matters: People do business with those they like

and trust.
 The Benefits of Writing
• Writing is not just typing – it’s
thinking, researching & learning
what you really think

• It forces you to streamline your

arguments & principles

• Allows you to educate yourself &

others

• Documents the reasons behind your

decisions & actions
 How to Improve
Your Writing Skills

Step 1. Write on a regular basis

Step 2. Repeat Step 1.

Ben’s Common Sense
Social Media Rules

1. Don’t get into fights with people.

2. Find your niche.

3. Be open-minded.

4. Learn how to pronounce GIF.

5. Avoid filter failure.

The New World

17
The Rise of the Machines
Selling Intangibles
Fending Off the Robots
 The Advisor of the Past

• Trust us, we got this

• Our partners have 748 years

of combined experience

• Have you seen the name on

the door?
 Artificial Intelligence Will
Require Emotional Intelligence

1. Self-Awareness
2. Self-Regulation
3. Motivation
4. Empathy
5. Social Skills

Source: Emotional Intelligence by Daniel Goleman

Client Behavior

24
Shark Week
What is Risk?
 Unfortunate Realities of the
Investment Business
• A talented sales staff will trump a
talented investment staff when
attracting $ from clients

• The products that sound the best are

often the worst ones to invest in

• Clients are often in search of

unrealistic solutions

• Increased activity does not necessarily

lead to better results

• There are no guarantees

Everyone Loves a Good Story

We prefer emotional narratives to accurate data

Stories stick with us not statistics

Client Fit is Everything
“I want all of the upside & none of
the downside.”

“Can you get me into the bitcoin

robotics 3D printing AI micro cap
ETF?”

“What’s your intraday trading

strategy for the 3 o’clock hour?”

“But how can I brag to my friends on

the golf course about this boring
portfolio?
Chauffer Knowledge
Experts
 Dual Mandate
Over the long-term… Over the short-term…

Risk & return are related Risk & return often not related

Volatility is more consistent Volatility tends to cluster

Markets are kind of, sort of efficient Markets are inefficient

How do we grow our portfolio to How do we survive severe market

reach our goals? disruptions?
Stocks
Bonds
Cash
 Stocks vs. Bonds vs. Cash
Growth of $1, 1926−2016
$100,000

$10,000 $6,031 US Stocks

$1,000

$134 US Bonds
$100
$21 Cash
$10
$13 Inflation (CPI)
$1

$0
1926 1936 1946 1956 1966 1976 1986 1996 2006 2016
Source: DFA
Unfortunately, Stocks Go Down
Doing Nothing is a Decision
The Shiller/Fama Paradox
 Marrying Behavioral with
Academic
By utilizing tactical in concert with strategic asset allocation,
we’re trying to prevent behavior from destroying a long-run
portfolio in the short-run.

• A rules-based approach takes emotions out of the decision-

making process

• The “long-term” is not where life is lived

• Tactical strategies typically seek alpha, whereas we’re looking to

encourage good behavior
Successful Investment
Advisors…
…manage investors more than investments.

…understand that the long-term is the only

time horizon that matters but people don’t
live life in the long-term.

...obsess about their clients, not their

competitors.

…speak in plain English to help their clients

understand what’s going on with their money.

…help clients focus on those things that they

control and ignore everything else.
42
Questions?