What Really Matters
Most of the smartest advisors I know all agree that, at the end of the day, money isn't all that important. Or rather, it's only important to people who don't have it.
So it was understandable that when we decided to do a survey of leading RIAs early in 2006, some advisors voiced displeasure that we would be confusing asset-gathering ability with quality advice. I can say definitively that we had other goals in mind.
For the past 17 years, I've been remarkably lucky to witness the transition of this business from a cottage industry to a real profession. The reason we decided to undertake this survey is to try to help our readers gain a quantifiable picture of just how far the advisory business has come.
We could not have achieved this without the assistance of Nick Stuller, Ryan Larkin and the folks at the Discovery Database group, along with the assistance of some of the most talented journalists I know, including former Bloomberg Wealth Manager editor Bob Casey, our own managing editor, Dorothy Hinchcliff, and our survey editor, Karen Burke.
Most of all, thanks should go to the participants. It's certainly not every story in the financial services industry where one gets to chronicle entrepreneurial people doing very well by doing the right thing for their clients. And that's more important than all the assets at Blackstone Group.
This issue has two other pieces that I was lucky enough to edit. One was written by Tracey Longo about the experience of some of this profession's most successful advisors when they created a marketing boot camp for themselves. The article, which starts on page 96, shines a fascinating spotlight on what some see as the Achilles' heel of this profession.
The success of this business, coupled with advisors' aversion to and ineptness at marketing, is one of the more interesting paradoxes in financial services today. My own guess is that advisors haven't suffered from their most glaring deficiency. Why? Because the last thing many clients want to see by the time they've accumulated significant assets-and made mistakes along the way-is a slick marketing pitch. They've seen it, and its consequences, too many times before.
Another piece I would urge you to read is this month's Gluck Report on Page 35. This month Andy sits down with Nobel Laureate William Sharpe and interviews him about his latest research on an emerging area of finance he calls State-Preference Theory, variants of which are already being employed by rocket scientists at some of the biggest quantitative hedge funds.
Finally, Andy probes Sharpe's questions about the research of Eugene Fama and Ken French and his concern that they are portraying value stocks and small-cap shares as almost "a free lunch." The Nobel laureate challenges their views, noting that most of their research on value stocks comes from studying only 5% to 10% of the value stocks out there.
I urge you to read all three articles.
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