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Many investors are like the Queen of Hearts in Lewis Carroll’s Alice in Wonderland, decreeing death sentences at the slightest offense. We are told by Carroll:The Queen had only one way of settling all difficulties, great or small. 'Off with his head!' she said, without even looking round. Investor hirings and firings of managers and consultants are as whimsical as this classic tale because investors don’t know who is good and who is not.
We need look back no further than the 1990’s to see this destructive behavior in action. Value managers – some very skillful -- were fired en masse as the growth bubble inflated. Business savvy value managers abandoned their discipline to survive; those who didn’t flinch went out of business. Today’s financial crisis is again creating investor anxiety for change, affecting both advisors and investment managers. There have been and will be many casualties, some justified, some not. So what can an advisor do? Certainly the main challenge is protecting client assets while simultaneously delivering reasonable growth. One important tool in the advisor’s arsenal for fulfilling this demand is manager due diligence, or the consultant could of course go all passive. For those who embrace the active approach this broadcast will discuss the problems with the old due diligence approaches and describe innovations that will set you apart and make clients happy.
About Ron Surz Ronald J. Surz is president of PPCA Inc. and its division, Target Date Solutions. He is a pension consulting veteran, having started with A.G. Becker in the 1970's. Ron earned an MBA in Finance at the University of Chicago and an MS in Applied Mathematics at the University of Illinois, and holds a CIMA designation. He has published regularly in such publications as The Journal of Wealth Management, The Journal of Investing, Journal of Portfolio Management.