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Sex, Money, Advisors and Distrustful Clients: Searching for Alpha for June 2011
A recent article in Der Spiegel explores why Germans seem more willing to discuss the most intimate details of their sex life than money. There are plenty of articles on the Web that claim the same about Americans, a view that isn’t hard to believe, in my view.
Armed with the knowledge that money issues make most folks uncomfortable, a Wall Street Journal blog post from last year stating that investors would prefer to do their own investing rather than relying on an investment advisor is a disappointing read. Are investors so thoroughly disgusted with professional advice that they are willing to tackle one of their most uncomfortable tasks alone? Sadly, that is the take-away from the article.
Thankfully, things have gotten a little better, as an updated WSJ posting shows a slightly higher percentage of the well-heeled are willing to consult with an advisor. Still, these articles underscore the familiar trend of disappointment during tough market conditions, such as the global turmoil of a few years ago.
It seems that most RIAs are simply not diversified enough to suffer the slings and arrows of market volatility. Tossing out illiquid strategies for all but the wealthiest clients and including liquid alternatives such as managed futures, foreign equities and fixed income, and longer dated domestic Treasuries could potentially cover downside risks enough to convince investors to stay the course. That’s the best outcome for everyone involved.
About the Author
Ben Warwick, Quantitative Equity Strategies
Veteran investment strategist Ben Warwick brings 20 years of investment management expertise to AdvisorOne.com in his blog, Searching for Alpha. His market and economic insights provide readers with an insider’s view on generating alpha through asset allocation, the use of strategic portfolio “tilts” and alternative investments.
Ben Warwick founded Quantitative Equity Strategies (QES) in 2002 as a platform for implementing his quantitative investment strategies. The firm manages assets with traditional long-only equity and fixed income, private equity, managed futures and alternative investment mandates. QES has developed an industry leading expertise in building investment programs that can replicate alternative returns, while offering daily liquidity and transparency. These products include the HFRq, a hedge fund replication strategy developed in concert with Hedge Fund Research in Chicago; the Managed Futures Beta Index, with Aspen Partners; and the Nomura QES Modeled Private Equity Returns Index (PERI), which was developed with Nomura Bank and Preqin, the leading source of information in the private equity industry.
He is the author of several books, including "Searching for Alpha: The Quest for Exceptional Investment Performance," (Wiley, 2000) and "The Handbook of Managed Futures," with Carl Peters, (McGraw-Hill, 1996). He can be reached at ben@qesinvest.com.
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