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Wall Street Execs Seem to Ignore Their Own Advice, but RIAs...
A recent article on Yahoo Finance (actually written by the online Wall Street Journal's Francesco Guerrera) caught my eye today. Interviews with a dozen Wall Street executives found that “most disclosed investment strategies that were both ultraconservative for financial experts and at odds with their banks' advice to companies, fund managers and individuals.”
The article blames the horrible memories of 2008 for the inability of most Wall Street pros to heed their own advice. “Memories of having that close-up view during as painful a crash as the 2008 crisis can explain why bankers are throwing their courage to the wind, stashing their money in cash and Treasuries.”
I think most RIAs are better than this. Instead of giving advice that they have no intention of following, advisors should be investing alongside their clients. This shows a level of commitment that should bring more enthusiasm and believability in client meetings, along with a sense of “we’re all in this together.”
If some advisors are too bearish to invest their own funds, the asset allocation they provide should reflect this view. Indeed, I believe the question “Are you invested in the stuff you recommend?” should be something every client asks their RIAs.
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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