Conference 2014 - Resources Kit

Conference 2014 facilitated debate on the markets, strategies and investing with particular focus on how to reconnect risk and return in portfolios - and how best to relate with individual investors in order to manage their expectations.

The last decade has seen a distinct disconnect between investment risk and return, versus what we're taught should be the case. Up to the GFC, many asset classes and investments were providing seemingly risk-free return. Since the GFC, the opposite - return-free risk - has been the hallmark of many asset classes and investments, while others have performed beyond all expectation. As if to the emphasise the point, in the first half of 2014, the VIX reached lows similar to those seen before the GFC.

Whether you attended Conference 2014 or not, this Resources Kit will help you reconnect risk and return in portfolios - better relate with individual investors in order to manage their expectations.

Quicklinks

This online Resources Kit is a key feature of the Conference 2014 program (in fact, all our programs feature an online Resources Kit). It enables all Members (whether or not they were part of the live "studio audience" on the day) to "attend" Symposium. It's an invaluable set of continuing education material.

This Resources Kit includes all the videos, podcasts and papers from the live program, along with a link to the delegate Workbook, and the two Backgrounders "Reconnecting risk & return" and "Finology - where investing meets investors".

Workbook
Backgrounder 1
Backgrounder 2
Insights
Critical Issues Forum

Due Diligence Forum
Finology Forum

Print it and use the checkboxes on the Timetable to tick off sessions as you "attend";
Read before "attending" any of the CIF sessions - it's assumed prior knowledge;
Read before "attending" any of the Finology Forum Sessions
Short 5-10 minute thought pieces from some of the world's leading investment minds;
The plenary presentations featuring 19 leading investment thinkers;
The elective program presentations featuring another 19 leading investment experts;
The sessions from the one-day program focused solely on the third "R" – Relating.

Insights

About Insights

These short 5-10 minute insights feature some of the world's leading investment minds giving their insights around the Conference theme

Insight 1

Prepare to change course
Warning, there may be rocks ahead. Reconnecting risk and return must surely be the right focus but thinking that conventional tools will keep us out of trouble will likely be a big mistake.

Alan Brown, Senior Adviser, Schroders (London)

Insight

Insight 2

The changing nature of interest rates and inflation
What are the questions that everyone is asking today? When will interest rates spike? And, what about the increased rate of inflation? One has to accept the changing nature of these two elements.

Joan Payden, President & CEO, Payden & Rygel

Insight

Insight 3

Understanding both sides of the risk and return equation
As we sit today with some unprecedented market conditions, it's probably more relevant than ever to understand both sides of the risk and return equation in the fixed income space.

Dr. Michael James Hasenstab, CIO Global Bonds, Franklin Templeton Investments

Insight

Insight 4

How different fixed income is today
Fixed income has changed, and is very different today versus what it was years ago. It makes sense to evolve your portfolios accordingly.

Rick Rieder, CIO Fundamental Fixed Income, BlackRock

Insight

Critical Issues Forum

About the Critical Issues Forum

The Conference 2014 Critical Issues Forum was designed by our specialist, experienced and independent team to cover two of our three pillars - Markets and Strategies. It featured a carefully selected faculty of more than 20 leading investment thinkers from around the world presenting on contemporary and emerging issues related to the first two "Rs" – Risk & Return – within the overall Conference theme "Reconnecting the three Rs - Risk & Return (& Relating).

Critical Issues Forum 1

Reconnecting the three Rs - Risk & Return (& Relating)
PortfolioConstruction Forum Publisher and Conference 2014 Moderator,
Graham Rich, opened Conference 2014 in his usual thought-provoking (and entertaining) way, highlighting key issues to consider over the jam-packed, marathon program.

Resources

Critical Issues Forum 2

Dysfunctional risk and return - growth and barriers to entry
The secular convergence toward modest real growth rates across the global economy has many investors yearning for yield - so much so that, in many cases, fundamental risk and return characteristics have been shown the door as funds have flowed into perpetually lower yielding income asset classes. This session asked whether today's portfolios are ready for a longer than expected low-cash rate cycle? Can income goals be sustained in light of an extended period of lower returns? By the end of this presentation, you'll have a better understanding of why there is dysfunction between market risk and return, and a sound appreciation of the medium-term risk and return outlook.

Mark Kiesel, Deputy CIO, PIMCO (Newport Beach)

Resources

Critical Issues Forum 3

Risk & return: Two investment approaches
Asset pricing models link risk to average return: higher risk stocks are expected to earn higher average returns, and lower risk stocks lower average returns. If risk and return are imperfectly linked, there is opportunity for investors to increase average return, without increasing risk. This return-seeking approach is the traditional approach to stock selection. Often overlooked is another response to the decoupling of risk and return, reducing portfolio risk without reducing average return. This presentation reviewed the evidence and explanations for both types of investment strategies, with particular focus on why risk is mispriced in equity markets.

Ryan Taliaferro, Portfolio Manager, Acadian Asset Management (Boston)

Resources

Critical Issues Forum 4

How best to take portfolio risk
The traditional approach to portfolio construction is to own a diversified portfolio, and adjust the total risk of the portfolio up or down. An alternative is to take a bucket approach, building different portfolios for different income goals. From a behavioral perspective, using bucket strategies with clients is appealing, if only to help them stay the course during stressful times. Is it an asset allocation mirage?

Michael Kitces, Partner/Head of Rsh, Pinnacle Advisory (Washington, DC)

Resources

Critical Issues Forum 5

Conversations that matter
The fact that a return may lie within a predictable statistical range no longer necessarily implies that it is a return an investor in the "real world" can actually live off of. That gap needs to be bridged through greater precision in the form of asset-liability matching for individual investors, and then related to investors in such a way that they can once again know and trust that financial security is a fact, not a feeling.

Timothy Noonan, MD Capital Markets Insight, Russell Investments (Seattle)

Resources

Critical Issues Forum 6

Residential property – riskier than equities?
For many Australians, their house is one of their biggest assets, if not the biggest. With the latest results showing house prices again growing at a multiple of incomes, this presentation examines how volatile the asset class really is, at both the national index level and from the vantage of an individual buyer (two radically different risk profiles) and argues that, empirically, a leveraged owner-occupied home is riskier than the Australian sharemarket.

Chris Joye, Contributing Editor AFR & Director Yellow Brick Road (Sydney)

Resources

Critical Issues Forum 7

Reshaping asset allocation after a perfect storm
Portfolio construction models have changed markedly from the 1990s, evolving from the classic long-only 60/40 portfolio, through to the introduction of exotic beta and alternatives, to the current emphasis on asset allocation based on risk factors. What lies ahead?

Prof Amin Rajan, CEO, CREATE-Research (London)
- brought to you by Principal Global Investors

Resources

Critical Issues Forum 8

Are risk and return really linked?
This presentation explores the linkages between investment risk and return, exploring different types of risk and what return premia - if any - are attached to each, just how reliable those premia are in practice, and whether the risks can be diversified. By the end of this presentation, you will have the ability to assess different types of risk and return, and, in particular, see through marketing dressed up as sophisticated analysis.

Tim Farrelly, Principal, farrelly's Investment Strategy (Sydney)

Resources

Critical Issues Forum 9

The power of the 3rd R
Clients in the 21st century's new economic era will judge professionals not by their technical expertise, but by their ability to provide consistent, high quality, personalised outcomes. Portfolio construction practitioners who want to flourish in the era of instant internet and robo-advice must understand how to create value for their clients by providing them a positive: ROA (Return on Attention), ROI (Return on Intimacy) and ROE (Return on Empathy).

Dr David Lazenby, PhD, President, ScenarioNow Inc (St Louis)

Resources

Critical Issues Forum 10

Risk parity portfolios - fad or the future of portfolio construction?
The first risk parity portfolio was created in 1996 and the term itself was coined in 2005 (although the idea that a portfolio should take advantage of multiple risk premia dates back 60 years to the establishment of MPT). There is a great deal of debate about whether risk parity outperformance of the past decade is sustainable or just a quirk of an unusual market environment, especially given that risk parity portfolios tend to have a much larger exposure to bonds. This presentation frames the debate at a conceptual level of what delegates need to understand to productively participate in a risk parity conversation, presenting new ideas about how to think differently about portfolio risk and how are we really trying to manage it.

Michael Kitces, Partner/Head of Rsh, Pinnacle Advisory (Washington, DC)

Resources

 

Risk parity portfolios and the low beta premium
In recent years, the risk parity approach to asset allocation has been gaining popularity. While empirical evidence and intuition support the approach, confidence in its efficacy also requires a theoretical justification. This presentation overviews the theory of leverage aversion, which changes the predictions of modern portfolio theory - safer assets must offer higher risk-adjusted returns than riskier assets. Consuming the high risk-adjusted returns of safer assets often requires leverage, creating an opportunity for investors with the ability to apply leverage. It explains how risk parity portfolios exploit this opportunity by equalising the risk allocation across asset classes, thus overweighting safer assets relative to their weight in the market portfolio.

Cliff Asness, PhD, Co-founder & CIO, AQR Capital (Greenwich)

Resources

Critical Issues Forum 11

Quiescent markets – why is volatility so low?
With global volatility reaching multi decade record lows, there's a strand of thought growing in markets that Central Banks have investors' backs with ultra-loose monetary policy and a new 'souped up' version of the Greenspan put. Record low levels of volatility, however, are natural for this stage of the cycle and, indeed, forecastable given an understanding of the economic cycle. If that's correct then the critical questions become: should we be worried or relaxed? What next? History points to record low volatility marking the entry point into the final stages (perhaps final third, perhaps less) of the economic cycle. That insight is consistent with a multiplicity of other indicators. This presentation takes you through the structural and economic drivers of volatility, showing why quiescent markets should be feared, not embraced, before aruging that we've entered the last third of the economic cycle.

Chris Watling, CEO & Chief Market Strategist, Longview Economics (London)

Resources

Critical Issues Forum 12

Geopolitical risks (and rewards) - the impact on portfolios
In the context of the often repeated assertion that geopolitics is far more important in considering investment markets today, this presentation introduces a geopolitical strategy methodology to review the current state of the world, arguing that global multipolarity will increase the frequency, if not necessarily the magnitude, of risks. This geopolitical analysis is then related to investor decisions and the implications for portfolio construction.

Marko Papic, Chief Geopolitical Strategist, BCA Research (Montreal)

Resources

 

Geopolitical risks in East Asia. How worried should we be?
The geopolitical risks in East Asia are growing. China, emboldened by a growing economy and a leader who has rapidly consolidated his power, has taken a tough approach to its periphery. Hardly a week passes without a news report about an incident of China upsetting its neighbors in its near seas. This presentation examines how China's actions are perceived in China, and why these actions don't necessarily spell doom and gloom for Australia and the region – at least in the short to mid-term.

Linda Jakobson, Visiting Professor, US Studies Centre, University of Sydney & Nonresident Fellow, Lowy Institute for International Policy (Sydney)

Resources

Critical Issues Forum 13

Risk rapporting
This presentation argues that formal reports redolent with data and analysis fail to communicate risks as people actually feel them. Our panoply of measures may leave us with a warm glow that we've explained risk but they're likely to have the opposite effect on those with whom we are communicating. Once risk leaves the comforting (to us) zone of β, α, σ, CVaR, etc and falls under the rubrics of Uncertainty and Ignorance, reports need to be replaced by rapports, by engaged conversations. Not surprisingly, literature can be a source of information and inspiration for rapporting on risk.

Prof Jack Gray, Adjunct Professor of Economics, UTS (Sydney)

Resources

Critical Issues Forum 14

Investing with risk in mind
This presentation argues that investors should be aware of the risks they are exposed to within a portfolio - and of when they are being paid to take investment risk and when they are not. To know and understand these issues before and during investment requires a different approach to those of the past, to build portfolios with better risk awareness in mind.

Nick Bullman, Founder, CheckRisk (Bath)

Resources

Critical Issues Forum 15

Behavioural approaches to retirement risk communication
Individuals are vulnerable to a number of economic and financial risks as they approach and enter retirement, including longevity risk, investment risk, inflation risk, contingency risk and political risk. In the absence of appropriate guidance around retirement benefits through incentives, defaults or compulsion, many retirees remain exposed to these retirement risks. This presentation highlights how the insights from behavioural finance can be used to enhance risk communication and retirement outcomes.

Prof Hazel Bateman, Head of School of Risk & Acturial Studies, UNSW (Sydney)
- brought to you by Challenger

Resources

 

Navigating risk through asset allocation – The 1st order decision
Since the GFC, investment professionals have been extremely busy as clients grapple with the problems illuminated by extreme market events. Long-held ideas regarding correlations, diversification, benchmarks and portfolio volatility have rightly been questioned by investors. This presentation addresses the importance of developing improved and dynamic investment approaches that seek to better understand and manage total portfolio risk as well as identify sources of return.

Dan Farley, CIO Investment Solutions, State Street Global Advisors (Boston)

Resources

Critical Issues Forum 16

The power of R³
It is given that we all are wired to act foolishly sometimes, so how can we be better "choice architects" and "decision reassurers" for ourselves and our clients? This session grinds new lenses for understanding how changes in conventional thinking, methods, and tools result in quantum leaps in performance. The only question is “Are you willing to be Influenced?”

Dr David Lazenby, PhD, President, ScenarioNow Inc (St Louis)

Resources


Due Diligence Forum

Due Diligence
Forum 1.1

Debt - Global
Fixed income: The future is flexible
Over the past few decades, fixed income investors have enjoyed strong capital gains, an attractive income and the benefits of diversification. However, with interest rates now at record lows, uncertainty about timing and extend of future rate increase is posing challenges to traditional benchmark- oriented bond strategies. This presentation and paper explore the key advantages of flexible fixed income management in more detail and look at the importance of selecting the right strategy and the right manager when choosing an unconstrained bond fund. In addition, the presentation and paper discuss the performance of one approach to unconstrained fixed income in a rising rate environment to show how investing in benchmark-agnostic strategies with more flexibility to change duration and sector exposures can have a positive impact on a portfolio’s overall risk and return profile.

Nicholas Gartside, CIO Int'l Fixed Inc, JP Morgan Asset Management (London)

Resources

Due Diligence
Forum 1.2

Equities - Australia
Alpha Potential – Identifying active management opportunities
Alpha Potential is gaining traction as another important quantitative tool available to investors. Its use lies in identifying opportunities for active management, enhancing the value proposition afforded to active managers and, ultimately, their evaluation. This presentation and paper define and review empirical research on the use of cross-sectional volatility as a measure of Alpha Potential internationally and within Australia and, in the context of Active Share and Security Selection, relates this back to active portfolio management in Australian Equities.

Robert Penaloza, Head of Australian Equities, Aberdeen Asset Management (Sydney)
Andrew Kophamel, Head of Performance Asia Pacific, Aberdeen Asset Management (Sydney)

Resources

 

Due Diligence
Forum 1.3

Equities - Specialty
Trends and opportunities in global listed infrastructure
The size of the global infrastructure asset universe will expand from $40 trillion earlier this decade to over $110 trillion by the beginning of 2030. This presentation and paper illustrate that the private sector share of these assets is much larger than commonly believed and that the listed share of private infrastructure assets has grown consistently over the last two decades. It argues that there are significant opportunities to invest in this sector in both advanced and developing economies in the future, based on a multitude of trends.

David Hale, Founding Chairman, David Hale Economics (Chicago)
- brought to you by RARE Infrastructure

Resources

 

Due Diligence
Forum 1.4

Alternatives
VIX-ING your portfolio
Volatility derivatives have captured the imagination of investors around the world over the past seven years. This presentation and the underlying research paper discuss, in simple terms, what practical application these tools have for investors in transforming their portfolios. When looking to reconnect the concept of Risk and Return, what better place to start than with the barometer of equity market risk itself?

Simon Ho, Executive Director, Triple 3 Partners (Sydney)

Resources

 

Due Diligence
Forum 1.5

Multi-asset
Building a robust portfolio for future unknowns
A genuinely diverse portfolio cannot be benchmark constrained and to prevent hubris, managers need subtle but powerful constraints combined with risk tools which ensure that diversity remains strong even in adverse circumstances. Conventional historic stress testing is helpful and objective but insufficient in isolation. To ensure risk is genuinely well diversified takes a sophisticated forward-looking scenario-analysis process to combine quantitative rigor with qualitative insights of the plausible but unlikely extreme stresses we might face. This presentation and paper rework portfolio construction and risk management for greater portfolio efficiency, diversity and to generate better investor outcomes.

Mark Foster – Investment Director - Absolute Return & Multi Asset Investing, Standard Life Investments (Edinburgh)

Resources

 

Due Diligence
Forum 2.1

Debt - Australia
Evaluating the Australian bond market through a global lens
The seismic shift in fixed income after a 30 year bull market for bonds has created significant portfolio construction challenges. This paper analyses the role of Fixed Income in asset allocation within a new phase of potentially rising interest rates and explores the thesis that capturing the traditional relationship of fixed income in the total client portfolio will require more untraditional approaches. This research explores this dilemma by considering the Fixed Income investment universe and proposes that Australian fixed income portfolio construction needs to: 1. Retain some core local exposure in order to match the income requirements of Australian investors' and 2. Expand the opportunity set to achieve the desired (relatively uncorrelated) relationship of bonds to risky assets. The significant internationalization of Australian fixed income over the last 10 years has meant that Australian fixed income is already globally oriented in composition and also in terms of the influences that drive returns. This evolution presents opportunities for investors looking to more optimally blend bonds with their growth assets

Chris Siniakov, MD Australian Fixed Income, Franklin Templeton Investments (Melbourne)
Andrew Canobi, Director Australian Fixed Income, Franklin Templeton Investments (Melbourne)

Resources

Due Diligence
Forum 2.2

Equities - Australia
Are you hanging your client’s investment aspirations on 6 stocks?
Investors hold a portfolio of Australian shares for their role in generating strong total returns, and the preference is to achieve these returns with a ‘smooth ride’. However, contrary to this aspiration, the most common approach is to invest within tight relative constraints of the benchmark, suggesting the benchmark represents the best risk-adjusted opportunities. The top six stocks in the ASX 300 represent 45% of total market capitalisation and 50% of the market risk. A 4% tracking error constrained manager, for example, must hold in the vicinity of 15-20% of these stocks even if they do not like them. This presentation and paper examine whether this is responsible investing.

Olivia Engel, Head of Active Quantitative Equities Asia-Pacific, State Street Global Advisors (Sydney)

Resources

 

Due Diligence
Forum 2.3

Strategies
Breaking the Risk On/Risk Off Cycle
The GFC highlighted the shortcomings of traditional asset allocation in managing portfolio risk and underscored typical fear led human behaviour. For those nearing or in retirement, the GFC also highlighted the impact of sequencing risk. Bonds did provide some correlation benefits when growth asset class correlations approached one in the GFC, but historically low absolute and real interest rates and tapering risk place question marks on the role of bonds going forward. This presentation and paper describe an alternate approach to managing a risk on/risk off world, allowing investors to maintain or increase exposure to growth assets while experiencing a smoother ride.

Dr. Don Hamson, Founder & MD, Plato Investment Management (Sydney)
Wade Matterson, Principal & FRM Practice Leader, Milliman (Sydney)

Resources

 

Due Diligence
Forum 2.4

Equities - Specialty
Private equity - Diversifying equity portfolios
Boosted by monetary policy experiments in the advanced world, capital markets continue to flourish. Public equity valuations have disconnected from underlying earnings and there is a distorted link between perceived and actual risk. This presentation and paper explore the opportunities within private equity and private debt whilst examining their role in providing downside protection for investors.

Urs Wietlisbach, Executive Vice Chairman, Partners Group (Zug)

Resources

 

Due Diligence
Forum 2.5

Multi-asset
The quest for returns in the new world paradigm “Redux”
Given the backdrop of a sustained period of lower global growth, rich valuations from traditional assets and an eerie calm before the storm in asset price volatility, this paper and presentation explore a different approach to asset allocation, together with exploring alternative returns sources to reduce the reliance on traditional asset classes to drive returns in the period ahead. The analysis finds that the individual application of each to investor portfolios can result in a significant improvement in return, risk and diversification – and, when these two concepts are combined together in one portfolio, the results can be dramatic.

David Griffith, Senior Investment Strategist, BlackRock International Strategies Group (Sydney)

Resources

 

Due Diligence
Forum 3.1

Debt - Global Credit
New directions in high-yield investment
Among the various disconnects that investors have experienced as a result of the financial crisis is the idea that bonds are no longer risk free. It’s time to accept the idea and move on – to broaden the traditional idea of fixed-income as a form of risk mitigation and view it also as a risk-and-return proposition. This paper and presentation explore how global high-yield markets have moved ahead of investor perceptions in this respect, and why they will continue to develop as a diverse and attractive - though, of course, not entirely risk-free - opportunity for income investors.

Guy Bruten, Senior Economist Asia Pacific, AllianceBernstein (Melbourne)

Resources

Due Diligence
Forum 3.2

Debt - Australia
Demographics versus The Bear
Demographic understanding is now one of the most important elements in the areas of government and - importantly for investors - future drivers in financial market returns. This presentation and paper discuss current demographic trends around the world including the impact they are having on growth and on bond markets, before turning to the perceived bond bear market and exploring whether it really exists - and, how all this impacts fixed income allocations in portfolios.

Vimal Gor, Head of Inc & Fixed Interest, BT Investment Management (Sydney)

Resources

 

Due Diligence
Forum 3.3

Equities - Australia
Practitioner's guide to building absolute return portfolios
This presentation and paper review the principles, practices, risk management requirements and implementation steps needed to build absolute return focused portfolios and achieve absolute return objectives. They argue that many risk management techniques remain relevant but their application and focus need to change.

Nick Griffiths, CIO, Pengana Capital (Sydney)
Antonio Meroni, Senior Fund Manager, Pengana Capital (Sydney)

Resources

 

Due Diligence
Forum 3.4

Equities - Global
Lengthening the investment time horizon
Investors are increasingly short term in their orientation, even while demographic trends point to longer life expectancy and the need for larger pools of retirement funds. This presentation and paper explore the view that there is a time horizon arbitrage opportunity in the marketplace which those with a disciplined investment process can capitalise on. Company fundamentals do not change nearly as much as equity market prices, and herein lies the opportunity for investors with a longer-term view.

Sanjay Natarajan, Institutional PM, MFS Investment Management (Singapore)

Resources

 

Due Diligence
Forum 3.5

Equities - Specialty
Capturing the Emerging Market equity premium with lower risk
This presentation and paper examine the empirical relation between risk and return in emerging equity markets and find that it is flat, or even negative. This is inconsistent with theoretical models such as the CAPM, which predict a positive relation, but consistent with the results of studies which have previously examined the empirical relation between risk and return in the US and other developed equity markets. The findings are robust to considering a universe of large-cap stocks only, to considering longer holding periods and to controlling for exposures to the size, value and momentum effects. Finally, the presentation and paper find low correlations between the volatility effects in emerging and developed equity markets, which argues against a common-factor explanation.

Frank Wirds, Client Portfolio Manager, Robeco (Hong Kong)

Resources

 


Finology Forum

Session 1

What is finology anyway?
Finology is the emerging (and converging) research field covering the study of minds, customs and behaviours with respect to money. Our particular focus of finology is as it applies to the giving of investment advice. It incorporates behavioural finance, and much, much more. This session ensures delegates have a sound appreciation of the scope and role of finology, in helping them better relate to investors.

Michael Kitces, Partner/Head of Rsh, Pinnacle Advisory (Washington, DC)

Resources

Session 2

Finology: The Financial Frontier
What is the meaning of Money? Needleman said, “Money has a way to bring reality to situations”. If so the challenge for organisations, advisers and clients is to have more scientific clarity helping to expose what money (and therefore investing) represents in their clients world. This session explores new insights into the nature of money.

Dr David Lazenby, PhD, President, ScenarioNow Inc (St Louis)

Resources

Session 3

The essential art of storytelling
Often dismissed or forgotten, or even unknown or undiscovered, a purposeful story, articulated with passion and conviction, is a key ingredient in inspiring others to support a dream... and to trust us. And fulfilling dreams is what all those in the wealth management world have to offer - but this will only happen if the community find us to be trustworthy. Storytellers may be perceived as being too "soft" in our world demanding as it does facts, disclosure and information or, perhaps, too "old-school", too "sales'y". Instead, reward comes from the ability to talk technical information laden with TLAs, SOAs, and the skill 2 send gr8 txt msgs. Anyway, doesn't storytelling just come naturally to some, not something to be proud of? This session makes the case for us all to re-embrace the lost art of storytelling in our lives and in our businesses, so we can better inspire and engage with our communities.

Graham Rich, Publisher, PortfolioConstruction Forum (Sydney)

You had to
be there

Session 4

Top investment stories for investors
This three-part, practical session highlights case studies of ideas advisers have used in their efforts to ensure more effective communication with their clients, which have resulted in more meaningful communication in reality. Delegates then discuss and share their ideas, successes and failures. By the end of the day, via this three-part session, delegates will have learned 10 ways to better relate with their clients, so as to more effectively help them manage their expectations and portfolios.

Tim Farrelly, Principal, farrelly's Investment Strategy (Sydney)

You had to
be there

Session 5

Risk & return mythbusters: Improve outcomes with active listening
Common beliefs held amongst investment managers and advisers include "I just need to manage the fund/portfolio for the right outcomes", and "My investors and clients understand the investment objective and they are confident it will achieve this". But are these statements a reflection of reality or investment myths? In this session, some of our common investor expectations are scrutinised by focusing on investor-driven research. By the end of this session, delegates will understand why the objectives, construction and positioning of investor portfolios must be dynamic according to changing investor circumstances, and how this process can combat these common risk/return myths.

Fredrik Axsater, Global Head of Defined Contribution, State Street Global Advisors (San Francisco)

Resources

Session 6

Belief is not enough
Belief and philosophy when it comes to investing are in themselves not enough. Without culture and rigour around the systems, structures and processes, it is highly unlikely an investor will maintain their beliefs in all market conditions and cycles. They will instead ultimately succumb to the behavioural flaws for which man is known so well, as it applies to investment decision making. This session discusses some common behavioural faults that impact performance and provide insights into how to maintain an unwavering belief and philosophy for over the long term.

Simon Mawhinney, Portfolio Manager, Allan Gray (Sydney)

Resources

Session 7

Conversational methods that accelerate trust
Using leading edge psychology methods, this session focuses on the individual money constructs that influence our brains "anticipatory" nature about money. We review the "Fuzziness of Logic" and explore a whole-brained-approach to improving client outcomes, as well as the six basic response skills psychologists – and financial advisers – must master.

Dr David Lazenby, PhD, President, ScenarioNow Inc (St Louis)

Resources

Session 8

Managing expectations: keeping clients goal-focused
Research in biology, physiology and neuroscience now agrees that humans’ interpretation of risk is multi-dimensional. A simple client questionnaire is therefore likely to give a misleading indication of their risk tolerance, leading to a portfolio that is not aligned with their true wealth objective. This session focuses on an alternative approach which is to construct a portfolio that targets the client's specific wealth goal, providing an objective measure of the portfolio's success. We discuss the adviser's constant challenge - to keep clients focused on their wealth goal when they are distracted by the many other factors that influence their perception of risk.

Kajanga Kulatunga, Portfolio Specialist, MLC Investment Management (Sydney)

Resources

Session 9

I’ve been thinking about… my key takeouts
This session identifies clear key takeouts from the program, and actions delegates can take when back in the office, to better relate with investors and be more effective in helping manage their expectations and portfolios.  We start with each of the Finology Forum 2014 faculty summarising their key takeouts from the day, before delegates share their key takeouts and actions they plan to take to better relate with investors going forward.

You had to
be there

 

 

 

 

About Conference >

Backgrounder: Reconnecting risk & return >

Backgrounder: Finology - where investing meets investors >