Surviving & Thriving in the

New World of Financial Advice

Ben Carlson, CFA
Director of Institutional Asset Management,
Ritholtz Wealth Management
My Books

Organizational A Wealth of
Alpha Common Sense

CreateSpace, 2017 John Wiley &
Sons, 2015
A manual for
institutional How simplifying
investors to the investment
improve decisions process can
and add value improve long-term
through intelligent investment results
planning and by avoiding
organizational complexity.
structure.
Financial Advisors in the U.S.
• 310,000 financial advisors (down from
325,000 in 2008)

• Half of all advisors are over the age of 55

• An estimated 100,000 advisors will retire
in the next decade

• Wirehouses control around 50% of the
market

• Almost 12,000 Registered Investment
Advisors (RIAs)

Source: Cerulli Associates
The DOL Fiduciary Rule
Does the Market Care Who
the President is?

Source: DFA
Big Ideas We Believe In
• Investors are compensated for the risks
they bear & some risks pay better than
others

• While the future is unknowable, the past is
a decent guide and you have to always
understand the present

• Asset Management has to be tied to goals
to work effectively

• Less is more, costs & taxes matter,
forecasting is unreliable & performance is
mean-reverting

• Client fit is everything

• Behavior will determine client success or
failure
The Advisor of the Past…and the
Future
Next Gen Advice
Unfortunate Realities of the
Investment Business
• A talented sales staff will trump a talented
investment staff when attracting $ from
clients

•. The products that sound the best are
often the worst ones to invest in

•. Clients are often in search of unrealistic
solutions

•. Increased activity does not necessarily
lead to better results

•. There are no guarantees
Biggest Advisor Mistakes

• Chasing past performance & fad investments

• Overconfidence

• Having the wrong type of knowledge

• Fighting the last war

• No idea what risk entails in the markets
“Invert, always invert”
Focus on What You Control
Decision-Making Amid Uncertainty

• Perform a pre-mortem

•. Document your process

•. Stay humble

•. Avoid blame & excuses

•. Scenario analysis

•. Make it a habit
Sources of Alpha
How to Succeed in Today’s
Financial Markets
• Understand that evidence-based research doesn’t always work
perfectly with real world investor behavior

• Admit that every investment strategy or portfolio has drawbacks

• Know what you own and why you own it

• Financial advice & investment management go hand-in-hand

• Perfect is the enemy of good

• Know thyself
Successful Financial Advisors…
…manage investors more than investments.

…understand that the long-term is the only
time horizon that matters but people don’t live life
in the long-term.

...obsess about their clients, not their
competitors.

…speak in plain English to help their clients
understand what’s going on with their money.

…help clients focus on those things that they
control and ignore everything else.
Questions?