Thursday, February 26, 2009

Funds using alternative investment strategies gain steam

Alternative investments that are less correlated to major market indexes are gathering momentum in the advisor community. Two trends are fueling the movement. First, the sharp market declines since September 2008 have boosted the attraction of strategies that don't dive along with stock market. "This year, people are looking to dial down risk in their portfolios," says Bill Harding, director of research at Morningstar Investment Services in Chicago. Second, these strategies are increasingly available to those who don't qualify as accredited investors (with investable assets of $1 million or more).

Continue reading "Against the Grain," my article in the March 2009 issue of Financial Planning magazine (free registration may be required for access).

Also, here's some information that didn't make it into the article. It's the list of funds used by the advisors whom I interviewed.
Absolute Opportunities
Absolute Strategies
Diamond Hill Long-Short
Direxion Commodity Trends
Highbridge Statistical Market Neutral
Hussman Strategic Growth
Nakoma Absolute Return
PIMCO CommodityRealReturn Strategy
Robeco Boston Partners Long/Short Equity
Rydex Managed Futures Strategy

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Tuesday, February 24, 2009

"How to send a personal email" by Seth Godin

"How to send a personal email" by Seth Godin gives some excellent suggestions about how to avoid being perceived as a spammer.

But there are no easy answers. Basically his 14 points boil down to taking the time to make your email short, clear, personal, and relevant to the recipient. 

I found Godin's blog post thanks to Anna Goldsmith's "Just Because You Have Someone's Email Address Doesn't Mean You Have the Right to Email Them."

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Tuesday, February 17, 2009

"James Grant: A Positive Lesson from the Great Depression"

Great price tags on a number of investments are the silver lining of the current recession, according to James Grant, founder of Grant’s Interest Rate Observer

Grant shared his “Thoughts on the Financial Markets and the Current State of the Economy” with the Boston Security Analysts Society on February 11. He spoke at length about the virtues of value investing, as exemplified by the Depression era strategies of Floyd Odlum of Atlas Corporation. Today’s investors can learn from Odlum’s strategy of underpaying for assets, Grant said.

Continue reading "James Grant: A Positive Lesson from the Great Depression," my article in Advisor Perspectives.

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

"Institutional investing" isn't as great as you think

That's what Van Kampen Investments discovered when it researched how to name a new retirement income product.

"Institutional" means expertise to financial services professionals, but it makes individuals think of hospitals and prisons, said Andrew Scherer, managing director, Van Kampen Investments, in his comments to the Managing Retirement Income conference on Feb. 10.

Van Kampen named its new product "Retirement Strategy Funds" and adopted the tag line "helping you build a better plan" under the influence of research showing that
1. "'Retirement' resonated better than 'Freedom,' 'Target,' 'Lifetime' and others."
2. "'Strategic' tested better than 'automatic,' 'institutional,' or 'customized.'"
3. "Positive messaging resonates, fear-based does not."

Can you think of other words that mean different things to you and your clients? Would you agree that "risk" is one of those words? Please leave a comment.

Related posts:
* Highlights from the Managing Retirement Income Conference
* Notable quotes from the Managing Retirement Income Conference

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Thursday, February 12, 2009

Notable quotes from the Managing Retirement Income Conference

Speakers expressed some interesting opinions at the Managing Retirement Income Conference on Feb. 10. Their comments are paraphrased below.
  • It'll take at least two years at 5% equity returns for people to make back what their 401(k) plans lost in the 2008  stock market decline.--Jack L. VanDerhei, Employee Benefit Research Institute
  • Retirement will turn out to have been a twentieth century retirement phenomenon. Fewer people can afford our concept of retirement because of longer lives and all three legs of the retirement stool getting shorter.--Larry Cohen, SRI Consulting
  • Only one in six LIMRA survey respondents have taken action--mostly reallocating balances--related to the economic crisis. Respondents are planning to reduce debt, delay making investments, and reduce plan contributions.--Bob Kerzner, LIMRA International
  • A tremendous demand for financial advice is coming, but people lack confidence in financial advisors.--Bill Dwyer, LPL Financial Services
  • Top earners might be willing to give up receiving Social Security payments, which they don't need, in return for not paying more for Social Security--John Murphy, Oppenheimer Funds
  • It's a myth that income annuities reduce liquidity and your children's inheritance. Used properly, they can allow your assets to grow. --Steve Deschenes, MassMutual
  • There are three categories of managed payout funds: perpetual horizon endowment, horizon targeted self-annuitizing, and dollar payout targeting.--Richard Fulmer, Russell Investments
Related post: "Highlights from the Managing Retirement Income Conference"

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Wednesday, February 11, 2009

Highlights from the Managing Retirement Income conference

The stock market's decline has changed how individuals look at retirement income. They want more certainty. That was one of the themes I took away from the first day of the Managing Retirement Income Conference on Feb. 10. The conference was hosted in Boston by the Retirement Income Industry Association.

Some other takeaways
1. Retirees--and pre-retirees--are concerned about becoming a burden on others in retirement.
2. Advisors will have to change to accommodate Baby Boomers' lifestyle and income needs. 

Desire for certainty vs. the cost of guarantees 
The desire for certainty means that individuals are becoming more willing to give up control of their investments in return for a guaranteed stream of income, said Robert Kerzner, president and CEO of LIMRA International.

Guarantees of principal or income were a theme of many product presentations at the conference. For example, Brian Perlman, partner, Mathew Greenwald & Associates, made a case for target date funds with a guaranteed minimum account balance (GMAB). He suggested that guarantees should go into effect five to 10 years prior to retirement. Perlman said a GMAB would reassure investors and make them comfortable about investing a higher percentage of their assets in equities, which is necessary to give them a better shot at meeting their retirement income needs.

The SunAmerica High Watermark Funds offer a GMAB, according to an audience member. They may be the only such funds currently on the market, though Perlman said more are in development. These funds came up again in a presentation on managed payout funds by Juan M. Ocampo, Trajectory Asset Management, subadvisor to the High Watermark Funds.

However, said Kerzner, demand for guarantees is ratcheting up just as the credit crunch and stock market decline are forcing insurance companies to reassess their risk tolerance and pricing. Synthetic annuities may be one solution, he added. Oppenheimer Chairman John Murphy, who also chairs the Investment Company Institute, said there's a question of how much risk a provider wants to take and at what price. 

"I don't want to be a burden" 
Financial services firms are obsessed with their products instead of meeting people's needs, according to futurist Bruce Sterling. Old people say "I don't want to be a burden," not "I want a million dollars," he added. Sterling recommended that financial professionals seek opportunities to provide "de-burdenizing" services.

Sterling posed a dilemma to the conference attendees. If you had to choose, would you rather have a really good financial advisor? Or would you rather have Google or Facebook or social networking?

Advisors must change
Many financial advisors could do a better job of communicating with their clients. According to LIMRA consumer survey research cited by Kernzer, only 15% of respondents had been in touch with their clients during the current crisis. Two-thirds of those consumers initiated the contact. 

Oppenheimer Funds is directing some of its marketing efforts to helping advisors talk to clients. Advisors want to know how to approach client reviews and start conversations with clients, said John Murphy. More communication will raise client confidence, he added.

Ann Connolly of Deloitte Consulting said that as retirement income provide more unbundled products, the role of the advisor will be critical. Individuals will look to their advisors to assemble the right package for them. But these products can be bewildering. Advisors will need modules of advice, new financial modeling tools, and consolidated retirement management accounts.

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

"Amid Market Gloom, Fund Manager Fights Against Jargon"

Are you using too much jargon in your market commentary? 

Read "Amid Market Gloom, Fund Manager Fights Against Jargon" for the tale of a British fund manager trying to eliminate jargon and wordiness.

Here are most of the terms he's fighting:
  • Aggressively
  • Backdrop 
  • Basis points
  • Bets
  • Drawdown
  • Going forward
  • Is primarily engaged in
  • Headwinds, tailwinds
  • Musings
  • Names
  • On the back of
  • Perfect storm
  • Space

Some of these are okay with me. "Headwinds" bothers me the most. The article suggests "positive trends" as an alternative. "Basis points" is one of my pet peeves.

What investment jargon are you battling?

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Tuesday, February 10, 2009

To "dear" or not to "dear" in your email

What salutation should you use to start a business email? 
  • Dear? 
  • Hello? 
  • Something else?
I typically open with the person's name followed by a comma. Like this
This is how 95% of my business correspondents start their emails.

Some people use "Dear," then the recipient's name. That's essential for a business letter, but it's too intimate for a business email. At least, that's how it feels to me.

I was surprised to see that the authors of Send: Why People Email So Badly and How to Do It Better argue for using "dear." They don't like my approach. They say:
For some reason, people who would never in a letter write "Jim" or "Bob" or "Mr. Smith" with no introductory word beforehand feel no hesitation in doing so in an email.... But it strikes us as rude to bark out someone's name like that, even in an email, especially if you don't know your correspondent."
I reserve "Dear" for my correspondence with friends. Or for replies to emails in which I've been addressed as "Dear Susan." I think it's usually appropriate to echo the salutations used by the person with whom you're corresponding.

I don't have strong feelings either way about starting an email with "Hello" and then the name of the recipient. If Allan emails me with "Hello, Susan," I'll "Hello, Allan," back to him.

If you read my "Should you say 'No' to 'Please,' " you're probably not surprised to find me disagreeing with the authors of Send, as did most of the respondents to my reader poll on the use of please in emails.

So, how would you address an email to me? Would you use one of the following salutations?

  • Dear Susan:
  • Dear Ms. Weiner:
  • Hello
  • Hi
  • Hi, Susan
  • Ms. Weiner,
  • Susan,

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Sunday, February 8, 2009

"Financial services marketers must restore trust"

In the current environment, small business "decision makers are much more likely to choose the safe choice over the best choice," according to Gal Borenstein of The Borenstein Group, interviewed in "Financial services marketers must restore trust" in DM News

That may mean picking a bigger, seemingly more stable financial services provider over a smaller provider.

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Friday, February 6, 2009

Top five types of freelance writing for CFA charterholders

In tough times, CFA charterholders are getting creative about their job options. That's undoubtedly why the January 2009 panel on "Alternative Careers for CFA Charterholders" that I organized for the Boston Security Analysts Society was well attended. Freelance writing is one non-traditional option. In this blog post I discuss five types of writing.

1. Investment performance commentary for institutional portfolios or mutual funds
Reporting and explaining a portfolio's investment performance is an important component of client service. In the case of mutual funds, annual and semiannual reports are mandated by law.

In my experience, this is the freelance writing gig that requires the least writing skill because reports follow a strictly defined model. There's no room for individual creativity. It's more important that you understand attribution analysis and other components that feed into reports. You should also be accurate and detail-oriented.

2. Company reports for websites or newsletters
Lisa Springer, CFA (lisa AT, says

The great thing about writing for a newsletter or website is it's steady, predictable work, typically involving weekly assignments. In most cases, they pick the stocks they want you to write up. Most jobs are free-lance and permit telecommuting. I think there are probably more opportunities out there writing for websites than for print newsletters since most newsletters are 1-2 person operations.
Here's her advice on finding opportunities:

This is not the best time to be looking for this type of work since ad revenues are way down and the investment web sites are mostly ad-driven. There is also a trend towards smaller "sound bytes" (100 words or less) rather than 500-800 word articles. Still, sites like Motley Fool and Street Authority were recently hiring free-lance writers. I've also found opportunities on free-lance writer boards, contacting sites that interest me directly (just google investment web sites and you will find hundreds of sites) and even on Craigslist.
3. Market commentary
Market commentary requires a mix of writing skill and investment knowledge. Sometimes clients want you to write commentary from scratch, reporting your own opinions and statistics. Other times, they'll want you to interview their investment professionals to reflect their take on the market.

4. White papers
The ability to identify the client's problem and write persuasively about it is key to a successful white paper. White papers are a cross between an article and a brochure. They typically pose a problem faced by clients and tell how to solve the problem. While the solution is offered by the company commissioning the white paper, the most credible white papers don't overtly flog their products.

Information for your white papers may come from different sources: your own research, materials provided by your client, and interviews with experts at your client's firm.

5. Articles and books
Of the five kinds of writing discussed here, articles and books require the highest degree of writing skill. They may also expose you to clients who don't understand your topics. Writer Annie Logue, CFA, author of Socially Responsible Investing for Dummies, says "editors don't always understand finance. If you can make it understandable to the editor, you can make it understandable to anyone."
Writing for individual investors may force you to work hard to describe your topic in less sophisticated terms.

Writing articles and books also requires the ability to develop story ideas and pitch them to editors. That's something you don't typically do with corporate clients.

Resources for freelance writers
Freelance writing isn't just about the mechanics of writing.  As Logue says, "You have to spend time on marketing, information technology, accounting, etc."

A number of websites and blogs offer advice, classes, and other resources for freelance writers.

Investment Writing blog posts:

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Wednesday, February 4, 2009

What you're missing if you don't blog

Financial planners who don't blog are missing out on a great opportunity to connect with prospective clients, according to "Social media in financial planning -- the sweet spot and the sweet gap." Why? Because many of your most desirable prospects read blogs.

On the other hand, if you do blog, you're in a minority. Apparently fewer than 1% of financial planners blog, according to research from Kahuna Content.

Thanks to Bill Winterberg for bringing this information to my attention.

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Provocative quote about target date fund (TDF) advisers

Are target date fund advisers swayed by a conflict of interest?

On p. 41 of CFA Magazine (Jan./Feb. 2009), Mark Ruloff, director of asset allocation for Watson Wyatt Investment Consulting, says, "Advisers...are implementing the glidepath. They might have a bias toward keeping higher equity allocations longer because it helps their own fees.... There are legitimate reasons for advisers to arrive at different glide paths, but there's the appearance of a conflict of interest."

What do you think?

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Tuesday, February 3, 2009

How to avoid "Really BAD PowerPoint" presentations

"No more than six words on a slide. EVER."

That's the advice of Seth Godin in "Really BAD PowerPoint (and how to avoid it).

Here's his rationale: "Communication is the transfer of emotion." Too many words on the slide prevent you from connecting emotionally with your audience. Moreover, a PowerPoint slide shouldn't serve as the script for your presentation.

Still, I think Godin is too tough on PowerPoint. I like the rule about using at least 30-point type on your slides. It puts a useful upper limit on the number of words you cram onto one slide. I first saw this rule in Guy Kawasaki's "The 10/20/30 Rule of PowerPoint."

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Eaton Vance, Evergreen, and FRC on "Communication Strategies for Good Times and Bad"

Mutual fund companies are ratcheting up their communications, as you might expect in challenging  times. I learned some of their strategies in a panel on  "Communication Strategies for Good Times and Bad" with speakers from Eaton Vance, Evergreen Investments, and Financial Research Corp. They spoke at NICSA's East Coast Regional meeting on January 15.

Social media on the rise 
I was struck by how companies are using--or considering--communication tools such as webinars and social media that barely existed five years ago, back when I worked for Columbia Management Group. 

Social media is impacting every brand and how firms need to communicate, said Stephen J. Barrett, chief marketing officer and managing director, Eaton Vance Distributors. He suggested that you search for your company name on Facebook. (By the way, when I searched "Eaton Vance," I found several people named "Vance Eaton," but also a number of people who might be Eaton Vance employees.)

Barrett is thinking about how to leverage Facebook and other social media. "We need to enable people using social media networks to share our content and to use it build their own content." 

None of the panelists' firms are currently blogging, though Evergreen's parent company, is involved in the Wells Fargo-Wachovia Blog, which allows readers to leave comments. 

Even if your company doesn't blog, you should be searching on its name in the blogosphere using tools such as Technorati or Google, said panel moderator Bill Blase of W.T. Blase & Associates. He has seen issues that companies could have "gotten in front of" if they'd learned about the issues through blogs.

More frequent internal communications 
At Evergreen Investments, Laura Fay, senior vice president, corporate communications, said the best time to connect with your employees is a time like now, when morale may be low, she said. Employees feel better if they hear frequently from senior management.

Evergreen is using the following tools for internal communications:

  • Monthly newsletter or business update
  • Quarterly summary of financial information
  • Quarterly video available on employee desktops
  • Town hall meetings, held in four primary locations and available via webinar; employees can submit questions anonymously
The challenges of faster communication
Companies need to communicate more quickly, which is pressuring them to get things approved quickly. "Out in two days and very, very good is much better than out in five days and perfect," said Barrett. 

That's not easy when you've got to win approval from both portfolio managers and your compliance department. "Getting out quarterly commentary can be torturous," said Fay.

It's also challenging to create communications that serve both financial intermediaries and their clients. Financial advisors tell the researchers at Financial Research Corporation (FRC), "don't dumb it down," but they want to share fund companies' content with their clients, said Craig Kilgallen, director of FRC's ADVISOR INSIGHT. That adds to the difficulty of getting compliance approval. Also, as Barrett said, "If you talk about negative convexity in a client brochure, you're probably going down the wrong path."

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved

Sunday, February 1, 2009

Website lessons from the Obama administration

You can learn about good website design from the Obama administration.

Writer Matthew Battles explains how in "Extreme makeover edition: How should we read the new Obama home page?", in today's Boston Globe.

Some of the key lessons illustrated by the new website:
  • Prioritize. Put your most important information first. Remember the top half of your page will get the most attention.
  • Use active verbs. They raise the energy level of your web page.
  • Use white space effectively.

Susan B. Weiner, CFA
Check out my website at or sign up for my free monthly e-newsletter.
Copyright 2009 by Susan B. Weiner All rights reserved