Richard Bregman, CFA is a New York-based Registered Investment Advisor and president of MJB Asset Management, LLC., currently managing over $45 million in assets. Richard is a former member of the Schwab Institutional Advisory Council.
et it be said up front: Schwab Institutional
throws a heck of a conference. There are more events packed into a two and a half day span than even the most eager advisor could ever hope to attend. These include general sessions featuring nationally known speakers; educational sessions; practice management sessions; networking sessions; an immense exhibit hall with hundreds of exhibitors; and, of course the multitude of informal meetings, meals, mini-events, etc. hosted by mutual fund companies during non-conference hours. Here is one advisor's point of view from the vortex of the Schwab whirlwind known as Impact 1999
The omnipresent theme of Impact 1999 was "Change is the only constant." The idea, as presented by Schwab, is that the business is changing. Technology is altering the landscape in terms of access to information and delivery of services; the old business models are being usurped by the wirehouses; advisors are looking to merge and/or form alliances; differentiation is crucial to survival; clients are looking for more than just no-load mutual funds.
The attention to change was good, and somewhat apropos to the Schwab conference itself, which had been in need of some change over the years. The wide disparity of sophistication, type of practice, assets under management, size of firms, etc. among the advisor community has always presented Schwab with a huge hill to climb in putting together a program that will appeal to such a broad range of attendees.
Further, the success of Impact over the years has spawned many other, smaller conferences for advisors. Topics had become stale. For example, this was the seventh Schwab conference for this writer. I, as with many of my colleagues, am no longer interested in the basic practice management courses, e.g., "Estate Planning and What It Means for Your Practice," "Managing Growth," etc.
This year Schwab got it right on target. The conference was organized thematically. Day One was devoted to "Exploring the Changing Environment." Sessions challenged the traditional paradigms of strategic asset allocation and traditional economic models; discussed the validity of valuations in the technology sector; explored the realities of investing for and marketing to the "new," young, technologically savvy investor; and, of course, presented Schwab's latest technology offerings to help advisors function in the new environment. Speakers included practitioners in the field.
The day also featured panels on value investing and overseas investing. And the Day One luncheon featured a terrific panel discussion among Maureen Allyn
of Scudder Stevens and Clark
, Mario Gabelli
and Michael Price
. Here is where Schwab is at its best.
Where else could you get superstars such as Gabelli and Price on stage together in an informal discussion about stocks, markets and the world in general? Both showed why portfolio managers' insight is a main focus for attendees. Price offered this insight when prodded by Gabelli to identify stocks he likes: "I can get GM Class H for $75 per share, or I can get it for free by buying GM common (currently at $69 per share)."
For his part, Gabelli offered insight into his stock-picking strategy by picking up on Maureen Allyn's comments that Scudder does not anticipate any substantial rise in inflation any time in the foreseeable future -- Mario sees no hope for companies that used to make profits merely by raising prices.
The value panel in the afternoon offered little new, beyond the opportunity to compare value managers Bill Nygren
of the Oakmark Select Fund
, Scott Schermerhorn
of Colonial Management
and Rich Meagley
. Take your pick, based on what you like. (My vote for clear and away the best of the group is Nygren.)
The only question of real interest by moderator Tim Armour
, president of Morningstar, was to ask the deceptively simple "Why are each of you a value investor?" Nygren immediately offered that he views stocks as he views consumer purchases - price matters. He recounted growing up in a middle class household where the price you paid for things was an important consideration in making the purchase.
When learning the investment business, the value approach to making stock purchases simply made intuitive sense to him. This was a wonderful bit of insight into what makes a manager tick. Hard to get that from a fund prospectus.
Day Two's theme was "Preparing Your Firm to Compete." Sessions focused on how to operate within the new environment that was explored on Day One, including how to position yourself in an increasingly competitive market; how to hire and retain the right personnel; how to explore a merger or alliance; and, of course, how to use Schwab's new tools to do any or all of these things. The merger/alliance session was interesting, with three practitioners discussing their approaches to merging their firms.
Clearly, many advisors have growth through acquisition on their minds, and this might have been the most timely of all of the sessions. No magic formula emerged. Just the same, obvious truth. This is a people business -- tailor your deal to the people involved.
The afternoon session on market cap in Investment Selection offered another insight that should have been obvious to sophisticated advisors/investors. Market cap is as much a marketing decision as it is an investment decision. The three managers, Tom Marsico
, Gary Lewis
and Tim Miller
all discussed their individual approaches and reasons for operating in their respective market cap arenas. (Nothing new here.)
Not surprisingly, their approaches all sounded remarkably similar in terms of how they invest in companies. The interesting part came when Miller, of Invesco
, advised the audience that Invesco wants to provide a full line of investment choices for the intermediary market. As such, they keep market cap limits on their products solely to stay within the far right-hand column of the Morningstar style box and thus to appeal to style-box driven consultants and advisors.
Marsico, in discussing his view of market cap purity quoted Don Phillips
as stating that "the Morningstar style box was intended to be descriptive, not restrictive." The implication: managers should seek value wherever they believe they can find it and not necessarily where the style box would lead them. These were interesting comments coming from the people who, nevertheless (and unfortunately), are frequently judged not only by performance but also by style box consistency.
Day Two's keynote speakers were phenomenal. George Will
, conservative Republican commentator, spoke in the morning; former Governor Mario Cuomo
of New York, liberal Democrat, spoke in the afternoon. Phenomenal juxtaposition, phenomenally interesting, and a vast improvement over prior year speakers.
Coming in Part II: The Exhibit Hall and other Fun Things
The views presented in this article represent those of the author and do not necessarily represent those of InvestmentWires, Inc. InvestmentWires, Inc. does not guarantee the accuracy, completeness or timeliness of, or otherwise endorse, these views, opinions or recommendations, give investment advice, or advocate the purchase or sale of any security or investment.
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