Posted on by Steveark

Sixteen Hours

I get approached occasionally by financial advisors who are fishing for new clients. I am always polite and I’ll do lunch or have a coffee with them, but I always tell them up front that I’m not a good prospect. I have my investments managed by big national discount advisory services who use modern portfolio theory strategies and am happy with their performance and their low fees. I know I could avoid fees altogether if I managed them myself, but I prefer to outsource it. The latest encounter was with a genuinely nice young man who made a pass at my accounts a year ago and then suggested I virtually attend an event being held by the CEO and founder of his employer. Since I’m interested in continuing education in a lot of areas, finances being one, I agreed. Partly because of my own nest egg but also because the foundation I chair has a large endowment that I help manage.

The weather was inclement and my wife was up at the cabin with one of her college roommates and I really didn’t have anything else to do, so I agreed to devote two full days to being enlightened with the theory and practice of what the CEO referred to as “Academic Investing principles”. So, what did I learn?

I’m tempted to say I learned zero, nada, zilch. But that’s not really true. I did not learn much of anything about investing strategies that I already did not know, but I did get to observe hard sell and emotional manipulation on a grand scale. I’m not going to identify the particular company, nor its founder. He has achieved a good deal of success building his assets under management from nothing to nearly ten billion dollars and his investment philosophy is pretty much standard Markowitz modern portfolio theory, eschewing market timing, the buying of individual stocks and concentration risk. I agree with all of that, however he skimmed over that part of the presentation and concentrated on what felt a lot like televangelism at its worst.

There was a big emphasis on patriotism and a fair amount on faith and family. I’m all for all three of those but I had a major disconnect on how that related to investing. The real nuts and bolts of investing did not make up more than about one of the sixteen hours of content. The other fifteen hours were mostly about all the mistakes “we” were surely making without his guidance. If the presentation had only occupied one hour of my time it would have been reasonable. But as it was, I had the other fifteen hours of listening to ponder what the presenter was trying to do to me and the other 900 people attending the virtual seminar. And this is what I decided was going on.

First, he was trying to establish a cult of personality by appealing to our love of family and country with a heavy dose of guilting. He presentation was full of endearing personal family stories. He spoke like a reformed addict who had been there and found the light. He knew that all of us must have made many bad investing decisions just as he had. But hope was here, he was going to save us from our own bad choices if we would just change the way we saw the world. All of us were slaves to our lizard brains and incapable of making wise long term decisions because we were programmed to run from saber-toothed tigers and not to buy and hold index funds. But he could fix us, if we just had faith.


I found the concept more than a little off-putting because I’ve been investing using the same Nobel prize winning strategies he uses, for many years. Its not anything new. Its exactly the same strategy that Wealthfront, Betterment and Vanguard use in their managed accounts. In fact its what almost every robo advisor in the business uses. Its become common knowledge that active investing fairs poorly compared to passive investing and that day trading or even buy and hold stock picking is a losing proposition.

The statistics and studies back that up, its why Vanguard has over eight trillion in assets under management. Its also why traditional money managers and storefront brokerages are struggling. They have higher fees and lower returns, which makes them a bad deal. If you don’t believe it then just Google who the top performing mutual funds were ten years ago and then check out how they are doing now. If even one of them is in today’s current top ten I’d be shocked. That part of the CEO’s message was fine and accurate. But its hardly earthshaking, life changing news. Anyone who is investing their own money already knows that.

I know why the CEO has resorted to his emotional hard sell tactics. Its because he doesn’t have anything special to offer to justify his high fees. He can’t offer better performance than an inexpensive robo advisor, so all he has to justify his fees is himself. He is selling confidence and faith in a person. And that’s appealing to a lot of people. If it wasn’t cults would not exist. Multilevel marketing schemes wouldn’t happen and ponzi schemes could not be pulled off. Now in this case he has a solid product and sound theory. He is just overpriced. So he is doing the only thing he can to differentiate himself from lower cost providers. He is selling himself.

That’s kind of a profound concept, its not so different from the way charismatic politicians woo us. And perhaps spending sixteen hours observing that in action had a prophylactic effect, an inoculation of sorts against the next huckster I run into. That’s a little harsh I suppose, because this guy isn’t selling snake oil, he’s selling a good product that’s just overpriced. As for the young man who talked me into the two day commitment, he’s a nice person who has drank the Kool-aid his company is serving. I run into earnest young men and women selling whole life insurance, over priced annuities and, of course, multilevel marketing schemes who are all sincere and who have all been mislead by their employers. And there are people who need an authority figure to give them the resolve they lack. I am just not one of them. So I’ll nicely explain to my friend that I’m happy with my current providers and to keep in touch.

How about you? Have you sat through a lengthy sales pitch that left you unimpressed?


Am I wrong about investing, is a personal advisor valuable to you even if they come at a higher price or are you a DIY or robo fan?

39 Replies to “Sixteen Hours”

  1. Wow, how did you manage to sit through that for that long. Truly impressive!

    I do think personal advisors have their place in helping those who are not financially educated and have no interest in learning.

    But as for me, I’m DIY and not looking back.

    1. I think they do have a place, and I get high quality advice from very low cost advisors like Vanguard. But that’s only available for larger accounts and leaves most people out. You make a good point AR!

  2. I can’t imagine sitting through 15 hours of that crap. I personally would have given them 2 hours max of my time and I would have been gone.

    1. I know, that’s what my wife said. It was the combination of not having anything else to do on two rainy days and because I had said I would do both days. If I had been smarter I would have not said that up front. Once I did though, I was kind of locked in because I felt like I needed to keep my word. Which is why I shouldn’t have done that in the first place! It did give me something to blog about so it wasn’t a total loss I guess. But wow, there just wasn’t anything useful and a lot it rubbed me the wrong way. You are definitely smarter than me, Ricardo!

  3. It was a long time ago but I attended a dinner by the person running my wife’s work 401(k) plan. He gave a talk and addressed people by name in the room (we all had name cards), blah blah blah, the dinner was all right but was largely unimpressed.

  5. Reminds me of a Time Share presentation 🙈. If I may ask, what percentage of holdings were they charging? Or a flat fee? You mentioned they were overpriced, just curious.

    1. Hi Kathy, the only mention of his fees was that nobody should consider fees until they’ve analysed the entire investment philosophy. Which told me all I needed to know about their fees. Looking on the web they seem to charge 1.2% for new accounts. But its not that clear. 1.2% is less than I expected but still pretty high compared to the 0.14%, 0.3% and 0.79% I pay for Betterment, Vanguard and Empower, respectively.

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