As an ardent believer in the importance of lifetime professional learning, I am proud to receive a letter from the president of the CFA Institute that recognizes my efforts “for voluntarily attesting to the CFA Institute Continuing Education (CE) Program in 2016.” As Mr. Paul Smith aptly states “Investors deserve to be served by professionals who stay on the cutting edge of the investment management profession and who stand out from their peers …”

This makes Year 24 for me in terms of meeting or surpassing the minimum hours of continuing education credit (now set at 20 hours), including “2 hours in the content areas of Standards, Ethics, and Regulations.” Maybe next year, I’ll get a letter and a cupcake with a candle.

On my own at eighteen, I self-funded my college education at both the undergraduate and graduate levels. I am a huge supporter of knowledge as an economic equalizer. As a former tenured university professor who later returned to industry and corporate training, I understand the challenge of teaching students who, through no fault of their own, lack basic skills in writing, math and logic. Therein lies the rub.

The United States spends much more per capita than other developed countries at the same time proficiency tests show American students lagging international peers in “the literacy, numeracy, and computer-age problem-solving skills needed to compete in the global labor market.” This is not good nor is it sustainable or desirable.

At the company level, employers are grappling with the real problem of too few people who can do the jobs they must fill. According to CNBC’s website, a Colorado construction firm, Oakwood Homes, jumped into action by creating its own school. Students learn to “saw, tile, drill, plaster and paint.” The CEO of this Berkshire Hathaway-owned company, Pat Hamill, laments the worsening worker shortage, saying “if we don’t do this, we’re not going to have a labor force to meet the needs of our industry.” I talked to a construction manager a few years old who told me his young workers could not convert measurements when asked to cut wood into certain size pieces.

From a financial perspective, the numbers are staggering. The National Center for Education Statistics reports that taxpayers funded $634 billion for public elementary and secondary schools during the 2013-2014 period or “$12,509 per public school student enrolled in the fall (in constant 2015-2016 dollars).” Inside Higher Ed tallies college and job training at $1.1 trillion.

While taxpayers are scratching their heads about oft anemic investment returns from the national education sector (recognizing that performance varies by region), venture capitalists are clapping with glee at opportunities to make money by solving existing woes. In 2015, Bertelsmann SE & Co announced its $230 million investment in a learning technology company called HotChalk. EdSurge Research chronicles “edtech” funding of K-12 focused start-ups since 2010 of $2 billion.

In an ideal world, young people graduate with adequate skills to land a job and progress towards eventual financial independence. To the extent that improvement is needed (just look at the data), let’s hope that outside investors and clever entrepreneurs can help drive reform with their contributions and independent insights.

With the nation’s capital knee deep in fiscal policy wonkery, it seems a good time to remind lawmakers about their fiduciary duties to taxpayers. Asking that our money be allocated wisely and efficiently is simple enough, especially at a time when the U.S. Debt Clock just whisked by $20 trillion. (If you have a strong stomach, click here to see how quickly the IOU levels are growing at a federal, state and international level, respectively.)

In my little household, like so many others, we balance our checkbooks to the penny. We don’t overspend and we borrow what we can reasonably repay on time. I don’t accept that a bigger purse leads to better outcomes. What about doing more with less and improving efficiencies? How is leaving a legacy of crushing debt the right thing for our younger generations? These questions are just two of dozens that demand good answers, regardless of your political affiliation.

It’s hard to joke about excessive debt and a runaway spending machine. On the other hand, if humor adds impact, then my recent efforts writing quirky prose are worthwhile. Click to download a pdf version of “A Taxpayer’s Scream” by Dr. Susan Mangiero.

Ignoring risk is folly, especially when the downside could be complete ruin for a business or investment portfolio. That’s why it’s essential for risk managers to persuade others to pay close attention to things that go bump in the night and then figure out a way to prevent loss, to the extent possible. Unfortunately, risk management is often seen as dull, overly complex or unlikely to be a path to career advancement. I know this firsthand. Having worked in various corporate settings, risk managers have few fans. They are the people who say “no” or ask others to gather data and documents instead of doing the kind of glamorous work that adds to one’s bottom line. Risk management is a thankless task until it isn’t. When the stars align, no one cares about managing uncertainty. It’s the “oops” moments that remind the world why taming risk before disaster occurs is a big deal.

For frustrated risk managers, there is hope, especially if you are willing to tweak your communication skills in pursuit of a worthy cause. Don’t take my word. Check out what Scott Adams Says.

According to the creator of the successful Dilbert cartoon strip and author of bestselling books such as How to Fail at Almost Everything and Still Win Big, simplicity is a core element of convincing others. In his recent video about doing laundry, I laughed out loud when he explained how he avoids the risk of discoloration. Buy clothes that don’t have to be washed separately. It’s such a basic and obvious solution that one wonders why it’s not more commonplace. (As I write this post, I’m wearing yoga pants and a sweatshirt with spots from something else I mistakenly cleaned in the same load.)

In one of Adam’s many insightful essays, the reader learns that another persuasion technique involves the use of visuals, especially those that appeal to people’s emotions. In investment land, think about the photos of senior citizens who lost retirement money in 2008 juxtaposed next to images of wealthy bankers with cigars and fancy cars. Regardless of case-specific facts, such powerful images scream “good” versus “bad.” It’s no surprise that financial service ads tend to focus on comforting images whereas political commercials show pictures likely to rile voters.

Yet another tool in the persuasion toolbox is what Adams describes as the “high ground maneuver” or the art of advancing an argument to a level that garners widespread agreement, thereby trivializing any other position. For fiduciaries being sued over their management of other people’s money, they might silence critics by demonstrating (if they can) how their risk management actions broadly advantage beneficiaries such as retirees or endowment recipients. The goal would be convincing others to overlook short-term strategy misdirection in pursuit of a lofty and prudent long-term focus.

When it comes to risk management, it’s not just about numbers. Rallying others to do their part is critical. One has to be an effective cheerleader to grapple with the unknown. I’m convinced that this persuasion “thing” has legs. That’s why I’ve just pre-ordered Win Bigly by Scott Adams for a dose of wisdom and a few chuckles.

Fiduciary education is an important topic at any time but seems to be garnering further attention in recent months. Rumor has it that questions about training are being asked of in-house fiduciaries during U.S. Department of Labor audits. According to “Developing a Fiduciary Training Program,” ERISA attorney Sheldon Smith explains that this federal regulator “views fiduciary training as a critical element of good governance.” I concur.

Hiring third party experts is one solution to closing a skills gap. Requiring in-house investment fiduciaries to demonstrate a minimum level of proficiency is another option. In either case, there is a real need for instruction about topics such as ERISA plan governance, risk measurement, fee assessment and service provider due diligence.

Fortunately, there is no shortage of organizations that offer retirement plan fiduciary training as part of a certification program or for continuing education purposes. To learn more about this knowledge-sharing alphabet soup, read “Sorting through Professional Credentials” by financial journalist Ed McCarthy (Wealth Management, September 27, 2017). I am quoted in this article as saying “… the value of any one designation will depend on other credentials one has, the kind of work they do, the kind of client base they serve, how well someone explains the value of that credential to his or her clients …”

In my case, credentials are aplenty. Besides a PhD and MBA in finance, an MA in economics and lots of financial industry experience, I successfully met requirements to become an Accredited Investment Fiduciary Analyst, Chartered Financial Analyst charterholder, certified Financial Risk Manager, Certified Fraud Examiner and Professional Plan Consultant. I adhere to continuing education mandates. While it’s difficult to know which designation, degree or type of industry position ranks highest on clients’ “must have” list, I am aware of an increased appreciation of programs that are rigorous in terms of content, candidate requirements and emphasis on high ethical standards.

McCarthy’s article correctly points out the role of continuing education. I’ve long held the opinion that point in time training is worthwhile but ongoing instruction is likewise needed. High integrity professionals who study hard to pass designation-related exams understand the advantages of lifetime learning. Many of their clients acknowledge the seriousness of advisors who stay abreast of new rules and regulations and strive for an A game on behalf of investors.

If you missed the Strafford continuing legal education webinar on September 12, click here to download the slides about ERISA investment committee governance. The ninety minutes flew by, with each speaker having lots to say. Attorney Emily Seymour Costin addressed ways for companies to minimize the risks of being party to an ERISA lawsuit or, if sued, how best to mount a defense. Insurance executive Rhonda Prussack talked about ERISA fiduciary liability coverage. I gave an economist’s perspective about conflicts of interest, delegating to a third party such as an investment consultant, facts and circumstances considered by a testifying expert and fiduciary training.

I also broached the topic of benchmarking fiduciary actions as vital to good governance, something that deserves significant attention. Certainly policies, procedures and protocols can vary across ERISA plans. However, the importance of assessing whether committee members are doing a good job is universal, regardless of plan design.

One way to grade job performance is to create a matrix of relevant attributes and compare actual deeds to expectations of what a prudent investment fiduciary would do in similar circumstances. Although overly simplistic, the image above illustrates the general notion of ranking decisions from great to bad or somewhere in between. For a specific engagement, a scorecard would be much larger because there are dozens of categories to examine.

My recommendation to anyone with ERISA fiduciary responsibilities is to engage outside counsel for a fiduciary assessment and then have the law firm bring an investment expert on board to address economics, risk management and industry norms. By self-assessing, with the help of knowledgeable and experienced third parties, investment committee members have a golden opportunity to improve weaknesses and recognize areas of strength. When there are multiple solutions to a given problem, something that is more the norm than not, brainstorming with meaningful metrics can be invaluable.

Despite the billions of dollars being allocated to financial technology or “Fin Tech,” some believe automation will never trump personal interactions. As Carla Dearing, CEO of financial wellness company SUM180, puts it “… money is emotional and there are always intangibles to consider in deciding what to do next, which cannot be captured by robots …” (Read “Why Robo-Advisors Will Not Replace Human Financial Advisors,” The Street, February 28, 2017).

Last month, industry pundit Michael Kitces offered interesting insights in his “Why Broker-Dealers Launching Robo-Advisors Are Missing The #FinTech Point” article. He acknowledges the growth in automation but suggests it won’t be a cure-all to attracting Millennial heirs who expect to inherit their parents’ wealth. What makes more sense is to exploit the “tremendous operational efficiencies” for purposes of “onboarding clients and efficiently managing (model) portfolios” while allocating ample resources to “marketing and business development.”

Whatever your view about the next big thing involving a mobile interface or data analytics, a critical question remains. Will you or your financial advisor soon be made redundant by some version of R2D2 or C-3PO?

Drum roll please! If research by Oxford University academics accurately foretells the future, financial advisors can breathe a sigh of relief – sort of. In their 2013 paper, “The Future of Employment,” Carl Benedikt Frey and Michael A. Osborne quantify low probabilities of replacement for securities, commodities and financial services sales agents. Financial managers, financial examiners, financial analysts and financial specialists similarly fall into the “low probability” category. Personal financial advisors fall into the “medium probability” bucket with an estimated fifty-eight percent chance of being replaced by a computer. Of course, those who specialize in complex areas such as estate planning are logically more a fixture than any digital counterpart.

Like any career, the friction between technological progress and added-value by a particular individual is real. One solution is meaningful continuing education. Another approach is for investment professionals to actively empower their clients by providing them with solutions to specific problems. Consultative selling can be a time-intensive process and not one that is always supported by an organization’s business model. Some investment advisors or asset managers are rewarded for short-term and not longer-term performance. These decision points are seldom simple to parse but nevertheless vital to consider at both the micro and macro levels – for both service providers and their clients.

Attracting clients is hard work in the best of times. Increased competition adds to the challenge. One way to stand out is to make clear what product (or service) you offer and why an investor should consider your firm. In my experience, providing information in a straightforward manner is paramount. It’s easy for a saver to be overwhelmed by a seemingly endless assortment of products with different names, especially when many are already struggling to understand basic investment concepts. The American College of Financial Services gives Americans a grade of “F” in terms of understanding how to best prepare for retirement. In my experience, plenty of institutional fiduciaries likewise grapple with how to meaningfully compare two or more funds with overly complex structures and strange sounding or confusing names.

The importance of brand clarity hit home a few weeks ago when I excitedly showed my husband my toes, post-pedicure, decked out in a new color called Cranberry Kiss. He drily replied: “They look red to me.” A smart man with a PhD in finance, he does not follow beauty trends. He’s not alone. Others might simply look at the overall color and ignore attributes such as brand name or bottle design of competing items such as Big Apple Red, Sophisticated or Forever Yummy.

Customer indifference is not new. I’ve talked to investors who throw up their hands in despair when presented with too many choices. One lady recently told me that she did not want the headache of having to vet multiple funds so she picked the one with the name that seemed to describe the underlying portfolio strategy. Consumer research supports the notion that a buyer can have “too many” choices. From a service provider’s perspective, having your product lumped together with others is not ideal. On the other hand, having a name that seems “exotic” or is not self-explanatory can likewise lead to lost sales.

Understanding how to name a product is vital for a fund company, bank or insurance firm. While it may be tempting to rely on performance numbers alone to build assets, smart marketers and sales professionals know the power of keeping things simple, having a memorable and obvious product name and doing whatever they can to differentiate their product as a “must have.”

According to the authors of “A Nurturing Campaign” (Financial Advisor Magazine, August 1, 2017), other investment industry professionals are key to securing leads for your business. Savvy advisors, consultants and money managers know the importance of cultivating relationships with peers, positioning one’s self as a competent technician and being ready to reciprocate as appropriate.

I agree that effective networking is the way to go. Besides the prospect of adding clients, investment professionals benefit when others are willing to candidly exchange information about ways to improve best practices and avoid mistakes.

Not everyone is a believer. It takes time and money to market your skill set to potential clients. Some posit that leaves little time for outreach to others, especially for those whose “to do” lists seem to aggressively expand each day. This kind of thinking is unfortunate. The world is a small place and today’s competitor could be a close ally later on.

To those who do seek referrals (and hopefully give them when you can), I applaud your initiative but would like to respectfully remind you that your request is only a beginning. Be clear with what you want, when you need an introduction and what you expect. Help others help you build your book of business by recognizing their busy schedules and any limitations they might have about being able to provide effusive praise. (Company policy or regulations could prohibit lengthy or detailed referrals.) By asking someone to do the heavy lifting you should be doing, you risk criticism for taking that individual for granted, coming off as impolite or turning a positive connection into one tainted with a hint of annoyance. I know this from firsthand experience.

Just last week, I received two separate requests for recommendations, both of which ended costing time and frustrating everyone involved. The first person asked me to write a recommendation letter and have it sent one day later. Ordinarily I would have said no because of the short turnaround but I like the high-integrity work this person does and his client focus. So I stayed late at work to write something, only to discover that the directions provided to me were incomplete. The net result was that I used up several hours of time and he could not meet the cutoff. Another individual gave me ample time to write a recommendation letter but told me, after I had already spent about ninety minutes drafting text and reviewing her service materials, that I should revise my letter to include passages of her numerous research papers. Of course I would have to take time to read them in depth as it had been awhile since I looked at them. We mutually agreed that she would ask another colleague – someone with the schedule flexibility to review her impressive portfolio of thought leadership items.

A few of my takeaways from these recent experiences are as follows:

  • It’s gratifying to be able to recommend high integrity, knowledgeable colleagues but important to set boundaries in terms of time and realistic expectations.
  • Arrange for a call to ask for a recommendation or referral. Email seems impersonal to me for this purpose and increases the likelihood that the referral source will waste time because instructions were unclear or incomplete or both.
  • During the call, catch someone up on what you’ve been doing and your professional value-add so everyone is clear on your achievements, business philosophy and goals. Let the recommending party ask you questions. Be specific about how the referral will be used and by whom.
  • Afterwards, send a handwritten note to acknowledge that person’s gift to you of their time, energy and belief in the positive way you handle clients.

Small courtesies can grow into large payoffs. It’s hard enough to stand out from the competition. Why not shine by demonstrating courtesy and respect for other people’s time?

Economist Dr. Susan Mangiero is pleased to announce that she will be speaking during an upcoming Strafford Live webinar on September 12, 2017 from 1:00 pm to 2:30 pm EST. The Continuing Legal Education (“CLE”) webinar is entitled “ERISA Plan Investment Committee Governance: Avoiding Breach of Fiduciary Duty Claims.”

She will be joined by a prominent ERISA attorney and a senior-level ERISA fiduciary liability insurance executive to discuss risk mitigation approaches that have the potential to help lower the likelihood of breach of fiduciary duty allegations. This program will also address effective litigation strategies, the importance of fiduciary liability insurance and the role of the economic expert in the event of litigation, arbitration, mediation and/or regulatory enforcement actions. Court cases including the recently adjudicated Tibble v. Edison matter will be discussed as part of the program.

Please join the distinguished faculty for what should be a relevant, timely and important conversation about suggested protocols and bad practices to avoid. For more information or to register, visit the Strafford website or call 1-800-926-7926, extension 10. Mention code ZDFCT to qualify for a fifty (50) percent discount. If you have questions you would like answered, please let Strafford know in advance or on the day of the live event.