Richard Bregman, CFA is a New York-based Registered Investment Advisor and president of MJB Asset Management, LLC., and currently manages over $45 million in assets. Richard is a former member of the Schwab Institutional Advisory Council.
OK, let's get down to business. No matter what anyone might say about undue commercialism, unseemly efforts to sway advisor objectivity or -- worst of all - plain old bad taste, one of the annual highlights of the
Schwab's Impact 1999 Conference is the Exhibit Hall. This year was no different.
All of the usual suspects made their appearances -- T-shirts, balls (golf, tennis and baseball), pens, cups, bottles, bags, clips, etc., etc. Rather than list them all, I thought it might be useful to begin an awards series for best tschotchkes, in the hope that fund companies will benefit from the opinion of an inveterate tote-bag stuffer.
Best overall giveaway award: Cohen & Steers. After the nifty backpacks (four years ago) and beach towels (three years ago), I though Elizabeth Reagan had outdone herself with last year's elegant and totally practical chip clip carnival. However, in a terrific return to the big size, blow 'em away booth give away, this year's fleece sweatshirts emblazoned with the logo "AuthoRIETy" tops all comers.
Best T-shirt: Baron Funds, hands down. Prior years' Max Factor prints were hard to top, but this year's "New York State of Mind" (some autographed by Billy Joel) left everyone in the dust.
Best pens: Rumor has it that
Firsthand funds had the best, but I somehow missed it.
SIFE Funds had the best quality ink;
TCW had the best feel.
Best Ball: Kinetics Asset Management's
Internet Fund, for the multi-colored superball with the flashing lights encased.
Best tote bag: Munder for its fire engine red beauty.
Best Beanie baby/stuffed animals: First Eagle Funds' (what else?) eagles.
Best Umbrella: Oakmark funds (no competition of which I was aware).
Best (and the only) Yo-Yo award: UAM Funds, this year in beautiful lime green.
Best Non-Big Time Sponsor with Lots of Fund Managers at the Booth: Oakmark again, with (by my count) six of the fund managers answering questions at the booth on Monday and Tuesday (Robert Sanborn of Oakmark Fund, Bill Nygren of Oakmark Select, Clyde McGregor of Oakmark Growth and Income, Steve Reid of Oakmark Small Cap, Michael Welsh of Oakmark International Greg Jackson of the Oakmark Global Fund).
Nicest and Most Thoughtful award: FAM Funds for their Happy Thanksgiving greetings and plastic removable Thanksgiving stick-ons for children.
Most clever: Lipper Funds, for their pneumatically-wrapped, shrunken T-shirts that forced everyone to think: "How did they do that?"
Best Stick to Your Principles award: GAM Funds, which, for as long as they have been attending Schwab Impact, has never given away a single item to a single advisor. This category could also be re-named the Staying Above the Fray Award. Congratulations to Dave Anderson for refusing to run with the pack.
"Hey, that's a good one that I haven't seen before" award: Paula Schuppel of
Navelier, for the eyeglass neck holder, available in various colors.
Most Useless Award: No names mentioned here because it would take too long, but the award goes to all of the fund families who gave out myriad highlighters, plastic bags, cigar clippers, finger-squeezed menu-reading mini-flashlights and, in the topper of them all, the Day-Glo year 2000 fake eyeglasses.
Lastly, many attendees (on both the advisor and the fund company side) have given me suggestions for future booth activities or giveaways. Here are the top:
Poor performance dunk tank. Put the poorest performing managers on the hot (or should we say wet) seat and let advisors take their shots at getting their dunks.
On the topic of dunks, suggestions were heard for a
slam dunk booth, complete with video replays.
Foot, neck and/or shoulder massages.
For
most practical, one fund company marketer suggested a shirt giveaway, with three lights on the front of the shirt -- green, red and yellow. When approaching a fund booth, the advisor would flash one of the lights. Green light means "I am interested in your fund." Red light means "I want your toys only." Yellow light means "I am not interested in your fund, but I am going to lie and say that I am so that you will give me one of your toys."
It is difficult to determine whether any of these giveaways actually create a sufficient amount of goodwill for an advisor to place assets in a fund. (Certainly, few advisors would admit to it!)
Further, it is not clear that the fund companies actually expect the giveaways to generate asset growth. On the fund company side, the most interesting comment I heard was from one fund marketer who indicated that fund companies realistically don't expect to gather much in the way of new assets from new advisors at the conference. The feeling was that most advisors are fairly set in their choices and the conference is viewed more as a way to schmooze existing clients than it is as a venue to open new advisor doors.
This might be true for the giveaways. However, in my opinion, the Schwab conference does offer the potential for an unparalleled opportunity for fund companies to generate interest in their funds. The opportunity, of course, is for advisors to meet directly with fund managers in a small setting for the purpose of doing due diligence. Most advisors relish the opportunity to meet with a fund manager. After all, this is where they are most able to claim that they are adding value for their clients (how many retail clients ever get the chance to meet their fund managers?).
My most valuable time at conference after conference has always been the one-on-one or very small group meetings I have arranged with fund managers over a cup of coffee or an early breakfast. For fund companies however, such meetings can require a large expenditure of resources in time and effort, particularly for the advisor channel, which can be a comparatively small source of assets relative to the fund companies' institutional clientele.
My suggestion to fund companies and advisors alike is to limit these meetings to advisors who are knowledgeable about the fund and the manager. It would be reasonable for fund companies to expect that advisors --who, after all, are in the business of evaluating funds -- come into the meeting knowledgeable about the basics of the fund. Such information is easily obtainable from Morningstar or the fund company directly. Questions about expense ratio, turnover ratio, net assets, etc., are a waste of time for the fund manager, who should be asked questions about investment process, investment philosophy, portfolio holdings, decision-making processes, incentives, etc.
In this regard, it would be helpful for advisors to understand money management techniques in general. In any event, fund companies should be careful in inviting advisors and, at the same time, advisors should be respectful of fund manager time management. The fund companies and Schwab should explore ways to facilitate more of such gatherings at the conference. From what I have heard at the last two conferences, it appears that Schwab has been heading in the other direction of late, limiting the amount of time during which fund companies are allowed to sponsor advisor meetings.
Note: Meeting the manager at the exhibit hall booth doesn't cut it for the serious advisor. Frequently, the manager is surrounded by many questioners, making it difficult to get quality time in. Also, the generally public nature of the exhibit hall venue can be discouraging at times in terms of asking and/or receiving answers to difficult questions.
One thing to come out of the exhibit hall is the fact that notwithstanding the frequent advisor complaint of being inundated with useless fund marketing materials (I guess T-shirts and golf balls, etc. do not count), there remains a significant number of advisors who welcome the information that fund companies provide. Moreover, it appears that fund companies would love to provide the information to advisors, but are frustrated because they are unable to identify: 1) the specific advisors who want it; 2) the specific content that each advisor wants; and 3) the method of delivery favored by each advisor (e.g., e-mail, fax, hard copy, etc.).
As a result, the fund companies are left to giving door prizes such as bottles of wine to a lucky advisor who puts his or her card in the bowl (providing the building blocks of a mailing list for the fund company). There is a gap here that needs to be bridged. More on this at a later date.
All in all, this advisor continues to view the Schwab Impact conference as the pre-eminent event geared to investment advisors using mutual funds for all or some portion of their clients' portfolios. Next year's Impact is in Denver in September -- a welcome relief from cross-country travel, absentee ballots and absentee Halloween celebrations. Schwab again has a mountain to climb (and I am not referring to the Rockies between SF and Denver), but if this year's conference was any indication, Schwab is on a roll!
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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