Redefining and Reinventing Money Management

We can't compete with the market. Charlie Ellis has made that clear repeatably (supported by the evidence) for the last thirty years.

If we can't compete with the market what good are we (investment managers)? What value do we have? Where can we add value?

The industry is tied to a millstone. The S&P 500 (or the Dow Jones or some other arbitrary benchmark).

The quandary is that everyone wants performance. Everyone is conditioned to want performance. Everyone is focused on performance.

How do you wean yourself (your business, your clients) off this?

Do you say, "I can't beat the market. I'm not going to try to beat the market. The market is an artificial construct. We've been duped. Or, we've duped ourselves. We need to focus on your goals (but what if my goals require a level of return that the market is unlikely to provide?). We need to focus on protecting your accumulated savings and generating a little return without putting it all on the line."

Then what am I paying you for? If you're only going to use index funds and give me market, then I can do that myself and save myself 1% pa.

Advisers have basic expertise (they know the nature of the market and are aware of the most appropriate vehicles for structuring a portfolio/achieving a goal) impose a structure and discipline most savers/investors don't have. But what if investors through the discipline of the 401K process develop their own structure, discipline and expertise.

The process (maturation process) reminds me of developments in theology. Theology would move forward as it addressed the thoughts and concerns of the time. Someone would rise up and create a framework to take the conversation to the next level. And then new questions, problems, issues would arise and someone else would have to rise up and propagate a new paradigm with which to venture forth.