If you’re are as old as me, you spent the better part of your career first learning Modern Portfolio Theory as a theory, then seeing it put into practice, until finally watching it flail in agony as market gyrations proved what the contrarians were saying all along.
While entertaining, practitioners remained more concerned with the everyday business of marketing, selling, and servicing. In retrospect, making the sales process more important than actual investment results was MPT’s greatest gift to the industry. In essence, it made the sizzle more important than the steak.
If the preceding paragraph depresses (or worse, angers) some of you, take heart. It just doesn’t matter anymore. And I’ll tell you why right now.
One of the benefits of reporting on the industry each and every week involves having the opportunity to speak with many financial professionals all across the nation. You can’t imagine how enlightening this continues to be. It permits me to put my finger on the pulse of the hard-worker “Regular Joe” advisers. Sure, I’ve had many contacts with thoughtleaders, too. But thoughtleaders speak in rarified air. And when you’re constantly jetting from industry conference to industry conference, it’s a challenge to refine those thoughts in actual practice.
That often leaves it to everyday advisers to takes those innovative ideas and forge them into practical usage. In other words, if thoughtleaders paint the picture of tomorrow, it’s the leading-edge practitioners who show you how that future will work. It sounds like the thoughtleaders get all the credit for being pioneers while the practitioners do all the hard labor. And that’s another advantage the everyday practitioner has.
Thoughtleaders, almost by definition, promote provocative proposals. And, like the pioneers before them, thoughleaders regularly find they’re the ones with arrows in their back. Practitioners have the benefit flying under the radar. They can quietly create, implement, analyze, and improve in ways thoughtleaders can only – uh – “think” of.
In speaking with both groups, you’d be amazed what I discovered concerning the subtle changes occurring in the 401(k) world right now (see “Investing vs. Saving – Why the 401k Fiduciary Must Emphasize Only One,” FiduciaryNews.com, February 3, 2015).
While many practitioners remain committed to emphasizing investment-based education and sales techniques, a few of those on the vanguard have realized the future lies with fixating on savings strategies, not traditional investment strategies.