Earlier this week, I attended the Evidence-Based Investing Conference (West) and spoke on “The Factor Zoo” panel. I present a few highlights / takeaways from the event before. Of course, these are just my personal reflections, so anything excluded is simply because I could not be everywhere at once.

Highlights:

Investor Behavior Matters

Day 1 began with Barry Ritholtz’ talk on investor behavior. A takeaway from his talk (and from the event overall) is that investor behavior matters. (1) Barry makes a key point for advisors: there are (1) Things that matter and (2) Things that you control. A good advisor helps clients focus on the overlap between the two. Helping clients with items such as spending, planning, and simple asset allocation are things that matter and that can be controlled. Some clients may already be experts on the spending and planning side; however, the idea of redirecting a client’s focus to controllable items is invaluable for the overwhelming majority of investors. Here I discuss the idea of advisors serving as “money doctors”, and David highlights their impact in crisis situations.

But the topic of investor behavior did not stop there. Day 2 had a great discussion with Robin Powell moderating a panel of Dan Egan, Bob Seawright, Brian Portnoy, and Nicholas Carr. In addition to being entertaining, the panel shared some ideas on (1) how to educate investors on their behavior, (2) how to help advisors communicate more effectively with clients, and (3) how to nudge clients into making better decisions with their investments.(2)

It is a welcome event to hear the investment management industry helping advisors communicate more effectively with clients and facilitate the suppression of behavioral biases. This focus allows many (including us) to benefit from the great takeaways of behavioral finance.

Embrace Transparency

Transparency is a core belief at Alpha Architect and many other emerging advisors and asset managers. But this way of thinking is different than it was 5 or 10 years ago.

Why?

Quoting Josh Brown (sourced from Bill Sweet’s Twitter account):

“This next generation of investors…they look sh!t up. They look sh!t up [right] in front of you!”