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Finology
Summit 2018 features an exceptional and eclectic international
faculty of behavioural finance, behavioural economics, and
psychology experts covering various aspects of finology with
particular focus on the implementation challenges, tools and
opportunities faced by practitioners.
8.20AM-8.35AM: CRITICAL ISSUES FORUM 1
Where investing meets investors
Finology knowledge and skills enable us all to better understand
how our own preferences, biases and perspectives influence our
portfolio construction philosophy and practices - and to better
uncover and understand the preferences, needs and objectives of
individual investors to help them achieve their goals. It's
where investing meets investors.
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Graham Rich, Managing Partner & Dean, Portfolio Construction
Forum (Sydney)
Prep!
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Finology Backgrounder
8.35AM-10.20am: CRITICAL ISSUES FORUM
2
8.35am-9.05am
The finologist of the future is a cyborg
The future is not one of humans OR technology, but rather
tech-augmented humans – cyborgs. The problems of finology are
just too complex for humans to manage along (there’s too much to
calculate), or for computers to calculate (it doesn’t help when
people can’t articulate their goals in the first place!). The
man vs. machine framing of the role that technology will play in
the future of delivering financial advice is too narrow.
Instead, the combination of man and machine (i.e., the “cyborg
adviser”) can be more effective than either alone, posing the
greatest opportunity to human advisors in the long run – and
threat to those who lag behind.
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Michael Kitces, Partner & Director of Wealth Management,
Pinnacle Advisory Group (Columbia, Maryland)
Prep!
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Finology and finding the higher purpose
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What cyborg chess can teach us about the future of financial
planning
9.10am-10.10am
The trust mandate is how asset managers win and keep clients
Trust – defined as the belief that those to whom we are
vulnerable are both willing and able to act in our interests –
is the no.1 factor in the decision to select and retain an asset
manager. Research on the way people form those beliefs about
others, suggests not only that the judgment of willingness is
the first to be made, but it is also the more important of the
two. Indeed, the greater the vulnerability, or risk, the more it
becomes essential for clients to be convinced of potential
managers’ intentions, rather than of their abilities.
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Herman Brodie, Founder, Prospecta Limited (Birmingham)
Prep!
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Understanding how clients select their asset managers
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Not so
different after all: A cross-discipline view of trust
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Warmth
and Competence As Universal Dimensions of Social Perception
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Money
Doctors
10.20AM-11.00AM: MORNING BREAK
11.00AM-12.30PM: CRITICAL ISSUES FORUM 3
11.05am-11.45am
Downsize now. Rejoice at leisure.
Government incentives may help to encourage downsizing but
the decision itself may not be purely financial. Recent research
exploring the opinions from a psychological perspective of 350
people who downsized over the last five years reveals that
despite one third describing it as a difficult decision and 70%
reporting some levels of stress, only 9% reported it to be worse
than expected. Most people take ownership for their decisions,
nominating physical health and finances as the top two impetuses
to move. Only about 19% reported regrets, with these classified
mainly as emotional and social.
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Joanne Earl, PhD, Director of the Professional Psychology
Program, Macquarie University (Sydney)
Prep!
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Downsize now. Rejoice at leisure.
11.50am-12.20pm
Behavioural biases lead to unrecognised risk-taking
Behavioural biases lead money managers to take risks
they don’t see. Substitution, aggregation, and feedback
risks are often ignored in financial modelling.
Successful managers become overconfident. Limited
attention and the availability bias distort our
perceptions of probability. And confirmation bias leads
us to underestimate the likelihood that we are wrong.
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Terrance Odean, PhD, Rudd Family Foundation
Professor of Finance, Haas School of Business,
University of California, Berkeley (San Francisco)
Prep!
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Boys will be boys - Gender, overconfidence, and common
stock investment
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Bubbling with excitement
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Trading is hazardous to your wealth
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Learning to be overconfident
12.30PM-1.15PM: LUNCH
1.15PM-1.55PM: CRITICAL ISSUES FORUM
4
1.20pm-1.50pm
Robo-advisors are NOT the future (but technology is)
While robo-advisors have been the big buzz as replacement
humans, in reality they’re not (and US data proves it). In fact,
robo-advisors are pivoting to become human advisor platforms.
Technology is augmenting the financial advisory process in the
US, from assessing risk tolerance, to gathering client data, to
allowing for interactive financial planning, and providing
financial dashboards. But while technology is great, it’s not
enough alone (otherwise everyone with a FitBit on their wrist
would be healthy). The role of the adviser is to help clients
NOT go with the herd and to figure out what their goals are in
the first place.
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Michael Kitces, Partner & Director of Wealth Management,
Pinnacle Advisory Group & Publisher, Kitces.com (Columbia,
Maryland)
2.05PM-2.50PM: SPECIAL INTEREST FORUM
Featuring
three concurrent breakouts – in each, one speaker presents followed by Q&A.
Is it
relevant? Is it understandable? We can all do much better….
Too much of our communication with end investors is either
irrelevant, unintelligible to the average investor - or worse
still, both. We can all do a much better job of connecting with
investors by focussing on two key questions: do they really need
to know this?; and, will they understand what I am saying?
Relevance and understandability are key.
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Tim Farrelly, Principal, farrelly's Investment Strategy
(Sydney)
Ride the
Managed Accounts tsunami
In an ever changing regulatory environment and increasing
pressure to deliver quality investment solutions to clients,
Managed Accounts have become increasingly popular with
approximately A$40bn in assets. According to the Institute of
Managed Accounts, it’s no longer enough to be a highly capable
practitioner. To maintain your position in the industry, you
need to embrace technology and a rigorous ongoing educational
program. Managed accounts have proved themselves to be a
cost-effective way to help streamline back office processes and
create a tailored and transparent investment portfolio,
liberating practitioners to spend more time engaging with
clients so they can achieve their goals. Prepare to ride the
managed accounts tsunami or be left in its wake.
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Peter Chun, FIAA, General Manager Distribution, Colonial
First State (Sydney)
Successful practitioners are caring practitioners
“Nobody cares how much you know, until they know how much
you care,” cautioned Theodore Roosevelt. This is especially true
when risk is involved. Practitioners can reveal how much they
‘care’ for their clients in the contracts and incentives they
insist on, in the education and information they provide, and in
their interest in the client’s wellbeing beyond the transaction.
Practitioners should start, though, by trusting their clients.
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Herman Brodie, Founder, Prospecta Limited (Birmingham)
2.50PM-3.30PM: AFTERNOON BREAK
3.30PM-5.00PM: CRITICAL ISSUES FORUM
5
3.35pm-3.55pm
Beware the trifecta of desire
Behavioural impacts on investment decisions are well understood
but human conditioning also impacts investment communication.
Practitioners demand a trifecta from fund managers -
performance, simplicity, connection - opening up risks.
Performance chasing in fund selection leads to sub-optimal
client outcomes, while assessing processes and outcomes is hard
and has parallels with stock selection. Simplicity and
Connection expose recipients to powerful risks of influence;
these “tools of selling” contradict “tools of investing”.
Disagreement is a barrier to persuasion yet many great
investments are contrarian and uncomfortable, while an
investment process simple enough to codify will inevitably be
replaced by a cheaper automated alternative.
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Douglas Isles, Investment Specialist, Platinum Investment
Management (Sydney)
4.00pm-4.55pm
Finology is central to the future of financial advice
The debate around professionalism gets louder by the day
against the backdrop of legislated increases in education,
standards and ethics set by the new government body, FASEA.
Finology must be seen as central to the curriculum of what
financial advisers learn and how they practice, for
professionalism to be complete.
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Nick Hakes, General Manager Member Services, Partnerships &
Campus AFA, Association of Financial Advisers (Melbourne)
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Michael Kitces, Partner & Director of Wealth Management,
Pinnacle Advisory Group & Publisher, Kitces.com (Columbia,
Maryland)
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Herman Brodie, Founder, Prospecta Limited (Birmingham)
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Mia Taylor, Personal Financial Adviser, Evalesco Financial
Services (Sydney)
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Michael Ward, Director & Personal Financial Planner, Maxim
Private Wealth (Perth)
5.05pm-5.30pm
Keep hope alive!
There was a time in my recent life when I was a lonely, homeless
woman in one of the most expensive cities of the world. Everyone
said it would cost me a lot when I moved to Sydney. As it turned
out, it cost me everything I had - my family, my friends, my
money, my health, my dignity and my belief in myself… simply,
everything. Sydney is an expensive city, yes, but there are also
generous people in the expensive city, if you look through the
right lens. Some of these generous people have invested in me.
Their investment has not been in the form of money. Instead,
they’ve invested by giving me hope, love, time and energy. They
saw in me the potential to renew a hope for the future, showed
me how to have love conquer hate, how to move forward, and how
not to look backwards. Today, this hope is more alive than ever,
and I want to share it with you. As I do, my confidence in the
future will continue to grow. And perhaps I can encourage you
with the gift of hope that you can gift to others.
5.30PM-7.00PM: NETWORKING RECEPTION
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