Does strong sales culture matter more than good returns for financial success as money manager?

Discussion in 'Professional Trading' started by learner88, Oct 21, 2019.

  1. From the article, Kenneth Fisher under-performed cheaper benchmark stock indices despite charging high fees. This is not new in the money management world. What surprises me is that his fund manages USD100billion!! That is a huge amount, given his inferior long-term performance against cheaper stock indices. He is easily one of the biggest hedge fund managers in the world. How does he get away with this, charging high fees yet delivering inferior performance?

    This gives rise to my question to the professional elite money managers here. Does strong sales culture matter more than good returns for asset gathering? To get rich as a money manager, is it fair to say that being a good salesman matters more than being a good money manager? Kenneth Fisher is worth USD3.8billion, despite money management skills that are inferior to much cheaper stock indices.

    Worn carpets, musty smells, poor insulation: It’s not what you might expect from a money-management empire that’s been overseeing more than $100 billion. But then, this is the private kingdom of Ken Fisher, where Fisher’s way is the only way.

    For decades, the idiosyncratic money manager has sold himself as a brilliant stock picker with the help of almost a dozen books, torrents of direct mail, seminars, videos, ads, magazine columns and more. His happy message for investors: “We do better, when you do better.”

    Indeed, Fisher Investments has done very well -- most of all for Ken Fisher. Over the past decade, as the firm filled mailboxes across America with tens of millions of marketing flyers, it has employed aggressive sales tactics to sell stock investments with relatively steep fees. Fisher, meantime, has grown fabulously rich: He’s now worth about $3.8 billion, according to theBloomberg Billionaires Index.

    Founded in 1979, Fisher Investments manages more than $67 billion for private clients and more than $35 billion for institutions, according to data posted on its website before Fisher’s remarks.

    The reins are held tight. Investment decisions are made by Ken Fisher and four other men. While low-cost index-tracking funds have come into vogue in recent decades for their long record of beating actively managed stock funds, Fisher’s pitch is that it can pick winners.

    Publicly available information on Fisher’s funds and strategies showed mixed performance. The Purisima Total Return Fund, for example, returned well under half of the S&P 500 Index in its final 10 years before it was liquidated in 2016, according to data compiled by Bloomberg.

    Fisher’s Fees
    One reason Fisher Investments has turned into such a bonanza for its founder is simple: fees. Depending on the account assets, fees range from 1% to 1.5% for private clients. In contrast, active U.S. stock funds typically cost about 0.7% of assets per year, according to a Morningstar report earlier this year. Index funds cost about 0.08%.

    Where Fisher Investments undeniably excels is at marketing. Salespeople typically work from leads generated from responses to its online ads to ferret out affluent clients.

    Last edited: Oct 21, 2019
  2. dozu888


    how do you live with yourself.... even if you get rich from sucking other people's blood.
  3. I agree with you but most professional money managers do just that because most of them got rich from charging their clients a high fee despite under-performing cheaper stock benchmark indices. In other words, these money managers got rich from sucking the blood out of their clients' wallets.

    I think many of them are living with their wealth generated from undeserving fees happily ever after.
    tommcginnis likes this.
  4. ETJ


    Branding and marketing are critical - performance is how you keep the $$.
  5. tommcginnis


    When I first started trading, Fisher came out with a thick, thick-ass book -- I think it's titled "The Only Question You Need To Ask..." or something reasonably close.

    I paid full retail. (I NEVER do that.) I felt so proud. It seemed entirely tome-ish. I've had a few tomes in my life -- books that you could crack open at any point, and distill and discern *wisdom* from them! *Surely* this too -- as thick as it was -- surely this would a tome, too? No?

    No. I've cracked it a few times. I've tried to make sense of some part of it or other.... but one day, when I was looking for THE QUESTION from which the book gets its putative title -- it dawned on me that such a question would have to be at last 400-500 pages, to justify the size of the 700-800 page book -- and that NO such question could ever be written, excepting the one (THAT ONE) with the ONLY ANSWER that a question of import deserves, being[​IMG]

    ...and since this was a *finance* book -- I just didn't see it happening. That's when I first started doubting Mr. Ken Fisher. I thought reading his book -- simply *owning* his book -- would make me a pro. I mean -- I *paid* for it! I OWN it! (I own it still! No lie!)....

    Meh. "42." Let me end on that hopeful note. Screw Mr. Fisher.

    (Book For Sale! Mostly new. Best Offer.)

    And no, I never did figure out what the question was. Sound familiar??
    murray t turtle likes this.
  6. The one question that clients should ask their active managers is ...

    Why should I invest in your active fund when you charge a few times more for long-term under-performance compared to cheaper, more liquid passive stock index funds/ETFs?

    murray t turtle likes this.
  7. 0008


    How old are you?

    You should know this is the way how the financial market works. :D:D:D:D:D:D
    murray t turtle likes this.
  8. 2rosy


    i said it before and will say it again.
    You don't need to make money to make money. :cool:
    murray t turtle likes this.
  9. Yes
  10. Dizaj


    2rosy, I agree with you. You have a mind of entrepreneur which thinks a bit differently from mind of investors. Indeed it is very true that you dont need to make money to make money, but schools are teaching us differently. Would you agree?
    #10     Nov 27, 2019
    murray t turtle likes this.