Plenty of online tributes to our veterans over this Memorial Day weekend. Many are touching. As I tweaked my site today to add a photo of a windjammer on Penobscot Bay in Maine, it seems appropriate to add my own thoughts. My father, who loved his Friendship Sloop and sailing in Penobscot Bay and Chesapeake Bay, served his country. We often trivialized it, as did he, saying he did his two years and retired a PFC. Truth is he played his part, probably more important than anyone would like to admit. As he got older, he became more nostalgic and truly valued the role he played and the importance of service – he was also a lifelong volunteer fireman. Ultimately, he chose to be interred in a National Cemetery near his adopted home in Jacksonville. In hindsight, more power to him, and thanks to him and all who have served, no matter the role. No role is trivial as they come together to deliver to us the ability to freely post what we will on websites like this, and there is nothing trivial about that. Enjoy your Memorial Day, but don’t forget why we remember.
Thanks to all who have served and sacrificed, and the loved ones they left behind. We can’t say it often or emphatically enough.
Watching ETF markets develop is interesting. Two recent articles are caught my eye. The most recent, http://wealthmanagement.com/investment/new-buyers-etfs, addresses the rise of actively managed mutual funds as buyers of ETFs, citing hundreds of actively managed funds and 21 of the 25 largest fund complexes as holders. Reasons, they say, vary from parking new money to niche positions in allocation funds to core positions in some allocation funds to core positions in target date funds. I still wonder, despite protestations otherwise, just how embedded ETFs impact the cost structure for the holder of the actively managed fund. No doubt there are good reasons for these moves, parking funds and cost competitiveness against actively managed funds in a fund of funds scenario amongst them, but what about the cost?
The second article, http://vixandmore.blogspot.co.uk/2013/03/the-low-volatility-story-in-pictures.html, adds another compelling argument for why actively managed funds might be interested in targeted ETF investments. They talk about how low volatility ETFs tend to outperform high volatility over the long term. Yes, I and they acknowledge that cherry picking time frames can make all the difference, and I encourage the skeptics to go there and dig deeper. I bring it up here because I think it is a good illustration of how a particular ETF can serve a meaningful purpose in these actively managed fund scenarios by providing reasonably strong upside potential over time without the downside swings even strong markets demonstrate.
Love to hear what you think about ETFs in actively managed funds and the notion of using these low volatility ETFs in some of these situations.
As a former life insurance company CEO I often proselytize about longevity risk – the fact that we are living longer than ever before, and so need to plan for longer time in retirement. I worked with the American Council of Life Insurers and state regulators to bring longevity insurance to market and with my own product and finance teams to bring sustainable, reasonably priced income for life benefits to our variable annuity product line. Two recent pieces prompt me to comment on what Larry Fink, CEO of BlackRock, rightly calls longevity risk “the defining challenge of our age.” Understanding this and taking steps to address it are paramount to Americans of every age. Interesting context for the video comes from Mary Beth Franklin’s piece in Investment News. She points out the dramatic impact the Great Recession had on existing savings, particularly for late boomers and Gen Xers. Of course the recovery has helped, with markets rebounding nicely, but so many drained what little savings they had that recovery is a relative thing. This backdrop only amplifies Larry’s comments. He covers a broad series of underlying issues from the aging workforce to lower birthrates to the overwhelming costs of entitlement programs. He talks about the shift from Defined Benefit plans to Defined Contribution plans, and the tendency for individuals to invest more conservatively than institutions, worrying about the short-term, when saving for the long-term. Of course, he highlights the need to focus on this now – individually and as a society. One solution he suggests is mandatory retirement savings, citing Australia as an example to consider. Really interesting talk, well worth your time. Now, if we can only move down this path. The sooner we begin, individually and as a nation, the easier this discussion will be. I believe a balanced approach which brings constructs, tools, and even products from the insurance industry (like lifetime income riders or their underlying hedging strategies, longevity insurance, and tax deferral mechanisms), asset management tools, and intelligent legislation can ensure the best possible outcome.
I came across this article the other day, and it sparked some deeper thought on getting and keeping your sales team on the same page as the organization. I love the core premise of the piece: that compensation is just one piece of the sales motivational puzzle. I am particularly fond of Colleen’s points #3 – Protect Your Team, #4 – Reward Your Team verbally or with an e-mail, and #5 – Separate the Manager from Selling. This goes to creating a supportive environment in which your sales team is positioned to win. I tend to agree with her point #6 – Have a commission plan that rewards your team for the behaviors you want. It goes without saying, but her sub-points about keeping it simple, ensuring everyone understands and encouraging team behavior are good. I think there is an important elaboration, though, and I would make it point #1. Consistent with my core philosophy that truly high performing organizations start with a well reasoned, well articulated strategy, your sales organization is an important part of that downstream messaging. Clearly translating your organizational vision into direction and implications for sales and marketing keeps everyone working toward the same goal. Ensuring that sales compensation plans dovetail with that messaging is vital. Finally, stay in front of the sales organization. Be visibly supportive and engaged, and use that time to keep reinforcing the overarching goals for the organization and the vital role the sales team can, and is, playing in making the vision reality.
What sparked my thoughts:
Welcome, today we are starting a new process of adding content more regularly in the form of Mark’s Observations. Right here on the landing page we will present a variety of opinions ranging from thoughts on the economy to effectively building corporate strategy to trends in products and distribution. We will not limit ourselves at the outset, simply venture to provide you with thoughtful and useful content which will keep you coming back for more. We encourage your participation, here with your comments and by sharing this content through social networks like Facebook, LinkedIn and Twitter. Let us know what you think, that you appreciate our work, and what we can do differently to serve you better.