News From the NAPFA National Conference

As I mentioned in a previous blog, I recently had the opportunity to attend the National Association of Personal Financial Advisors (NAPFA) annual conference. Over the years I have attended many conferences sponsored by institutions and professional organizations. While each offers different perspectives, they also share common elements, such as key-note speakers, educational break-out sessions, vendor booths, and the refreshing cocktail party at the end of a long day. Rather than describing the many details of my NAPFA experience, I thought I would share a sampling of the useful resources I found most compelling.

My favorite session was a speech by David Gergen, senior political analyst for CNN and past adviser to four U.S. presidents. Typically I avoid political commentary, but knowing that Gergen’s audience was primarily investment advisors I thought it could be interesting, and it was. His main topic was our national debt, the political jockeying related to whether Congress would raise the debt ceiling by late summer, and the implications either way. I’m sure many of us can relate to the party-neutral frustration Gergen expressed over the conditions of our current political climate. He also reflected on the trade-off between advances in technology-based productivity and potential reductions in companies’ workforces. Overall he was upbeat but realistic about the long term prospects of the U.S. economy.

Scott Bosworth of Dimensional Fund Advisors led an informative break-out session on the implications of investor behavioral psychology. He covered several academically identified behavioral traits to which we as investors can succumb. For example, there’s Regret Avoidance,or the hot stove syndrome: “I got burned in the market when the tech bubble burst, and I’m not buying stocks again!” There’s Loss Aversion: Losing money through market downturns hurts far worse than market gains feel good. And there’s Anchoring on past prices: “I once had X dollars, and now I have Y dollars.” These traits can cause us to make illogical investment decisions that aren’t in our ongoing best financial interests, so it’s important to understand their damaging tendencies and avoid them.

Other conference topics I found helpful included sessions on Social Security, estate planning with IRAs and trusts, and the changing landscape of retirement plans. Complementing my previous blog posting about The Squam Lake Report, the book’s co-author Professor Kenneth R. French gave a keynote speech summarizing the report’s recommendations in the wake of the sub-prime crisis.

One of the most fascinating break-out sessions was from the owner of an investment advisory firm who was about to embark on a three-year sailing cruise around the world with his wife and three young children. He is planning to manage his staff, clients and investments from his fourth office location: his 50 foot catamaran! Though technology these days makes working remotely very possible, my clients can rest assured I have no such ambitions. I am comfortably settled in a wonderful, and stationary, office located in Fort Vancouver.