5 Key Takeaways - Humans Under Management 2021
There are ‘industry conferences’ and then there is Humans Under Management. The former normally involves a suited, booted, and pinstriped list of speakers talking products, performance and persuading the room full of advisers to believe they have the ‘best’ (insert product).
Humans Under Management is different - a conference set up to look at how advisers can deliver value by understanding the complexity of the human condition. More a group of forward-thinking leaders and a good share of misfits from the advice profession who believe that the value lies in the good we do for our clients that goes beyond the bottom line. Apart from being far more energetic and perhaps skewing slightly younger. The conference is emblematic of where the real value lies in this profession. As such, the talks have no mention of products or performance figures. Only a continual discussion about how we can better serve our clients navigate the intersection of money and life.
Some great talks have been omitted from this list for the sake of brevity. These are my key takeaways in no particular order:
TAKEAWAY 1 - ‘Our client’s financial success relies more on what is in their minds than what is in ours.’ - (Brendan Fraizer)
I’d listened to the 'Human Side of Money', Brendan’s podcast before and this was probably the most all-encompassing talk on behavioural finance, strategies for improving client decision making and just fundamentally explaining how dealing with any ‘money decision.’
A few deeply impactful illustrations during the talk questioning - how can we possibly reduce a decision around money without considering the human element (I might need to paraphrase here):
How do you say to the recently widowed client who owns shares of the company that she has held for over 30 years. Where she worked all her life and met her now late husband. These shares need to be sold as the risk is overly concentrated?
This probably best sums up the madness of how little the focus can be given sometimes to the human aspect of financial decisions. Hearing quite a few quotes from Morgan Housel as-well-as the from the concept of the ‘Elephant and the Rider’ Psychologist Jonathan Haiti developed about how to improve behavioural change. The talk focused in on what is sometimes unfairly called ‘soft skills.’ Reflecting on how to build trust you have to first become a great listener.
TAKEAWAY 2 - ‘The enemy of true collaboration is politeness’ - Taken from Steve Hennessey’s talk
Steve’s talk was a reflection on how a level of conflict for a team is not only preferential but necessary for a team to be dynamic. It reminded me of Ray Dalio’s structure of assessing the opinions and disagreements of all his colleagues as part of their radically transparent meritocracy. I covered that in this video:
A team who are too deferential or even afraid to voice their concerns put forward ideas or disagree will never reach their full potential. Conflict should not always be avoided as often expressing negative emotion conveys investment in a relationship.
It made me think about the service we offer as planners and how we probably should do more to separate the nature of the relationship with our clients from Accountants and Solicitors. How the relationship mustn’t be of ‘tell’ it must be of collaborating, disagreeing and working through.
TAKEAWAY 3 - The way people seek financial advice is changing FAST - get onboard or get left behind (Courtesy of Holly Mackay)
Carrying on from that thought was Holly Mackay, founder of Boring Money. The website is growing from strength to strength and Holly brought forward stats on how through her site people are deciding to choose financial planners. With demand for female financial planners and fixed-fee financial planners on the rise. Without a doubt, the profession is in desperate need of more female representation.
Probably my favourite analogy of the talk was about how the financial professionals train new entrants as the ‘reverse Mr Benn.’ In the way that we take often interesting and colourful individuals and turn them into boring, suited and undistinguishable finance professionals. (In the cartoon the character Mr Benn would start in a black suit and bowler hat. He’d visit a costume shop and leave through a magic door at the back of the changing room and enter a world appropriate to his costume, where he has an adventure.)
The standout phrase of the talk was “make Mummy proud marketing” which brutally deconstructs the type of jargon we finance types use to sound impressive. Having 2 weeks ago sat in a very nice office near Victoria Station to hear why a very successful fund manager (don’t ask) talk about planning on using very complex and expensive strategies to capitalise on ‘pockets of value’ in Emerging Markets, it did strike a chord.
What I do think sites like Boring Money are revealing is how quick consumer habits when seeking advice are changing. Perhaps the pandemic’s move to online has been a catalyst for this but it’s remarkably clear to me that advisers who operate a scarcity mindset and aren’t doing what they can to deliver value online and explain what we do - are going to get left behind.
TAKEAWAY 4 - Inflation & The Great Companies - courtesy of Nick Lincoln
Mr Lincoln’s talks always deliver. No stranger to the odd bit of controversy when asking the delegates whose talk they were looking forward to? Nick’s talk was a regular selection. The core of the message - inflation is the real danger to long-term wealth and the only way that has always worked is investing in the great companies of the world. With examples that since the 1970's the purchasing power of cash would have fallen by over 90% whereas UK equities have provided a real return of 6%.
There was also cautionary examples of how gold is not the inflation hedge we all think is. (See below for more on this):
https://www.principlespersonalfinance.co.uk/blog/so-you-love-gold
There was also typically hilarious warnings from Nick of the standard financial trash that is advertised as the ‘antidote for inflation.’ Normally birthed from the same place that brought up Absolute Return Funds which through a mixture of tinkering, hedging and high charging have so far managed to deliver absolutely terrible returns in all environments.
TAKEAWAY 5 - Perception is reality - courtesy of Rory Sutherland
You’ve got to love Rory’s talks. Part a collection of stories on human behaviour, part a freewheeling stream of consciousness. His amusing, insightful but almost always brutally accurate assessment of the human decision-making process makes a mockery of rational finance and utility theory.
“People would rather make a decision that makes sense than a good decision.”
Like Rory’s books, the talk focused on our perception of the world that shapes our reality more than any objective measurement of good or bad. Reflecting how so many in government make often extremely expensive decisions based on incremental gains. Arguing if we approached an issue from a behavioural standpoint, we can change our world for the better (and in a cheaper way) simply by influencing human behaviour.
It was also quite amusing that Rory’s financial adviser was in the room. Anyone who has watched his talks or listened to him interviewed would recognise… he’d be an interesting guy to present a financial plan to! :)
Until next year!
