For years, advisers like you and service providers like me have been defending evidence-based investing against the opposite of it: Active vs. passive. Alpha vs. beta. Rational vs. emotional. Scientific vs. speculative. Market timing and stock picking vs. risk factors and diversification.
Call it what you will, ours has long been a relatively black and white conversation about “us” vs. “them.” It’s a conversation we’ve gotten good at too, as we state the case for keeping market efficiencies high, unnecessary expenses low and human emotions in check. By keeping our message loud and clear through the years, we’ve been winning over an increasing numbers of investors, fellow advisers, fund providers and even the financial press.
So, congratulations, we’re winning! That’s good news. But I believe it’s also the fuel that’s igniting a new communications challenge. Our black-and-white messages may no longer suffice. These days, expect a finer shade of gray in your conversations, with more nuanced variations on the theme of active vs. passive investing. Continue reading “Evidence-Based Investing and Adviser Gray Matters”