Congratulations to me! Today, I celebrate five and 15 years of helping passively minded, fee-only Registered Investment Advisor firms with their varied communications. It’s been 15 years since I joined Buckingham Asset Management/BAM Advisor Services as Director of Communications in January 1998. After a wonderful run there, I and my motorcycle-riding husband spun away to the open roads of Oregon, bidding a fond farewell to BAM. On January 5, 2009, exactly five years ago today, I received my own articles of organization, and Wendy J. Cook Communications, LLC became an official, tax-paying entity.

However you count it, it’s been the best ride of my life (not counting some of the ones I’ve enjoyed on the back of our Honda Goldwing, at right). To celebrate, I thought I’d share some reflections on the evolution of passive investing through the years. Even what we call what we do is evolving as I type. But that’s what makes it so much fun, right?

The “Passive” Advisor: A Constant Amidst Constant Change

Among the things I love about passively minded advisors (or whatever you want to call yourself) is the rabid consistency you apply in helping investors stay the course and achieve their personal financial goals through thick and thin. There are plenty of variations, but underneath are a few rock-solid, dependable themes that you share. The type of advisor with whom I choose to work and play is:

• Evidence-based – You help your clients heed the robust body of peer-reviewed, scientific evidence on how best to capture and keep the long-term returns that our markets are expected to deliver, and avoid the many distractions along the way.
• Goals-based – You ensure that your clients’ unique goals and personal tolerance for market risk are the driving forces behind their portfolio construction and management.
• Fiduciary – You single-mindedly champion your clients’ highest financial interests in a fiduciary relationship; you are merciless against unnecessary expenses – the industry’s and your own.

What’s not to love about helping advisors who demonstrably embody all of the above?

Common Perspectives, Creative Viewpoints

What also keeps my love alive are the many creative contributions that have led to continuous refinements of today’s best-practice, passively minded Registered Investment Advisor representative. To quote Bob Dylan, “He not busy being born is busy dying.”

The debates have been lively (to say the least!), with some worthy new concepts emerging from the fray. When I joined BAM, the idea of a CPA serving dually as an investment advisor was brand new, but has ably withstood the test of time as a viable business strategy. The advent of the wealth manager also comes to mind, particularly as envisioned early on by John Bowen’s CEG Worldwide. So does current explorations of whether and how we might apply potentially persistent market factors such as momentum and profit that, intriguingly, may or may not be risk factors.

Other fashions have fallen by the wayside. For example, in the early days of writing for passively minded advisors, I used to effectively use the adjective “trusted” in points such as, “Turn to us as your trusted advisor.” Alas, almost overnight, Bernie Madoff killed that tactic dead. Of course you still want to deliver well-placed trust, but you must now use different language to show rather than tell it.

Growing Public Perceptions

Shifting the focus outward, it’s also been fascinating to watch public perception of passive investing evolve since 1998. Buried as we are in the daily fray, it may not seem like we’ve made much progress in widely promoting what it is that we do. But look up from the weeds and I believe we can take heart at the significant advances made.

Fifteen years ago, Larry Swedroe’s first book had just hit the shelves: “The Only Guide to a Winning Investment Strategy You’ll Ever Need” (which strikes me as among the most ironic titles ever, given the popularity of his dozen-plus follow-ups that have been coming out ever since). Besides “The Only Guide,” you could count the other books covering passive investing in layman’s terms on the one hand of a machinist who’d lost a finger or two to industrial accidents.

Similarly in the 1998 media landscape, passively minded columnists such as Jonathan Clements and Humberto Cruz stood out like tiny peaks in a vast, foggy mist of what Jane Bryant Quinn classically described as “investment pornography.” I remember the days when we instantly reprinted mass quantities of ANY coverage mentioning Dimensional Fund Advisors, to tide us over until the next year or two later, when some other lost columnist accidentally mentioned Dimensional funds in passing.

I’m sure I’ll leave out some notables but, in short, we’ve come a long way. These days, Google Analytics handily yields Dimensional media mentions weekly. Larry Swedroe’s approachable library-full of books are augmented by Rick Ferri’s books, Daniel Goldie’s/Gordon Murray’s “The Investment Answer,” Carl Richards’ “The Behavior Gap,” Bill Schultheis’ “Coffeehouse Investor,” Dan Solin’s “The Smartest” series, and many others. Swedroe, Ferri, Richards and Solin also appear as regular bloggers/columnists in the popular press, along with other respected nationally syndicated journalists who routinely cover our beat. The University of Chicago has a school named after Dimensional’s David Booth. “We” (or of course more accurately, Professor Eugene Fama) just snagged a Nobel Prize.

And that’s just in the U.S. Similar trends have been following the same lead in the U.K., Canada, Australia and elsewhere – as evidenced by the U.K.-based resource, www.sensibleinvesting.tv.

I’d like to think the constant drip we’ve patiently sustained over the years has directly contributed to the fact that expense ratios and, yes, advisor fees seem to have slowly but surely trended downward during the past decade, especially in the U.S. While we have a long way to go in helping investors avoid excessive costs that drag on their fairly earned returns, I still believe public awareness of the issue is on the rise, and growing. If we remain on the investor’s side on this count, it should benefit us all in the long run.

What’s in a Name?

I can’t help but feel it’s ironic that, even as we seem to have finally made progress in familiarizing the public with terms like “passive investing” and “indexing,” we ourselves are increasingly turning away from these terms, feeling that – rightfully so – they don’t really capture what it is we’re about.

I believe it’s in our best interests to consistently and collectively use the same terminology as often as possible in describing what we do. That way, even if it’s not the optimum term you might personally choose, investors can most readily identify and connect with what we have to offer them.

If we must jettison “passive investing” (which seems to be the growing sentiment among the advisors with whom I speak) I’ll put a plug in for the phrase “evidence-based investing” as the closest expression I’ve heard to being an apt description. Then again, the term “smart beta” also seems to have arisen as a recent contender.

So where does that leave us? At a good place to call it a wrap … for now. Stick around, and I’ll get back to you in another five years to reflect on how these and other future debates play out. In the meantime, THANKS for letting me be a part of your world.