Weekend Reads for Advisers: Family Offices, Fiduciary Duty, and High Frequency Trading

Last year, the Financial Times conducted it’s biannual Family Office Survey on topics such as risk tolerance, asset allocation, and performance expectations and uncovered some interesting results. For example, despite seemingly low risk appetites, the average family office still had an allocation to “high risk” assets of more than 70%. Also, even in an economic climate with low yields and increased uncertainty, most family offices were targeting returns of 4% or more above current cash rates. A new paper from Towers Watson — “Family Offices — Aligning Investment Risk and Return Objectives” — explores some of the results in more detail.

Here are some other interesting reads from the past couple of weeks, in case you missed them:

Investing

• In 2007 Mark Sellers gave a remarkably sobering talk to Harvard MBAs on what it takes to be a great investor and why so few are good at it: “So You Want To Be The Next Warren Buffett? How’s Your Writing?” (Scribd)
• “Confessions of an Institutional Investor” (The Reformed Broker)
• “Buffett Doesn’t Tweet: Mindful Investors Read Books, But Ignore Twitter, CNBC And The WSJ” (Forbes)
• “Forget the Winklevoss Twins’ ETF! Investors Still Lose Money Trading Leveraged ETFs” (Dvega/Dtime)

The active vs. passive debate comes down to whether you want to maximize or satisfice. http://t.co/tYrDnbzknF $STUDY cc: @researchpuzzler

— Tadas Viskanta (@abnormalreturns) August 16, 2013

Neuroscience/Behavioral Economics

• “Commercializing Neurosience” (The Economist)
• “The Utility of Bad Art” (The Economist)
• On behavioral economics, regulatory moneyball, and the Obama Administration: “Cass Sunstein and the Power of ‘Nudge’“(Maclean’s)
• “Economics versus Fiction on Human Nature” (Scientific American)

High Frequency Trading

Does High-Frequency Trading help the world by driving stupid human day-traders out of the market? http://t.co/Ul8CvSD9Jz

— Noah Smith 🐇🇺🇸🇺🇦 (@Noahpinion) August 11, 2013

FATCA

• “Specialist Wealth Managers Pounce on Rich US Expats in the UK” (The Financial Times)

Fiduciary Duty vs Suitability Standard

• “Paradigm Shifting” (Above the Market)
• “Whose Side Is Your Financial Adviser on, Anyway?” (The Guardian)

Social Media

• Smart, concise advice from AdvisorAssist on the elements of an effective social media strategy for RIA firms. (AdvisorAssist)
• How Twitter Is Revolutionizing Washington Relationships (National Journal)
• Is something popular because it is good? Or because it is popular? “‘Like’ This Article Online? Your Friends Will Probably Approve, Too, Scientists Say” (New York Times)
• The perils of being a social media holdout. (HBR Blog Network)

Financial Planning

• “From a Prominent Divorce in the Affluent Class, Lessons for All“(New York Times)

And Now for Something Completely Different

• Frank Shorter is the father of the modern running boom. An enduringly popular speaker, he spins a captivating narrative about winning the 1972 Olympic Marathon. The story he hasn’t told is the dark truth about his own father. (Runner’s World)

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/JLGutierrez