Brooke Bigham was one of 35 Morgan Stanley Smith Barney financial advisers out of a possible 17,000 firmwide asked to attend the iShares Investing in Excellence meeting last month at iShares San Francisco headquarters. This two-day conference featured advisory professionals from Morgan Stanley Smith Barney and exchange-traded fund experts from iShares. The experience further solidified for Bigham that what clients want most when investing is to understand exactly what it is they are buying.
Q: Why were you selected to attend the iShares event, and what were you able to take from it? A: Our team, the Layman Group at Morgan Stanley Smith Barney in Springfield, was selected to send a member. The event was a collection of advisers, and they brought us out there to share some ideas with each other, as well as share some thoughts on the market. The tips I got related to educating clients – having them take a deeper look at what they are actually investing in. We’ve always done that, but people had just kind of took things for what they were told.
Q: What are exchange-traded funds, and how do they differ from mutual funds? A: iShares actually has exchange-traded funds that we utilize in our investment strategies. Exchange-traded funds are similar to mutual funds, but they are actually a better vehicle for accomplishing what a mutual fund would. So, they are still a collection of securities, they track an index, but they are just inherently less expensive than mutual funds. Mutual funds are not able to accept in-kind securities, so (investors) actually purchase everything owned in a portfolio on the open market. (With ETFs), securities that someone owns can be sent into the fund so that other shareholders can hold it.
Q: As someone who has been with the Layman Group since 2003 and in the financial services industry for 13 years, you’ve seen good times and bad – how have you counseled people through the recent economic downturn? A: Before ’08, we were, I felt, really good at educating our clients and we were really careful to stress the importance of diversification, so I don’t think our clients were hurt as badly as some of their peers. But, really, we have long-term relationships with many of our clients and so it came down to just being there for them; listening to their concerns; letting them know that they were making the right decisions in not selling everything and hiding it in a mattress.
Q: Are people more realistic now than they were before the stock market tanked in 2008? A: I think they are more cautious. People want to feel that they understand the risks they’re taking. Before, maybe they took an idea and said, “Let’s run with it.” Now, they want to look more deeply, kick the tires a bit, and see if it’s a quality investment.
Q: Where are signs of recovery? A: We see recovery. It is just slower than we would like it to be. Emerging markets are certainly an area that is always compelling. Emerging markets are more volatile, so they should be a smaller part of a client’s portfolio. We also are taking a closer look at our client’s bonds – the fixed income portion. With interest rates as low as they are right now, in the coming years, bonds will probably suffer. So, we are keeping those short and making sure they are of high quality. [[In-content Ad]]
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