FDx Advisors Blog

The Value of Being There – Office Visits and Investment Manager Selection

November 24, 2015 Written by John Parsons

For many high school seniors, this is a hectic time of year. No, not because of the anticipation of all those Black Friday deals, but November is the heart of college application season. As the father of a 17-year-old daughter, it’s starting to sink in. The little girl will soon be out and on her own. But before that day comes, she has to decide where it is she wants to spend those four illustrious years.

There’s been no shortage of college brochures landing in the mailbox these days, and she’s spent plenty of time browsing university websites and college resource forums. All in an effort to try to determine which school is the best fit for her, both academically and personally. A fair amount of information is available for a prospective student to gauge a university’s strength in a vast number of areas and make comparisons across different schools. Statistics abound. But what feels best to you – that’s a little harder to grasp without actually making an effort to venture out and visit the college in person. There’s really no substitute for strolling the campus yourself to get a true sense of the school’s atmosphere.

The same can be said about the benefit one gets when they actually step foot in the offices of an investment management firm. As a veteran of well over one hundred office visits, I’m convinced that traveling to all those far reaching locations to meet many of the investment managers on the FolioDynamix platform has been well worth the effort and expense. There’s no way to substitute the volume of information you absorb just walking through the building, let alone meeting the firm’s investment staff and office personnel face-to-face. As they say, a picture really is worth a thousand words, and in this case that picture is reality.

Just as your senses pick up the creek in the floor of a century old college building, or that funky smell in the undergraduate dormitory, lasting impressions are formed as you make your way through the investment manager’s office suite. You can’t help notice when an office is decorated with original artwork, or in the case of Davis Advisors, the stock certificates of the firm’s biggest investment mistakes. This display is by far the most compelling office feature I’ve encountered in any firm. Christopher Davis explained the “Mistake Wall” to me as being a reminder of past investments that didn’t pan out for them as they had initially expected. They’ve assembled quite a large number of these certificates over the years. Each one is individually framed, and includes a description at the bottom that states the lesson they learned from that particular mistake. Investment managers will freely discuss the bigger losers in their portfolios, but I don’t think many would hang them prominently on the wall for all to see. Davis Advisors was one of the first investment managers I ever visited, and this experience has remained with me over the years. This is just one example of an impression you can only collect by being there in person. But each location and each visit leaves an imprint of its own that helps form a narrative about that firm.

Office décor is nice, and no one gets penalized for having a typical office space like mine. But, what we’re really hoping to gain from the visit is a level of trust in the management team and investment process, so we can confidently recommend their investment strategy and products to our clients. We believe that this is best accomplished by meeting key investment staff members in person. Face-to-face visits are invaluable in developing a strong long-term relationship, and offer an advantage over phone conversations and conference calls. Typical manager conference calls do provide useful information, and serve as a good way to remain current with performance and portfolio positioning, but don’t offer the flexibility to steer the conversation to areas that best meet your particular needs or interest.

Most importantly, the clearest way to determine how passionate an investment manager is about their investment process and how engaged they are with their particular portfolio is to meet with them in person. Lasting impressions about the firm and investment staff are made during on-site visits that can’t be replicated by reading marketing materials or analyzing performance attribution reports.

Whether choosing between a small town college and a university in the city, or strengthening an understanding of an investment firm, the value in having been there in person is considerable.

This blog post was contributed by John Parsons, CIMA, Senior Research Analyst for FDx Advisors.

Tags: , , ,