Rehabilitation efforts have started among the people who ultimately rate his relevance. But all the TV ads in the world won’t help his reputation.
I thought we’d written the last about Fisher Investments for the immediate future. Then I spent a few hours watching airport TV.
Fisher commercials are everywhere. He’s still actively prospecting retail investors away from other advisors despite his recent fall from grace.
The ads haven’t even changed. It’s still the same fee-only messaging that the firm used last year.
It’s almost as though the industry scandal of a $100 billion manager’s history of sexist talk never happened. And that might be the biggest takeaway here of all.
From the retail investor’s perspective, the industry chatter doesn’t exist. Internal debate over business models, hiring practices, pricing and best practices is irrelevant.
The clients simply aren’t paying attention. That’s worth a little reflection.
“Secret genius”
Ken Fisher alienated the advisor community years ago. He isn’t interested in being people’s friend. He doesn’t play well with others.
His commercials are deliberately antagonistic. He’s all about creating doubt in the minds of investors who already work with other advisors.
Those advisors’ interests don’t factor into his strategy. All he wants is to drive a wedge between them and the clients he covets.
How does he do that? He can attack other business models, taking the fiduciary high ground.
But in a world where Vanguard and Fidelity already charge zero, it gets harder to play the low-cost provider card.
And he can’t exactly tout his performance while the SEC is watching, even if he has the numbers to argue that he delivers better cost-adjusted returns than a vanilla index fund.
People who are busy arguing that Fisher is some kind of secret investment genius are really only digging in the dark. Some conclude that he delivers alpha, others say he lags the benchmark.
His firm’s known holdings aren’t anything special. They’re the biggest stocks in the market, just like you’d expect to see in an index fund.
Add up the weightings and it would be hard for his clients to do anything but match the S&P 500, more or less. He’s charging clients for an index fund experience.
Even so, his fans try to turn his reputation errors into evidence that he’s wired differently and that working with him means accepting unusual behavior in order to get extraordinary results.
We all know the myth of the erratic superstar. But when the numbers don’t materialize, we’re just left with the aggravation.
Does Fisher deliver on the “superstar” part of the proposition? The institutional clients who jumped ship over the past few months indicate that he doesn’t.
They know his performance record. Whatever alpha he provides doesn’t compensate them for the reputation risk they endure for keeping him on their platforms.
Differentiation for its own sake
To put it a little more simply, if he was a superstar, they’d swallow the erratic behavior in order to chase those percentage points. History is full of noxious people who gather a lot of AUM because they make the money flow.
Fisher evidently isn’t doing that well enough to fool the experts. They were happy to keep him around as long as he wasn’t a drag on their own public relations efforts, but now he’s too toxic to deal with.
But in the retail arena, people are a little less sophisticated and the standard of due diligence is a lot lower. Investors in Fisher’s world are simply worried about fee drag and getting ripped off.
They’ve been well groomed by years of fee-only messaging. They respond to the buzz words . . . “aligned with your interests, tailored portfolio, client service.”
That messaging doesn’t grow the addressable client universe. It’s a zero sum proposition where Fisher doesn’t win until another advisor loses.
Maybe the other advisor falls down on conflicts of interest. Maybe the products are cut like cookies out of index funds. Maybe service is a little rough around the edges.
But maybe not. Fisher doesn’t care. All he wants is that wedge of doubt.
And of course people he competes with head to head aren’t happy. That’s almost everyone in the industry.
Does he even acknowledge that there’s a fee-only movement out there? No. Will he admit that just about any delivery model can provide good outcomes? No way.
Do people who see these commercials know the difference? They don’t. All they hear is the repetition and the Fisher name at the center of it.
That’s okay. He’s laying the foundation for you to take things to the next level.
His prospects are trained to appreciate the idea of differentiated service. You can do that too. Every client is unique. You treat them differently.
And his prospects don’t want to pay a lot unless they can see that they’re getting value for their money.
But Fisher has to stay vague. There’s never a specific fee proposition. You’re always either “too high” or you’re him. There’s never anything else.
You can separate yourself from the “too high” crowd just as well. And once you do,
every dollar he spends on these commercials will help your prospecting efforts as well.
You do it all as well as Fisher. You just aren’t him.
However, you can differentiate yourself from the stink around him. You’re good to all your clients. You’re as socially aware as they need you to be.
They like the experience of working with you. We don’t play that part up enough. Make it fun.
After all, unless his portfolios are running rings around the market, his people aren’t any happier than your people. And when they hear about his missteps, they don’t cheer.
If you have the ethical high ground, communicate it. I know it’s tough. It flies in the face of decades of learned behavior in the industry.
But try it out. Then see how many of your clients jump ship the next compelling commercial they see in the airport.
Just remember: it's about them. Industry gossip is just for us. They don't care about your model or your margins.
They want performance and your personality. That's it.
