YouSaid · the spoken record

Rick Ferri

lines on the record: 102
first: 2015-04-12
most recent: 2015-04-12
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“People have diversified more. And in fact, even with advisors, Still get our fair share of people who have us manage all of their money, but I think that in the world of post-Bernie Madoff, that people are comfortable splitting their money between a couple of advisors as well. And we're seeing more”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably 50% of our new clients that come in come from The big wire houses, but realize what's happened since Bernie Madoff. Is that clients have diversified into several different advisors, so it's not, whereas he used to all come from one place, now when we get a new client in, they'll be transferring in assets from two or three different places. Oh, really?”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. They don't have the philosophy because if they had the philosophy, then they wouldn't be asking those questions. It's not a good fit. So, the way I fire a client is say, you know. This, I don't think we're really the right company for you. I think you need another type of advisor than what we can offer. And that's how I fire the client. Gently ease them. But it's true, though. It's true. It's a fact that they need more.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Done a good job Every now and then. No, I have fired clients in the past because they... They call too much. They take up too much time. And at that point, we have to say, you know, we're not the right advisor. We're not going to have a, we can't have a discussion with you about what happened in the stock market today and then have another discussion with you tomorrow and then have another discussion the next day. That's emblematic.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so there's no ambiguity about it. So when people are asking questions about performance, They don't have the vision, and they're not going to be a good client. So that's the number one key right there or the tip-off that this isn't going to work.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's exactly the same thing. You're talking about performance. Right. So if I get the question from a prospect, What's your performance been over the last five years? It is just a red flag because If you really understood What we did, and you had the philosophy, you were in the church, you wouldn't ask that question.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, so 60,000 people per day have the big question in their mind am I going to make it? So originally when I launched 15 years ago, there weren't as many people asking the question, but now that the baby boomers are approaching that, we have had to. Up with different services that help them answer this question. And that's why we're doing this vertical advisor idea, which we had talked about in the previous program.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Typical portfolio solutions client is a 60 years old, has a total net worth of about $3 million liquid net worth of about $2 million. And so that is... Typical client who is either approaching retirement or rolling over into retirement. And that's our typical client today.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was working on my living room. I had an old desk that I picked up out of the junk pile when I was in the Marine Corps one day. Somebody had threw a wooden desk out. It was an old Korean war desk. I grabbed it and threw it in the back of my truck. So I had that in my living room. I set up a Costco table where my wife filled out paperwork for clients. In another corner with the living room, and this was portfolio solutions.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The only one that makes a lot of sense portfolio solutions was a name that I just sort of tells people what we do. We come up with a solution for your portfolio. Using this philosophy. So the last year, going into launch, I had finished writing the book and was looking for distribution of the book and the marketing and getting the website ready and all that stuff that goes behind launching. And so in July of 1999 after I was off contract now with Smith Barney, I had fulfilled my five-year contract and I vested in the pension plan, by the way, and all of my Citigroup stock options vested, which was nice because I was able to cash them in at a nice high price and get that money to buy the software technology and whatnot that I needed. That's what I did. It does take quite a while to really do it right, I think.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, actually, Barry, I use portfolio solutions to make it more. Have longevity of the company. I mean, I believed in the philosophy and I could train other people. To work with me to do this. And if something happened to me, I got hit by a bus or whatever. The company would survive. And so I didn't want to have my name in it.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A business running a business. It's like running A lot of compliance So you had to figure out the compliance puzzle. And then the very last year I spent, had to register the company. I had to do everything under the radar, by the way, because I was still at Smith Barney.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“While the beginning of that was coming up with the strategies, how I was going to manage money, the next couple of years we're coming up with how I was going to set up an investment advisor. You know, all of the compliance things.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It starts out with bonds. Bonds are yielding zero. So why do I want to be in bonds? You know, the real return of zero, I should be in stocks. I have the conversation about how am I going to live in retirement when interest rates are so low. And therefore, I should be more in stocks. And all I'm saying is people right now are justifying reasons or coming up with reasons why they should be more aggressive. And I have to do the exact opposite of what I did in 2001 and 2008, which is tame the expectations down as opposed to reverse of what I had to do in the past, which is to bring the expectations up.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Glacial pace. So the idea though is to not do anything. So when I hear it both ways, like right now you're right, we're getting the calls about, well, you know.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So you asked me what percentage of my business is psychology and trying to control human behavior and what part is actual portfolio management, changing the client's portfolios? And the answer is 95% as human. So I don't want to do anything. I mean, my goal is the not do anything.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're going to sell everything. When a client says, I can't sleep at night, you have to do something as an advisor. And what you have to do is you have to lower their risk permanently because we, the advisor, has probably made a mistake and allowed them or assess their risk tolerance at too higher a level than what it really was.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I lived through both the tech crash in 2000, 2001. I remember I started my company in 1999. And then live through the financial crisis. So, two pretty tough times. The only thing that we did for clients during that period of time besides do regular rebalancing was keep them focused on the long term. And then those clients who really had an issue, and I know that they had an issue when they used this phrase, classic phrase for all advisors, remember it. I can't sleep at night. Classic phrase, which means the next step is capitulation.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, if you had the philosophy, it's much less probability, much lower probability that it's going to be disrupted If you've got the vision, then your strategy, you'll be able to maintain it during all market conditions. Pretty much. It's a high probability. But if you don't have the vision, if you don't have the philosophy and you have some strategy that you heard on the radio last week. Or your advisor, or somebody got you into last year and it's not working, you're going to change it. You're going to have a higher turnover and you're not going to stay disciplined. So that's why I say that the biggest mistake people have is they don't have the philosophy first. You've got to get that down first. Then you develop the strategy and then you're more likely to stay disciplined.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Implement, create a good strategy for yourself, and then you need a way of implementing it and staying disciplined with it. And so all three of those things are missing. So there's really three issues. People confuse them all, by the way.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have the same philosophy. But I don't know what your portfolio looks like as far as what funds you have for your clients. And you don't really know what my portfolio looks like, what funds I have for my clients. That's called strategy. Philosophy is universal. Strategy becomes personal and personal to the individual client. So first off, I think it's important, and in a book I'm actually writing right now, that people get the philosophy first. They have the moment, the pivot, the epiphany of what it's all about. You get the philosophy first, and then once you get the philosophy, then you can develop a strategy. And then once you develop a strategy, you implement that strategy some way, and then you have to have the discipline to stay with it. So it's really three different things. You need the philosophy.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The average investor. The biggest mistake they make is not staying disciplined to a strategy. But let's even go back from that. The average investor doesn't have a philosophy. And philosophy is different than strategy. You and I have the same philosophy about investing. You had Charlie Ellis here, John Bogele. I mean, we have the same.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if it's going to be widely adopted or not. I know that, as you said, back in the 1990s when I started the low cost indexing solution, it was ahead of its time. And I think this is... Where people will go eventually, the advisors.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that the robo advisors will have to get into personal advice. They'll have to have human advice. Are they going to lose their clients? And they're going to realize this as the clients grow up and get more money and get more complicated lives. They're going to need actual personal advice. And they're going to have to merge or create that personal advice. And then there are times when people become not price sensitive anymore because of that point in their life where they really need advice and the cost of that advice at this point in their lives when they're nearing retirement. They're no longer point sensitive. They just want good quality advice. And you have to be able to offer that as well at a higher level. And then when they're ready beyond that into retirement for a while, they want to step back to the lower advice model. They could do that at a lower price point.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, advisors are going to have to offer different levels of service, like your firm. We are going to be offering a robo advisor, which is one level, and it's going to be one price. It's going to be a very low fee. Then there's the next level of some guidance and a touch perhaps once a year, and then a lot of technology touches, if you will, with the client. And that will be just a slightly higher fee than what the Robo fee would be. And then there's a comprehensive financial planning, but not face-to-face.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and the technology has become much less expensive, and there's much more of it, and there's a lot of competition, so prices have come down. So what we sell in our industry is intellectual property. That's my value added. And the ability in many ways to be able to explain to people sometimes relatively complicated concepts in a very simplified way so that they can understand it. And that's the value added. I can't add any value outperforming the market. And I'm not going to give them higher dividend yields from the S&P 500. I have to be able to deliver this intellectual property in an efficient manner so that I remain competitive in the marketplace.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, there's been a lot of productivity gains across the board. Actual portfolio management software, trading software, client contact software, phone systems. It allows you to manage more relationships than you had in the past. So you become more productive in this business, just like in all other industries.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's all anybody needs. You don't need a few. So that's the universal big question. And you can get on a website and fill out a bunch of questionnaires and do some Monte Carlo simulations or whatever. It just doesn't replace the human advisor who's sitting there looking at you and saying you don't have anything to worry about and your spouse has nothing to worry about. You've got plenty of money. And that's not going to go away. There's no computer that's going to take that away.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely, it's universal. I hear the same thing, and I hear it quite often. And you sit back and you say, you only need $150,000 from your $10 million portfolio, and you're worried about running out of money. And I don't know what the mental block is there. Maybe some PhD student can do a thesis or something on it, but there's an incredible mental block where they need to be told and really told you're not going to run out of money. If you do this sensible strategy and you don't go out and buy a bunch of Ferraris, you're not going to run out of money.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the big issue is income distribution after retirement. And is my money going to last? That is the question, the big question out there.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of take the money from the robos just when the robos are becoming profitable on a client. And so that's what I see occurring.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A human offers advice. Now people who are in their 20s and 30s may not need a lot more advice than just put money away, pick an asset allocation that you're going to be able to live with through all market conditions, and just shovel it away because my theory is that younger people are fairly homogeneous group. You're getting out of college, you don't have a lot of money, maybe paying off debt, just getting married, starting a family. So it's a fairly homogeneous group. But as you get into your 40s and 50s, the differences between us financially and socially just changed dramatically. And as you're approaching retirement, you really need much more than what a computer can give you as far as answers. And you are seeking much more holistic advice on everything having to do with your finances. And this is where advisors will.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I completely agree with that because they've been through the gauntlet, so to speak. And now they've had their pivot epiphany aha moment, whatever you want to call it. But the robos now, if you're young in your 20s and 30s and you're using this technology, you're getting it right away, even though maybe you don't understand it at first. And that's good because it saves you a lot of money and it educates you on the power of this strategy.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the whole process of saving for retirement as well as investing properly. So for saving for retirement, regular amount going in is very important. But the real interest for me and the robo advisors is that it gets young people interested in index funds and asset allocation doing it the proper way right from the start. So I think that's really important.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's important. I think it's a very good methodology for younger people that didn't exist before. Now, it's used for everyone, but for younger people in particular because it gets them into this philosophy of investing a whole lot faster than they would have.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and it's not my philosophy, but buying into the philosophy, correct, I've already bought in. And then they're looking for a way to execute and get it done. And that's where we can come in.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Find the right clients Really, it gets down to Realized that this isn't for everyone. And I need to find clients who also have the religion and they're just looking for somebody to help them put the portfolio together and execute. I can't go out and try to convert people. That just doesn't work.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, because the portfolios don't change. I haven't changed the portfolio in five years. Now, you might have a different allocation than the next person between stocks and bonds, but that's the driving factor. After that, and we put the portfolio together of stocks and index funds and bond index funds, it shouldn't change. I mean, the process then is just staying the course. It's driving down the middle of the road and being safe and not going to the left or going to the right. And that's what we try to do. My whole idea is to keep the clients going down the middle of the road, be disciplined, and if they can do that, then they'll get the benefits of the markets. If they veer one way or the other, It gets hairy, if you will.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's a zero sum game. Where the total market return is a finite dollar amount every year. Market's worth $20 trillion Get a certain rate of return from dividends, you get a certain rate of return from capital gain. I mean, it's a finite amount of money. So if you have one group or people who's trying to get more than that, it has to come from another group of people who get less than that. Or you can just capture your fair share So, in the long run, it's a fee game, period. You have money that goes from one set of managers to another and then back again. And skill is very difficult to even determine, let alone actually identify. In advance. So the best thing for most people to do is to just buy a very low cost portfolio of index funds and sit on it. And that's the answer.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And these people were the icons back then. They were the ones who recognized the problems. And there was others, more academics, as you read, Samuelson and so forth. As you read, you realized that there was a whole group of very smart people out there who had already realized this. And so it was hidden though. I mean, it really was pushed back as far as you could push it back. But the academics spoke for themselves. The data was there. And so if you believe the data, you're going to go this way. And that's what I did.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“By the way, I mean, James is a great guy. I mean, he was always very approachable, and I don't want to. I mean, he had a job to do like everyone else.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I investigated this. Again, this is October. So then in 1997 is when I went to Jamie and I asked him if I could create a program at Smith Barney that used Vanguard index funds and packaged them together into an asset allocation for our clients. And then we would charge a reasonable 50 basis point management fee. And that's when Jamie told me that it wouldn't be possible and sort of not that many words.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And yelling and chainsaw is going on, and I'm reading John Bogle's book, and I'm screaming and yelling in my car saying, I can't believe how stupid I've been. This is so obvious what John Bogel is saying here. I am seeing this daily in my business. I mean, he's right. And I had what I like to call a chemical reaction at that point. And it was a change of religion. I was an epiphany.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, as I was doing this quantitative analysis or attribution analysis on the active managers and realizing they weren't beating their benchmarks, in fact, they weren't coming close to their benchmarks. Most of them were not. I began paying more attention to what Vanguard was doing and indexing. And in 1996, I read John Bogel's first book, Bogle on Mutual Funds. I was very, very frustrated at the time with what was going on in my industry. And again, I was at Smith Barney at the time. And I read this book, and it was an epiphany. I call it my aha moment. I can recall exactly where this happened. I was at a house of horrors. My children who were teenagers and they were going through the house of horrors before Halloween. And I was sitting in the parking lot waiting for them and they were screaming.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A button, you push a single button, and you can see everybody's Button back in the late 1980s or early 1990s, you know, you had to create it yourself. So I created the software. And of course, when you get into that detail of it, you really see a lot of things that other people weren't seeing at the time. And what I was seeing was that the active managers were not beating their benchmark. In fact, they really weren't coming close to the benchmark.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“But it was programmable, so I could take the data from Active Money Managers and I could compare them to appropriate benchmarks. First, I could use it to determine what the appropriate benchmarks were, and then I could do an analysis to see how they were doing relative to the appropriate benchmarks. Now, a lot of this technology is off the shelf now, but back then.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what happened was I began to do a lot of analysis on the money managers we were hiring at Kidder Peabody to manage money for our clients. And I wrote a program, quite long program in Quattro Pro. Do you remember that? Sure. It was a programmable spreadsheet program. So”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, yeah, I went through the boot camp, if you will. And learned how to make a thousand cold calls a day and try to sell a thousand shares of the latest stock. And I began to realize at the beginning that maybe this wasn't what I thought it was. But I did stay in it for 10 years in total.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I was under the impression, like a lot of people were, that stock brokers were investment analysts and that we went out and found the best investments for our clients, which made money for them, which in turn made money for the company, which in turn made money for me. And I thought that's what stockbrokers did.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I said, okay, I'll take the test. And I did, and I did fine. And they gave me the physical and checked my eyesight and my height and all kinds of things, probed me in all kinds of different ways. And then they gave me the opportunity after I finished my officer's candidate school and then infantry officers school called Basic School. They allowed me to go down to Penscola, Florida and try my hand at flight school, which I did. And finish that, ended up down in Kingsville, Texas, married somebody down there, which is why I lived down there now, and was in the Marine Corps for eight years, did two tours overseas, and then left and went into the reserves. And when I did delete the Marine Corps active duty, I was looking for a finance job, and I was picked up by Kidder Peabody. And that's how my career began in this industry.”
2015-04-12 · Masters in Business · Founder and CIO Rick Ferri: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source