The Finance Professionals' Post

Three Critical Steps for Extracting Great Insights (Step 3: Entice a Thorough Response)

Have you ever found yourself going into a store or making a call for something you need only to be disappointed by the salesperson? As soon as the experience began to deteriorate, you probably had little interest in sharing your needs because you thought “let me just end this pain and find a better option.”

The problem here is the salesperson hadn’t developed good influencing skills which are required to entice the customer to share his or her needs.  As analysts, we’re “salespeople” because we need to sell the person we’re interviewing on the idea they will benefit by giving us the information we need. This post continues a 3-part series covering our ICE™ framework for effective questioning. Step 3 focuses on the “E” of the ICE™ framework, “entice a response.”

Q&A with Michael Kitces of Nerd’s Eye View

Blogging can help advisors attract and retain clients. I’ve decided to collect stories from advisors that illustrate this.

I’m starting a Q&A series with a contribution by Michael Kitces author of the Nerd’s Eye View blog and Pinnacle Advisory Group. Blogging has brought him more visibility, which has “helped to bring clients and cement relationships with centers of influence,” as he explains below.

Three Questions with Joseph Longino

With the Securities and Exchange Commission’s (SEC) decision on the possible incorporation of International Financial Reporting Standards (IFRS) into the US system still outstanding, many are wondering about the implications for their work and organizations.

In anticipation of the potential upcoming changes, IASeminars and NYSSA will host the 18th Annual NYSSA International Financial Reporting Conference & Workshops January 8-10, 2013. In the following interview, we spoke with Joseph Longino, principal of Sandler O'Neill + Partners, L.P., and a primary resource to the firm’s clients on supervisory, regulatory, and accounting matters. Longino is also a member of the Financial Accounting Standards Advisory Council (FASAC), a diverse group of senior accounting experts who advise the Financial Accounting Standards Board (FASB) on a broad range of matters affecting financial accounting and reporting standards in the private sector, and co-chair of the US chapter of the Corporate Reporting Users’ Forum (CRUF), an international discussion forum committed to engaging the FASB and IASB as they set accounting standards.

Four Questions with Pinto Suri

With the Securities and Exchange Commission’s (SEC) decision on the possible incorporation of International Financial Reporting Standards (IFRS) into the US system still outstanding, many are wondering about the implications for their work and organizations. In anticipation of the potential upcoming changes, IASeminars and NYSSA will host the 18th Annual NYSSA International Financial Reporting Conference & Workshops January 8-10, 2013.

Here, we spoke with Pinto Suri, a principal of Prudential Fixed Income’s Credit Research Group where he covers the insurance sector. Suri has been an active member of the Corporate Reporting Users Forum, a global organization formed to enable professional investors and analysts to engage in the debate on current and future corporate reporting issues. Prudential Fixed Income, a business of Prudential Financial, Inc., is one of the largest fixed income asset managers in the US with $348 billion in assets under management as of June 30, 2012.

Three Questions with Gregg L. Nelson

With the Securities and Exchange Commission’s (SEC) decision on the possible incorporation of International Financial Reporting Standards (IFRS) into the US system still outstanding, many are wondering about the implications for their work and organizations.

Gregg L. Nelson, vice president of accounting policy and financial reporting for IBM Corporation, shares his thoughts on this important matter. He also explains how accounting and finance professionals might benefit from attending the 18th Annual NYSSA International Financial Reporting Conference & Workshops from Jan. 8-10, 2013 in New York City.

Gregg is one of a number of prestigious speakers who will be sharing their expertise at this important conference, which is presented by IASeminars and the New York Society of Security Analysts (NYSSA). Other conference speakers include senior representatives from the International Accounting Standards Board (IASB), Financial Accounting Standards Board (FASB), SEC, Public Company Accounting Oversight Board (PCAOB), etc.

Ethics Is Important

Core to the mission of CFA Institute is promoting high standards of ethics, integrity, and professional excellence. Those pursuing their charter are introduced to this early, as committing to the CFA Institute Code of Ethics and Standards of Professional Conduct is a requirement to enter the program. Furthermore, CFA Institute warns that this commitment should not be taken lightly.

That’s good advice.

Video: Regulatory Insights from Eliot Spitzer

Former New York Governor Eliot Spitzer recently joined NYSSA for an interview with Bloomberg Television anchor, Pimm Fox. Spitzer gave his observations and opinions about the top regulators of the current economic recovery effort—Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

On Ben Bernanke:

• Bernanke is "the last man standing." He is the only one who has been willing to make the hard economic decisions as policymakers have remained in gridlock.
• He has used monetary policy to the fullest extent, but now there is little more that he can do.

On Timothy Geithner:

• Geithner did not have an adequate understanding of the structural failures that existed in the financial services sector.
• After the financial crisis of 2008, Geithner did not request enough from the banks in return for being bailed out. He simply did not comprehend how much reform was actually needed.

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Investing in the New World of Biophysical Limits

Two years ago, while researching an article for NYSSA’s The Investment Professional, I interviewed one of the most eminent alternative economists of our time, Herman Daly. It was the spring of 2010 and the global markets were reeling from the impacts of the 2008 financial crisis. Policymakers in the developed world were focused on one goal—to stabilize their economies and put them back onto a robust growth track. Meanwhile Daly, a former senior IMF economist, was warning—as he had for many years—that the relentless pursuit of economic growth as measured by GDP, far from being the antidote to the world’s ills, was diminishing human well-being and pushing the earth’s ecosystem to the verge of collapse.

A Q&A with the Compensation Expert Who Thinks Banking Pay Could Fall Another 50% in Five Years

What’s happening with investment banking compensation? Are lower pay and higher deferrals really inevitable? We asked Jon Terry, remuneration partner at PricewaterhouseCoopers.

Q: Over the next five years, how much would you expect investment banking compensation to fall by—on average?

A: Two big factors are likely to influence compensation levels: profitability and the share of profits distributed to employees. If banks continue to de-risk, profits will fall. If shareholders demand a higher share of profits, pay will fall exponentially.

Setting the Standards for Investing in the Solutions to Climate Change

The news around climate change grows more ominous every day, with reports of rising sea levels, droughts, severe weather, and mounting scientific evidence that the Earth’s temperature could well rise between 2 and 7 degrees in the coming century due to rising levels of atmospheric carbon. The International Energy Agency estimates that US$1 trillion investment in climate change combating projects per year will be required over the next four decades to address these catastrophic risks to the planet and global economy.

It has become more and more obvious that the challenge of climate change must be met not merely through punitive, regulatory measures. Big tent solutions that focus on the opportunities in investing in a low carbon economy are expected to be far more effective. The Climate Bonds Initiative—a not-for-profit collaboration among investors, policymakers, academics, and environmental NGOs seeking to support the development of a transparent global market for bonds issued to raise funding for climate-change mitigation and adaptation—is one such ambitious, solutions-oriented project.

Last month we spoke to Nick Robins, Director of HSBC’s Climate Change Center for Excellence, about his participation as an advisor to the Initiative. This month Sean Kidney, Chair and Co-founder of the Initiative, talks about its standard setting activities and why they are critical for the development of the market.

Nick Robins Provides Insight on the Climate Bonds Initiative

We spoke recently with HSBC’s Nick Robins to learn more about his participation as a member of the advisory panel to the Climate Bonds Initiative. In 2007 Robins launched HSBC’s Climate Change Center for Excellence, which analyzes the long-term commercial consequences of climate change for the HSBC Group and its clients.

The Climate Bonds Initiative is a not-for-profit collaboration among investors, policymakers, academics, and environmental NGOs seeking to support the development of a transparent global market for bonds issued to raise funding for climate-change mitigation and adaptation projects. This is the first in a series of articles about this rapidly evolving, critical initiative. Next month we will talk with Sean Kidney, Chair and co-founder of the Initiative, about standard setting and product development.

How Bond Plays Work in a Market of Global Systemic Uncertainty

We recently spoke with Glenn Reynolds, CEO of CreditSights, who offered us some straight talk on how global credit market risk is impacting the broad capital markets. Reynolds will be a speaker at the upcoming NYSSA conference, Market Forecast: Turbulent Times, to be held on January 5.

Here he explains why he recommends a blended strategy of investing in high-yield corporate bonds as an equity surrogate and investment grade bonds as a defensive play to navigate what is likely to be continuing systemic market uncertainties.

The Keys to Long-Term Success As an Equity Analyst

James Valentine is a former Morgan Stanley equity analyst, associate research director and author of Best Practices for Equity Research Analysts. He now heads up AnalystSolutions, which provides services to improve the quality of equity research. Valentine will be a featured speaker at the CFA Institute Conference: Security Analysis and the Search for Value, later this month. In the run up to the conference we talked with Valentine about some of the key qualities equity analysts need to cultivate to achieve success over the long term.

Schrödinger’s Morning Paper: The Impact of Barron's on Stock Prices

Barron’s magazine hits newsstands on the first trading day of the week, and its cover story generally becomes an immediate topic of discussion in the business media, including CNBC, before the exchanges have even opened. Companies featured in Barron’s cover stories experience significant impacts on their stock returns and stock volumes during the first day of trading after publication. What’s more, the markets react to the stories as to brand-new information, and tend to trade on that information very quickly, especially in recent years.

How Your Family Office Can Practice Philanthropy Through Its Investment Practice

While “giving back through philanthropy” will be a key topic for discussion at NYSSA’s 3rd Annual Family Office Conference on May 10, it may be well worth noting that a number of family offices are now discovering that they can express their philanthropic goals not just by “giving back” in the traditional sense but also through their investment practices.

Stephen Viederman has first-hand experience with this innovative approach to philanthropy as the former president of the Jessie Smith Noyes Foundation, a family foundation that was one of the earliest to put its investment assets behind its mission. The practical guidance he has offered to family foundations like Noyes is equally applicable to family offices that are not explicitly “purpose-driven” but whose family members desire to deploy a significant portion of their assets for the social and/or environmental benefits of their community or for the world at large.

Anniversary Special: Top Ten Articles from the FPP

It's been one year since NYSSA launched the FPP, and the readers have spoken: hot topics include career development, landing a job (not surprising!), behavioral finance, emerging markets, and quantitative methods. Here are the ten most popular articles from the previous year in case you missed them the first time around. If you would like to suggest new topics for the FPP to cover, please take a minute to fill out our reader survey. (Everyone who completes the survey is automatically entered in a drawing to win an Amazon Kindle and a selection of e-books from the FT Press.)

1. Five Things NOT to Do if You Want to Pass the CFA Exam
With pass rates lower than 50%, the CFA exams are daunting for even the most seasoned financial professionals. Approach the process strategically and avoid these common mistakes.

The New You: The Future of Securities Analysis

Embattled as the financial services industry is at present, there's nevertheless a sense that the light of day has broken on transactions and markets too long shrouded in shadow. Corporations and executives are snatching eagerly at the opportunity to reinvent and revivify—and absolve—the profession.

But what will that makeover mean for practitioners? What will securities analysis look like 10–15 years down the road? Will the profession expand or contract? Will the majority of jobs be in the US or abroad?

Interview with Sebastian Mallaby, Author of "More Money Than God"

Sebastion Mallaby is the director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics at the Council for Foreign Relations. He's just written an amazing book on the history of hedge funds called More Money Than God: Hedge Funds and the Making of a New Elite.

I highly recommend this book. It's long no doubt at 400 pages, but that includes the 60 pages of notes in the back of the book that are worth it alone.

Water as Political Capital

On one hand we need large urban centers to begin aggressively conserving water, while on the other hand there are hundreds of millions of people in India and China who do not have running water. This is a global issue that's not making enough headlines—and it needs to.

Colin Chartres is the co-author of Out of Water: From Abundance to Scarcity and How to Solve the World's Water Problems and is the director general of the International Water Management Institute (IWMI).

Interview with Amy Geffen, NYSSA's New President and CEO

On September 9, 2010, NYSSA announced the appointment of its new president and CEO, Amy Geffen, PhD. During her tenure at the American Society of Mechanical Engineers, Dr. Geffen expanded the global reach of the organization and spearheaded the delivery of online learning. Before beginning her new role on October 4, Geffen sat down to answer a few questions. 

You’ve been with the American Society of Mechanical Engineers for almost 10 years, which is a long tenure these days. (The average tenure for an American worker is 4.1 years.) What did you enjoy most about working for ASME?

Although ten years may seem a long time to be at one organization, in my ten years at ASME I held three different positions. The first was as Director of the Continuing Education Institute for four years. My greatest accomplishment there was to launch online courses that grew from zero to 100 in four years.

Confidence Men: Talking with Brett Steenbarger and Stuart Schneiderman

In October 2008, on one of the most volatile days in market history, I stepped to the podium during a program at the New York Society of Security Analysts. Looking out at the audience, I saw the eyes of deer in headlights. My listeners’ faces showed the stress that had been palpable in the room all evening. I felt much the same.

With seismic transformations underway in the economy and markets, with many having lost their jobs, and with many more suffering anxiety about the security of their careers and their futures, we’re all feeling the need for practical, sage advice. For that I turned to Dr. Stuart Schneiderman and Dr. Brett Steenbarger.

Mark Warren of Vulcan Materials Talks About the Outlook for the Construction Materials Sector

Vulcan Materials Company, the nation’s largest producer of construction aggregates, will be presenting at NYSSA’s fifth annual Construction Materials Conference on September 29. We recently spoke with Mark Warren, Vulcan’s director of investor relations, about the outlook for the industry. Warren also described Vulcan’s sustainability and corporate social responsibility initiatives, which have been critical to its ability to maintain and grow its business.

Interview with Anthony Scaramucci, Author of "Goodbye Gordon Gekko"

Sometime in the late 1980s there was a young man from the outer boroughs. His father was a laborer and worked for the company for his entire career, and he had a mentor and folks who helped him along the way. He’d almost gone in another direction career-wise, but was ultimately drawn to the excitement of Wall Street. He took a job at one of the largest and most successful firms on Wall Street hoping to “bag the elephant.”

You know the story, but...

Interview with Mike Bellafiore, Author of "One Good Trade"

Michael Martin had the opportunity to speak with Mike Bellafiore about his new book, One Good Trade: Inside the Highly Competitive World of Proprietary Trading. Bellafiore and Steve Spencer are the founders of SMB Trading. Moreover, Bellafiore and Spencer are prop traders and have one of the best training programs in the country. To hear a clip from the interview, click the button below. 

 

To listen to the interview in it's entirety, visit Michael Martin's blog, MartinKronicle.

Interview with Christine Richard, Author of "Confidence Game"

In Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff, Christine Richard unravels the story of Bill Ackman's six-year battle in warning the public of a catastrophic $2.5 trillion bond insurance business waiting to happen. As the hedge fund manager of the MBIA (Municipal Bond Insurance Association), Ackman placed a bet against the MBIA and brought in more than $1 billion for his investors from the collapse of the credit markets.  Despite his winnings, Ackman was called a fraud in the press and investigated by Eliot Spitzer and the Security and Equities Commission. A Bloomberg News reporter, Richard weaves a compelling narrative around Ackman, while revealing the financial fallacies on Wall Street. Bill Hayes, contributor to the Financial Professionals' Post, had the opportunity to speak with Richard about her book. (Richard will speak at NYSSA on Friday, September 24, 2010. Register now to reserve a spot.)

In Recovery: Looking Forward with Abby Cohen

Abby Joseph Cohen, CFA, is the president of the Global Markets Institute at Goldman Sachs, and the firm’s senior investment strategist. She’s been with the company since 1990, and became a partner in 1998.

Cohen’s career, which started when she joined the Federal Reserve Board in Washington, DC, as an economist, has been the subject of a Harvard Business School case study. She is the former chairman of the board of AIMR (Association for Investment Management and Research, now CFA Institute) and the recipient of that organization’s Distinguished Service Award.

Interview with John Authers, Author of "The Fearful Rise of Markets"

John Authers has written a great book called The Fearful Rise of Markets, and he took some time to speak with me about the book.

 
Authers is a long-time investment columnist. He now runs the Lex column for the Financial Times and is quoted all over the place. He was honored by State Street Institutional Press Awards as the UK’s Investment Journalist of the Year for his coverage of confidence in investment theory.

What We Talk About When We Talk About Quality Dividend Yield

How to formulate an effective equity investment strategy in today’s uncertain market will be the topic of an upcoming NYSSA Market Forecast seminar. Merrill Lynch’s Head of U.S. Quantitative Strategy, Savita Subramanian, who will be a featured speaker at the luncheon, maintains that companies with “high-quality” dividend yields are particularly prudent picks in this environment, and that quantitative screening can enable investors to distinguish the “good” dividend plays from the “bad.” 

Think Twice: Michael Mauboussin Podcast Interview

In the world of finance, there are myriad investment themes today: crude oil, China/India, Greece and all sovereign debt, a bumper crop in USD, clean/efficient energy, oil spills, OTC derivatives regulation, and the advent of the commodity investor.

How does an individual or an investment committee make sense of the confluence of themes? Michael Mauboussin is an expert in decision making within the investment process and he has a game plan to help you figure it out.

Your Track Record and Compliance History Are Your Franchise

NYSSA Commodity Instructor Michael Martin is interviewed by Stacy-Marie Ishmael of the Financial Times on OTC derivatives regulation and trader compensation at the Milken Global Conference April 28, 2010 in Beverly Hills.

The Great Divide: Talking to Lee Cooperman

Leon G. Cooperman, CFA, is uniquely situated to discuss the gulf between Wall Street’s buy and sell sides. Cooperman has presided as founder and chairman over the hedge fund Omega Advisors, Inc., since he left Goldman Sachs & Company in late 1991. He was a general partner at Goldman for 15 of his 25 years there, and he spent more than two decades as the partner-in-charge of the research department. For nine straight years he won honors as the top portfolio strategist in the Institutional Investor All-America Research Team survey. In 1989, he founded Goldman Sachs Asset Management, serving as its chairman, its chief executive officer, and the chief investment officer of its equity products. He is the former president of the New York Society of Security Analysts, Inc.

Interview: Stephen Harbeck and Irving Picard on the Lehman and Madoff Cases

The SIPC® (Securities Investor Protection Corporation), the organization created by Congress and empowered to protect customers when a broker-dealer goes belly up, is facing two of the most challenging proceedings in its 39-year history. It was called in to protect the holdings of brokerage customers of both Lehman Brothers and Bernard L. Madoff Investment Securities LLC. Lehman Brothers filed for Chapter 11 in mid-September 2008, while Madoff’s multibillion-dollar house of cards began to tumble in December.