Harold Evensky: 'It's an Unmitigated Disaster'


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Background (0:18-0:57)
Harold Evensky bio
Evensky & Katz/Foldes Financial
Personal Financial Planning Department, Texas Tech University
Financial Planning Standards Board Council (formerly known as "International CFP Council")
• [CFP Board of Directors](formerly "Board of Governors")
CFP Council on Examinations (formerly "Board of Examiners")
The New Wealth Management: The Financial Advisor's Guide to Managing and Investing Client Assets (CFA Institute Investment Series Book 28) by Harold Evensky
Books by Harold Evensky

Evensky explains why his practice opted to charge clients a percentage of assets under advisement instead of an annual retainer: "An unmitigated disaster." (0:58-2:51)

How Evensky and his fellow practitioners spend their time: "It's all built around the planning." (2:52-4:02)

On the firm's receptiveness to younger clients with less assets to advise: "Absolutely yes." (4:03-4:40)

The future: Comprehensive, modular financial planning. (4:41-6:49)

On the commodification of financial advice: "To the general public … it pretty much looks like the same service." (6:50-7:37)

On robo-advice: "Our conclusion was ... it's dangerous." (7:38-11:15)

• "The Efficacy of Publicly Available Retirement Planning Tools" by Taft Dorman, Barry S. Mulholland, Qianwen Bi, and Harold Evensky (Oct. 9, 2018).

Helping clients navigate turbulence: "Our goal is to call the client before they call us." (11:16-12:15)

The critical importance of communicating with clients: "Brokers and, much to my surprise, trust officers … hide under their desks." (12:16-13:02)

Where risk tolerance and client-specific circumstances come to the fore and human capital and age take a back seat: "Everything calls for a customized mix." (13:03-15:25)

Human Capital

"That's horribly inefficient." How Evensky came to embrace the simplicity of the core-and-satellite approach to portfolio construction. (15:26-19:27)

Evensky's construct for "explore" positions: "It can be most anything." (19:28-20:37)

Value's dry spell: "The basic concept of the value premium remains viable." (20:38-22:19)

Dimensional Fund Advisors

Permanent impermanence: How Evensky and his colleagues grapple with investing ephemera. (22:20-23:58)

Global diversification: "We've always believed in an international exposure." (23:59-25:45)

Home-bias definition
Market capitalization of listed companies in current prices

Risk tolerance and return needs drive strategic asset-allocation decisions: "Our maximum equity allocation is 80%." (25:46-27:53)

"Rebalancing is an immensely powerful tool, painful though it is in the short-term." (27:54-30:44)

Human capital's influence on the planning process: Car salesman versus tenured professor. (30:45-32:42)

Ramping up equity exposure through retirement: "Intellectually I think it's very sound research; but from a behavioral standpoint I don’t think it's realistic." (32:43-34:24)

• "Reducing Retirement Risk With a Rising Equity Glide Path" by Wade D. Pfau and Michael Kitces (Sept. 12, 2013) .

The simple two-bucket approach: "My experience is the relatively small opportunity costs (associated with the bucketing approach) are way outweighed by the behavioral benefits." (34:25-38:24)

Testimony of Deena Katz, CFP, on "Boomer Bust? Securing Retirement in a Volatile Economy" before the Senate Special Subcommittee on Aging, Feb. 25, 2009 (see Page 7 for "paycheck syndrome").

Time- and goals-based bucketing: "A great deal of appeal but they don't make any sense." (38:25-39:19)

How the complexion of retirement has changed: People will have to work longer. (39:20-41:32)

"Where's the protection of the investor?" Evensky takes a dim view of the SEC's just-finalized Regulation Best Interest measure. (41:33-43:34)

• "A New Rule Won’t Make Your Broker an Angel" by Jason Zweig, The Wall Street Journal, May 31, 2019.

Competency standards: Professionalism subsumes competency. (43:35-46:57)

Fiduciary oath

12 episodes available. A new episode about every 0 hours averaging 50 mins duration .