Monthly Archives: October 2018

A Day in the Life of a Plan Sponsor Event Recap

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By Matt Chruscielski, recent University of St. Thomas MBA graduate and CFA level III candidate

Ever wonder how foundations and pension funds manage their assets? On October 26th, Kurt Hoddinott, CFA and Shawn Wischmeier, CFA shared their experiences as plan sponsors, with a group of professionals. Over the course of lunch, the speakers explored their backgrounds, day-to-day tasks, and some of the challenges they face in the industry.

Background

Kurt Hoddinott, CFA, Senior Manager of Investments at General Mills, and Shawn Wischmeier, CFA, Chief Investment Officer at the Margaret A. Cargill (MAC) Philanthropies, traveled two separate paths to arrive at their current positions. Kurt has spent most of his career at General Mills, holding positions in various parts of the company until landing in their investments division. Shawn began his career as an engineer before switching gears and working for various state pension funds before arriving at the MAC Philanthropies.

While pensions and charitable donations may not seem similar on the surface, both speakers agree that there are a lot of similarities. Shawn manages the various payout obligations the individual foundations have pledged to donate to, all while maintaining the foundations’ combined $7.5B assets on an inflation adjusted basis. Kurt matches the payout obligations to the various employees who have pensions with General Mills, and ensures the company has high-quality fund offerings for the company’s 401(k) and medical plans. The goal is to ensure General Mills’ $6B pension fund can meet its obligations to the employees in a cost-effective manner.

A Day in the Life

Plan sponsors and foundations have many similarities. For example, both share a flat corporate structure with few employees. Every team member helps contribute to the shared responsibility. Those responsibilities include:

• Selecting/monitoring third party investment managers
• Managing liquidity (this includes private equity capital calls/distributions, pension/grant payments)

On the other hand, both speakers have tasks unique to their position due to differences between a foundation and retirement plan manager.

MAC Philanthropies has a small amount of its assets set aside to implement unique investment strategies, and part of the day is spent implementing and monitoring these investment strategies.

General Mills has a 401(k) and medical benefits plan that places the investment risk on the individual employees. In his role, Kurt ensures that the fund offerings balance between choice and simplicity that employees can understand.

Challenges

Our speakers were kind enough to share some of the challenges plan sponsors face and reminded the audience that life is never sunshine and roses.

Volatility

Both speakers agreed that volatility can be a major challenge for them. They have obligations that must be met at a steady rate while market swings can result in exiting investments at inopportune times.

Individual challenges

Each speaker also had a unique challenge facing them. As General Mills transitions to defined contribution plans, Kurt explained that it was a challenge to encourage employees to contribute to their retirement plans. It can be a struggle to educate the employees on how important it is to save money now for retirement rather than waiting until it’s too late. To help employees make better decisions for the future, General Mills has provided an online tool to help employees determine how much they need to save to comfortably retire at a desired income level. They also have 3rd party financial advisors that employees can consult on a more personalized level for a fee.

Shawn’s challenge is a little different. His challenge is that MAC Philanthropies is closed from additional funding. There are no additional payments to help cover losses in a down year. This adds an extra challenge to make sure the plan is meeting the required returns to support the foundations’ goals in perpetuity. With a challenge like that, it’s clear to see why volatility would be a major challenge.

A special thanks to Kurt, Shawn, and all the members of the CFA Society of Minnesota for making events like this one possible. Now it’s time to get out there and invest! Cheers! Be sure to check out upcoming Day in the Life events on our events calendar.

Societies 2.0: CFA Institute Delivers More Than Just Exam Results

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By: Tom Crandall, CFA, CAIA and Kate Lyons, CFA – CFA Society Minnesota Board Members

Intrigued? You should be!

Recently, the CFA Institute hosted delegates from societies around the globe to share details on the progress around their latest initiative, Societies 2.0.  Representing the CFA MN Society, Board Members Tom Crandall and Kate Lyons joined Executive Director Mark Salter in Vancouver to learn more about this initiative and how it will add value to our members.

As the name implies, Societies 2.0 is the Institute focusing on societies in a different way than the it has before.  Recognizing societies are experts in their own market and understand their members best, the Institute is looking to support the societies in all their different and unique initiatives by promoting the highest standards in ethics, education, and professional excellence.  In turn, this partnership will transform the society/institute relationship into a professional body rather than a group of test-passers.

We’ve outlined the three objectives that the Institute will focus on –

  • To develop future professionals through relevant and accessible credentialing programs, high

standards of entry and professionalism

  • To deliver member value that accelerates the professional success of our members and that

continues to develop educated, ethical members at the top of their profession

  • To build market integrity that benefits investors and our members that serve them

So what does this mean for you?

The CFA Institute has committed both financial and human capital resources in order to support the initiative.  A key element to the success of this initiative is to reduce the volunteer burden and increase operational consistencies at the society level. Beginning this year, the societies will begin to receive increased funding that can be used to reinvest in the society infrastructure.  Externally, the Institute is proactively advocating by engaging policy makers and regulators through leadership projects aimed at influencing perspectives. Actively engaging on industry shaping discussion such as Uniform Fiduciary Duty and capital markets issues such as fintech regulation, the Institute is finding a seat at the table and better able to represent societies and Charterholders as a whole.

The CFA Society of Minnesota is a society that is well known for our programs, innovation, and engaged members.  Sure, we already knew that but our strong midwestern sensibilities keep us from really acknowledging this fact, out loud (being transplants, we feel no uneasiness in highlighting!).  We believe that the society is in an excellent position to benefit from this new initiative and provide new value and better experiences for our members.

We are excited to explore what these new relationships mean to our local society and how we can leverage these additional resources from the Institute.  Should the Compensation Survey be a national effort?  How can we better engage with our Federal Reserve Bank?  What type of professional education/career development do our members want? Is there a way we can give back to our community? These are just some of the questions that can be considered and we are looking for your voice in the discussion.  Keep an eye out in coming weeks for additional information and a special request for your thoughts and interests!

Day in the Life of An Equity Analyst Event Recap

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By John C. Bird, Operations Analyst at Nuveen Asset Management and CFA Level II Candidate

Day in the Life: Equity Analyst, featuring Andrew Rem, CFA and Paul Dwyer, CFA

Day in the Life featuring Andrew Rem, CFA and Paul Dwyer, CFA

Interested in pursuing one of the investment world’s most exciting careers? On September 21st, a group of professionals and students listened to Andrew Rem, CFA and Paul Dwyer, CFA talk about their experience as Equity Analysts. Over the course of lunch, our speakers shared with us their backgrounds, what they do on a daily basis, important lessons they’ve learned, and even some tips on breaking into this extremely sought-after career.

Background

Our speakers: Andrew Rem, CFA and Portfolio Manager of Small Cap Value Fund at Nuveen Asset Management, and Paul Dwyer, CFA and Senior Research Analyst at Punch & Associates, did not start out life knowing they wanted to be Equity Analysts. Andrew spent some time in Retail management, while Paul did a stint in Investment Banking before finding their passion in Equity research and analysis. Both men have found they are value-oriented in their investment approach, and that they prefer small and (in Paul’s case) microcap companies when looking for investment opportunities. With Nuveen being part of TIAA, a multi-billion dollar financial services company, and Punch being a 15-person, employee-owned, RIA, with ~$1 billion under management, you could say Andrew and Paul work in opposite ends of the spectrum when it comes to firm size and organizational structure. However, Andrew and Paul cautioned their young listeners not to be picky when trying to break into the industry. “Just get a job with a firm, large or small, and develop your craft first. Once you are in the ecosystem, then you can worry about firm size, investment style, and the like.”

Tasks of an Equity Analyst

It presents a unique challenge when summarizing a “typical day” in the life of an Equity Analyst, because no two days are the same. However, our speakers were able to broadly summarize an analyst’s duties in the following categories:

  • Research at the Office
    • Includes reading, financial modelling, making / talking to industry contacts, Peer / Competitor reviews, Management calls
  • Travelling
    • Includes Industry / Investment conferences, field trips to companies, and Investor days
  • Activities around Earnings Season
    • Includes listening to Quarterly/Annual calls, updating models / forecasts, reporting on company given updated information

While all this might sound fun, it is important to remember that being an Equity Analyst is not a “9-5” job, and with little oversight from supervisors, one must be a self-starter, highly motivated, and interested in the work to succeed. The best Equity Analysts have a process.

Investment Process

Our speakers stressed the importance of having a repeatable Investment Process. “Focus on creating and then improving your process,” Paul encouraged the audience. “A good process will yield good results over time, while no process is no better than gambling.”

The speakers went on to describe the typical process in researching investments will often have the following steps:

Source -> Research -> Pitch -> Decide -> Monitor -> Close

Andrew recommended having an independent view and being skeptical of the “consensus” when analyzing and forming an opinion on an investment. “It’s only by doing something different, and zigging when the market zags, that one can expect to outperform over the long term.”

Food for Thought

Not surprisingly, given the exciting, intellectually stimulating, and often financially rewarding nature of the work, it is very competitive to break into and analyst positions don’t open up very frequently. Our speakers shared some of their recommendations on breaking in. These included:

  • Study for and obtain your CFA Charter
  • Be active in the stock market. Manage your own portfolio of investments and have a reason for why you own what you own.
  • Get to know your local investment community. Be active in the CFA Society of MN and in your Investment Club on campus (if applicable)
  • Demonstrate an interest and a passion for investing. This is a tough business and only a genuine love for the trade will get you through the tough stretches.
  • Attach an Investment write-up to your resume and cover letter when you go to apply for an open role. Even if you are wrong about the investment, this will demonstrate you are thinking about your investment decisions and will help you stand out in an interview.
  • Follow professional investors, read books and articles on investing, ask to shadow professional investors, and be persistent! The journey is part of the fun!

A special thanks to Andrew, Paul, and all the members of the CFA Society of Minnesota that make events like this one possible. Now it’s time to get out there and invest! Cheers! Be sure to check out upcoming Day in the Life events on our events calendar.