Author Archives: Joshua M. Howard, CFA

A Letter from Our Society President

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Joshua M. Howard, CFA

Spring is here in Minnesota.  Even if the weather occasionally is lousy I still enjoy this time of year, as the first two weeks of April bring the NCAA championship game, the Masters, the home opener for the Twins, the Wild in the NHL playoffs, and the end of another Timberwolves season.  I also seem to enjoy this time of year much more than when I was a CFA candidate, especially as we get closer to Memorial Day.

I apologize for skipping my monthly letter in March – there was way too much basketball to watch. Despite my preoccupation with the Blue Raiders of Middle Tennessee, the Northern Iowa Panthers and all the other lower seeds that pulled off upsets, Society staff and volunteers were still providing value-add programming to our members.  Since my last letter the Society has offered multiple lunches, a Distinguished Speaker Series presentation, an After Market Appetizers event at Surly and the Upper Midwest Research Challenge finals.

In mid-March we also hosted the first ever CFA Institute conference held in the upper Midwest, when the Wealth Management conference came to Minneapolis. Almost 200 people from around the world attended the two day event. The presentations included a variety of engaging topics on behavioral finance, fundamental indexing, philanthropy, asset allocation, and many other topics pertinent to a financial advisor. With roughly a quarter of all charterholders now working in wealth management this conference was very relevant to our membership.

Two final thoughts. First, I want to wish the best of luck to the North Dakota State Research Challenge team as they head to Chicago on April 11th to compete in the CFA Institute Research Challenge Super Regionals (and hopefully the International Finals the next day). They did a fabulous job at the Regional finals in February and will be a tough team to beat.

Second, I want to personally thank Kris Kautzman for the work she did for the Society over the past five years.  Many of you knew her through her work on volunteer coordination, member engagement, or with our prep classes. She has moved on to her dream job, combining her non-profit expertise with her love of music, and I wish her all the best.

Joshua M. Howard, CFA

President, CFA Society Minnesota

A Letter from Our Society President

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Joshua M. Howard, CFA

CFA Society Minnesota’s Immediate Past President, Kim Brustuen, and I hosted a call last week for all Midwestern U.S. Society leaders to discuss best practices in building and running an effective Board. This is something our society has been focused on for a few years now, and we have made tremendous strides in moving from an operational board to a strategic board. During the call we shared our growing pains, struggles and accomplishments with over 20 other regional Society leaders and Institute employees.

One of the reasons we have such a respected Board is our ability to source volunteers. We have a large board (currently 24 members) and over 100 active volunteers that serve on our committees and help with individual events. This allows us to be innovative and try new things while still maintaining our popular events and programs. One of our main points on the call to Society leaders was that it is never too early to start planning for the next round of new volunteers. Although we currently have an abundance of energetic, thoughtful people on our Board and our committees, we must continually replenish our volunteer base. Every year we have 3-5 Board spots open up as long-time volunteers roll off the board, and committees frequently have volunteers who join or leave throughout the year.

When we prepare for Board transition we look for new Board members and committee volunteers from a variety of industries – some even outside of finance, such as people with experience in human resources, accounting or law. We look for a diversity of ages, experience and viewpoints. We strive to represent the interests of the entire body of local members and of all occupations either directly or indirectly related to investment management. Many people do not realize that you do not have to be a charterholder to be on our Board or to volunteer with one of our committees. Event and committee volunteers technically do not even need to be local society members, though most choose to join once they start volunteering.

Our Nominating Committee for the upcoming fiscal year will begin their work in May, but it is not too early to put out the call for new volunteers. If you have an interest in joining our Board, assisting with a single event, or helping one of our committees please let me know and I will get you in touch with our staff or a committee chair.  If you want to learn more about volunteering in general please send Kris Kautzman or me an email and we can discuss the current opportunities. I guarantee we have a spot for any level of time commitment. If you know of someone who might be a good fit we also accept referrals.

To all our past, current and future volunteers, thank you so much for your contributions to the CFA Society of Minnesota.

Joshua M. Howard, CFA
President, CFA Society Minnesota

A Letter from Your Society President – January

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Joshua M. Howard, CFA

The holidays are behind us and the busyness of life has returned for most of us. The same is true for the CFA Society, as we have a number of events on the calendar over the next few weeks. Most importantly we have our signature event of the year next week, the Annual Economic Dinner. This year’s guest speaker is Michael Pettis, a China expert who currently works and writes in Beijing. There are still tickets available and I encourage you to attend if you are able to. In addition to the dinner our calendar is full of other programming as well, including lunches, happy hours and career support, which you can access here Events Calendar.

Also, in case you missed it in December, we have released our Society Annual report and the annual Compensation Survey, which was expanded this year to include many cities in the Midwest. I encourage you to read both. Our Annual report contains our financial statement for the most recent fiscal year, among other information, and as dues paying members I hope you will take the time to review our sources of revenue and how we spend your dues. Less than 30% of our revenue comes from your member dues, though it is still the single largest source of our receipts. We spend just under half of our total revenue on staff, administration and board expenses, with the majority of our expense going directly toward programming and education for our members. The Board takes its fiscal responsibility seriously, and we attempt to offer the highest quality programming to our members while limiting increases to dues and event fees. If you have any questions about our financials please let me know.

The compensation survey is also a valuable resource, whether you are looking for a job, attempting to hire someone or moving to a different part of the region. A special thanks to all who responded to the survey, and to our Advocacy Committee for their work on collecting and analyzing this information. As always, please contact me with any questions. I look forward to seeing many of you at the Economic Dinner next week.

Joshua M. Howard, CFA
President, CFA Society Minnesota

A Letter from Your Society President – December

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Joshua M. Howard, CFA

It only took 9 and a half years, but the Fed finally raised rates. As we all know by now, the FOMC raised rates by 25 basis points on December 16th, the first increase since the middle of 2006. Back then I had been in the industry for less than 5 years, had just finished Level II of the CFA exams and was about to buy a new house, which ended up not being the best timing for a real estate purchase. Many of our newer charterholders were still in college then, and most of us work with colleagues who have never experienced an increase in the fed funds rate during their professional careers until now.

With the Fed’s recent action coming at the end of the year, when many of us are already in the mood to reflect on the past, the increase in rates has spawned numerous articles on how the world has changed in the past decade. For example, Instagram and Twitter each have over 300 million active users now, up from 0 at the start of 2006. They, along with other social media services, have not only changed how we connect with our friends, but also how we share information, organize protests and plan events (both good and evil).

In 2015 it is no longer just the manufacturing sector that fears being undercut by cheaper alternatives and automation – Uber, Airbnb, and many other startups are threatening to upend sectors ranging from transportation to lodging to house cleaning, industries that in 2006 seemed very secure. Even financial services is susceptible, as robo-advisors, passive ETFs and fundamental indexing strategies continue to erode pricing power and put more pressure on active managers to actually produce alpha.

Some things haven’t changed as much as expected. The alphabet soup of financial products – CDOs, ABS, CDS, subprime RMBS – that helped cause many bank failures and the loss of billions of dollars during the financial crisis, were left for dead by 2009. In the last few years, however, amid very low interest rates and a thirst for yield, they have come back to life somehow, like a soap opera star from daytime TV. Actually, the last ten years have killed off more soap operas on network television than financial products.

The next year will bring more change. The Fed may raise rates again, possibly multiple times. Political campaigns in the U.S. will continue, culminating in an election in November. New companies will be started, old ones will fail, mergers will occur. The stock market may correct, or it may soar to new highs (and possibly both). It is an exciting time to be working in finance, and a challenging one.

I thank each and every one of you for the work you do each day for your clients, and for adhering to the highest ethical standards despite the turmoil that sometimes surrounds us. I am constantly impressed and inspired by the work being done by charterholders in the region, and I appreciate your commitment to our Society and the industry.

As 2015 comes to a close, I want to wish all Society members and their families a very happy new year.

Joshua M. Howard, CFA
President of the Board of Directors
CFA Society of Minnesota

A Letter from Your Society President – November

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Joshua M. Howard, CFA

Last month I attended two events focused on increasing the number of women in the Investment industry. The first event I attended was a presentation and debate on gender in the industry at the CFA Institute’s Society Leadership Conference in Hong Kong. The second event was a panel at the University of Minnesota, led by four female CFA charterholders, called “Paving the Way for Our Future Industry Leaders”. Both events discussed demand side and supply side issues with getting women in the investment industry and keeping them there once they start families.

It became clear during both discussions that the industry still presents some challenges for women (and men) in its work-life balance, sometimes stressful working conditions and occasional machismo culture. It was generally agreed, however, that great strides have been made at most firms in the last twenty years to improve the image of the industry and to achieve more acceptable working conditions for both men and women. Also, it seems that most employers strongly desire diversity on their teams – in gender, race, socio-economic background and approach to problems. Study after study has shown that diverse teams produce better results than homogenous ones, and are better as assessing possible risks. While even very talented women may have had a very hard time entering the industry in the 1980s, now they are strongly desired at many firms.

Despite all the change in industry culture and the increase in demand by employers for more women in their companies, we still have a supply problem. Approximately 20-25% of CFA charterholders in the U.S. are women, a range that has held steady for many years. Women make up the same percentage of candidates as well, so the overall ratio will not change anytime soon, at least in North America. More and more women are entering formerly male-dominated and demanding fields like engineering, medicine and law, but for some reason our industry has remained unattractive for most women who would otherwise be highly qualified to manage money, provide financial guidance to clients, trade bonds or manage equity risk. This is not true globally, as female CFA candidates in East Asia, especially China, are taking the CFA exams at the same rate as men.

What is it about our industry that fails to attract women and millennials? While there are obviously numerous explanations, I believe two reasons are very important.

The first is that we as an industry do a poor job of educating the public and the next generation about what it is we do all day long. “Finance” can mean many different things, many of which are very opaque to the average individual. We have not put in the time and effort to mentor and guide future leaders on the difference between a trader, an investment banker, a portfolio manager, a financial advisor or a risk manager. There are many different fields in our industry, but most people outside our industry are only acquainted with one or two of them (either from watching the movie “Wall Street” or from watching their cousin day-trading in his parent’s basement, wearing his pajamas all day long.)

The second reason is the way the industry is portrayed in the media. Most often when finance is in the news it is because of a rogue trader losing billions of dollars or a Libor-manipulator lying to his firm and regulators. Our industry is seen by many as unethical, full of money-loving jerks who like private gains but socialized losses. We do not do a good enough job of making sure everyone understands the benefits of a well-developed, well-regulated financial system, one that takes excess savings and deploys the money to its most productive use elsewhere, such as in infrastructure, car loans or startup companies. Our Industry allows individuals to smooth their consumption over their lifetime, and to store up savings for bad times. It allows for the purchase of a home well before most people would have the resources to buy one, and gives capital to entrepreneurs who attempt to create the next great device, software or medicine.

Most of us who work in their industry love our work and can’t comprehend why so many people, including women, fail to see the benefits of working in a fast paced, competitive, ever-changing industry, alongside smart, talented colleagues. We need to do a better job of educating the next generation about the variety of opportunities available in finance, and most importantly, we must maintain our high ethical standards, raising the profile of the industry for our future coworkers and clients.

Joshua M. Howard, CFA
President of the Board of Directors
CFA Society Minnesota