Tag Archives: University of Minnesota

Managing Me Event Recap

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

It’s a new year which means it’s time for resolutions to become better versions of ourselves. One thing I’m sure we all struggle with is managing our time. Much like losing ten pounds, it’s something many of us want, but few achieve. Balancing time between family, career and ourselves can seem like we are on a treadmill repeating the same steps over and over without getting closer to our long-term goals. In the Managing Me session put on by CFA Society Minnesota last week, University of Minnesota, Carlson School of Management Professor, Arthur Hill, talked about how it is possible to identify the trivial things that eat up our time. Time that could be spent doing the important tasks on our to-do list.

In the hour session, Professor Hill led an engaged audience through an interactive presentation on the six steps to better manage ourselves: aim, sort, select, do, review and break, all summarized below. Professor Hill’s process encourages one to write on sticky notes to help visualize the steps and ideas, because what’s in our heads does not seem as daunting once it is written down.

Aim: Define roles and responsibilities. Set daily, weekly monthly and longer-term goals that are regularly assessed. Schedule more difficult tasks early in the day and save easier or favorite tasks for later making up energy with passion.

Sort: Process inputs through filters to assess when to respond. Professor Hill described six filters related to how valuable, actionable, incremental, outsourceable, timely and capable the input is along with a filter for new projects.

Select: Use goals to pick the best task from the list. Only consider tasks that we have the time, energy and tools to do in the present. Prioritize tasks based on importance and urgency. Avoid multitasking when we are trying to complete a task that has a high cognitive demand.

Do: Complete selected tasks with focus and discipline. Focus on just a few goals. Take breaks but avoid distractions and interruptions as it can take up to ten minutes to get fully focused once disturbed. Avoid reading emails first thing in the morning. Emails can quickly derail a day as some of the audience attested to having over a thousand emails unread emails that day.

Review: Reflect, evaluate, celebrate and improve. This is to help with Aim. Did we take a step closer to goals this day, week, month? What did we learn? How can we improve? This is where we can keep track of our habits and create new ideas the next time we Sort. Don’t forget to celebrate reinforcing the good habits we want.

Break: Take breaks to recharge both at and away from work. We need to take regular breaks to replenish our attention and refresh our energy throughout the day. Pursue activities that boost energy. When away from work, really unplug. Don’t sneak a peek at the work email. Live in the moment and enjoy the time with family and friends. Work on a hobby or new skill to keep the mind fresh.

Overall, the session provided helpful tips and tools, and will hopefully allow for better time management in 2019. As Professor Hill said, “we are all guilty of letting ourselves get overwhelmed by the amount of noise in our lives which is why it is so important to have someone teach us how to filter out the small things so that we can focus on what really matters.” Judging by the large crowd in attendance it seems we all can use a friendly reminder now and then.

Changing Perceptions Interview with Jeannette Parr, CFA – Senior Portfolio Manager

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Tell me a little about yourself.

I am originally from Nebraska, and went to the University of Nebraska-Lincoln majoring in finance. While there, I got a good taste for money management through a student-managed fund opportunity. I came to Minneapolis after graduation and started out at a small equity firm with 10 employees. After a year, the principals couldn’t agree on a philosophy and things fell apart leaving us young folks looking for new jobs. This brought me to what is now ING where I got familiar with fixed income I was hired as a trader, and moved into an analyst role making high yield corporate bond recommendations. That led to a portfolio manager role focused on insurance company portfolios. Because Minneapolis was such a great center for financial management, brokers would sponsor road shows – breakfast meetings to ask management questions, learn about companies and risks involved. I met folks at American Express and when they had an opportunity and knocked on my door, I had to say yes. It really propelled my career forward, and I spent the next 10 or so years there.  Like many women at that stage in their career, the demands of family and work can be difficult to balance. My husband and I had two big careers, three busy children and felt we needed to  make a tough decision. While it wasn’t the best financial decision, we agreed both of us would be happier if I spent more time with the kids, so I took a five-year break. After that, I took a position at the University of Minnesota, which was a good way to transition back into the markets and fulfill my intellectual curiosity. Working with students on an investment fund was a great opportunity for me to get reacquainted with the tight network of mentors at the university from our local investment community. This is how I met the CIO at Prudent Man Advisors where I currently work; we manage money for public entities across the Midwest. My current role as portfolio manager in a small firm is a nice cumulation of everything I’ve learned in the industry.

What sparked your interest in the investment industry and CFA Program?

Math was a subject that I enjoyed but didn’t have a clear career path. I was encouraged by professors early in my college years to take the actuarial science path but realized it was more theoretical than I wanted. I preferred an applied math route and switched back to finance I learned about the CFA Program through my undergraduate finance professors and jumped into the CFA Program 1 year after graduation as I was used to studying and it dovetailed nicely with my work. My employer supported me in the process, paid for my exams and offered career potential. I was surrounded by CFAs in the investment department.

How did you land your first role?

It took a long time to find my first job, which can be true today. Back then the effort was focused on newspaper want ads and sending out resumes by mail. It can be highly competitive and you must be persistent and believe in yourself. I encourage recent graduates to actively pursue their career goals. Whatever role you want, put yourself in a position to interact with those involved and do what you can to manage your own portfolio, even if it is hypothetical. Be persistent and continue to learn. You’ll find the opportunity, though it may take time.

Did you have a mentor or champion who was instrumental in your career?

All of my bosses along the way were influential. Doug Hedberg, CFA at Washington Square Advisors was my main mentor early in my career. He gave me lots of opportunities to try new things. One example was being a young professional and voicing a contrary opinion that high-yield bonds weren’t gone forever after failure of Drexel and Michael Milkenhad caused in the market. It was a way to grow in my presentation skills, embrace that it’s okay to voice an opinion and take some risks.

What professional opportunities and challenges have you experienced?

I do feel like it’s a bit of a male dominated field. Early on if you were not playing golf on Friday afternoons with the rest of the leaders you had more challenges. I had clients that preferred a male portfolio manager so there was overcoming some of those gender preference hurdles. The industry can be a bit like a locker room; there’s a lot of culture that stems from a male dominated way of doing business. I was still able to thrive and move forward staying true to my beliefs, morals and values. One of the most interesting aspects of finance is the ability to learn about so many different industries and have an inside view of how the world is changing. Transferring that information into wealth accumulation and risk management for clients so they can achieve their goals is very satisfying.

What is the biggest risk you’ve taken in your career?

Stepping away from the field and spending time with my family. I wondered if I was ever going to come back and how it would alter my future path. Had I known then what I know now, it would have made the decision so much easier! It worked out just fine. During my break, I managed my own portfolio, went to some CFA meetings, kept my CFA Charter going and stayed in touch with that circle. I think there’s always a door open and an opportunity will arise.

What got you here; how have you been successful in investment management?

I think the key to success is being informed and humble; I saw a lot of people along the way who weren’t long-lasting. Some investment ideas work for a short period but burn out quickly. To have staying power, you need all the things that CFA Charter stands for. If you balance all those things, the financial industry is a great place to help a lot of people and institutions reach their financial goals. We all have to deal with finance in one way or another, it’s a skill-set that transfers well in people’s lives.

18% of CFA Institute’s members are female, and 14% of CFA Society Minnesota members are female. Do you have any thoughts on why more women aren’t pursuing a career in investment management?

I think culture is part of it, women not knowing if they’ll fit in. Secondly, it tends to be highly competitive. Hard driving teams are not always that welcoming to women’s typical work style or interests. The industry is also known for some long hours, so it can be a tough work/life balance.

Research has proven that the returns of diverse investment management teams out perform those of non-diverse teams. Have you seen this in your experiences?

I do think whether it’s gender or other kinds of perspective, groups benefit from that variety. We all come to the table with different experiences and having a diverse team does help. It’s a field where you debate ideas, and the more angles you have, the more developed that thesis can be. Communicating a message is also key to success, and having a professional staff that is reflective of your client base can be very beneficial.

Do you have any advice for young professionals interested in a career similar to yours?

Try to spend some time with people in the industry talking to friends of your parents, neighbors, etc. You’ll be surprised how small the world is; someone is always a phone call or two away. Don’t be intimidated, know that the steps in this career path are achievable and attainable.  Take the time to build the foundation and follow the path that is most interesting to you. There are many directions the industry and the CFA can lead you.

As a longtime CFA Charterholder, how have you seen the CFA Program and industry evolve?

One of the biggest changes is that information is so much more available. It used to take lots of staff to create a financial model for a company. Now we have data downloads and with a push of a button, instantly 10 years of history. You must be a good consumer of information to be able to discern fact from fiction. The markets are faster, there’s less time to gather information (compared to road show days) and to vet ideas. Different skills are required than you might expect; practice writing and speaking, the best investment idea doesn’t get anywhere if you can’t communicate. Developing all of those soft skills will help you go far.

 

This interview was conducted by CFA Society Minnesota’s Member Services Manager, Diane Senjem.

Changing Perceptions Interview with Dr. Mary Daugherty, CFA – Financial Educator, Consultant and Corporate Director

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With her merited achievements and stark determination, Dr. Mary Daugherty has successfully shaped a career that utilizes her CFA designation and PhD all the while keeping her personal values a priority. When hearing about her numerous successes, many wonder, “How did she get started?”

When Daugherty distinguishably earned her Chartered Financial Analyst (CFA) designation in ‘86 by consecutively passing the grueling series of three exams, she could not have predicted the path her career was about to take.

After earning her general business degree from the University of St. Thomas in ‘80 and receiving her Master’s degree in Finance from the University of Minnesota’s Carlson School of Management in ‘82, Daugherty took her first professional position as an equity research analyst for First Trust. This is where she met her mentor, Gerry Bren, who she describes as an instrumental influence on her career.  After a six year career developing her skills as an equity research analyst, Daugherty was about to take the biggest risk in her career by leaving not only First Trust, but also the entire industry to pursue a new path. That path being college teaching.

When Daugherty gave birth to her first child while at First Trust, she tacked on her company-allotted two weeks of vacation in addition to her six weeks of maternity leave in order to meet the demands of mothering her newborn daughter. However, her boss discouraged her from taking this extra time off as he said, “You are an officer of this company, so you should set an example.” Daugherty took the extra two weeks but did find FedExed documents on her doorstep for her to work on during maternity leave. It was not until she received a call from her husband while on a business trip in New York that she decided to leave her current position and look for a more accommodating career. She learned she had heartbreakingly missed her daughter’s first steps.

“Similar to many professional women in that era, I looked for an opportunity that would allow me more flexibility while still staying active in my professional community,” says Daugherty. So, what was the next step?

She simultaneously enrolled in a PhD program at the University of Minnesota while accepting a teaching position in the Finance department at the University of St. Thomas. During this time, she proceeded to have three more children and impressively wrote and defended her dissertation on private college endowment management. After six years of “a complete blur,” as she describes it, she earned her PhD in ‘93 and focused on building her consulting practice while also teaching as a professor at the University of St. Thomas. She would go on to receive four awards for excellent teaching awarded by faculty, students and alumni, and has been nominated for several more. Daugherty is known on the St. Thomas’ campus not only as an outstanding teacher, but as a generous, understanding and committed mentor.  She says, “I love my job as a professor and do my best to bring out the talents in every one of my students.” Through mentoring, lining up job opportunities and helping students reach their full potential, Daugherty is always eager and happy to help anyone who knocks on her door.

While continuing with her teaching career, she decided to further utilize and monetize her PhD and CFA designation, and pursued consulting opportunities with individuals and corporations, including U.S. Bank. While building upon her consulting business, another mentor taught her an indelible trait. Daugherty says, “Tom Holloran role modeled by example how to collaborate and work together with people to get great things accomplished. I learned a lot by observing Tom in action. Tom recommended me for my first Board position.”

How has Daugherty created such success for herself in every aspect of her career, and what advice does she have for others in this industry?

Exceptional merit is not the only thing that has contributed to Daugherty’s success, “I don’t even know how to say ‘I can’t’.” She says this trait of insistent perseverance was ingrained into her through her family and mentors. As a mentor herself, she frequently tells her students, “I will always help those who help themselves.” In order to be successful in this industry she stresses the importance of reaching out to peers, taking on new challenges and look for opportunities to learn.

As a professor and consultant, Daugherty has a true passion for helping people. She currently serves on four different boards of directors and is an advisor and professor for the Aristotle Fund at the University of St. Thomas. She encourages all students pursuing jobs in finance and investments to get their CFA designation because of the “appreciation and breadth of knowledge” it entails. She also cannot stress enough the importance of reading and being well versed in all subject areas in order to further enhance one’s diversity of thought. In a world of increasing technology she reminds us, “Robots can do anything we can do, but they cannot be resourceful and creative. I would take a resourceful person over a smart one any day.”

Daugherty also strongly encourages young women to consider careers in the financial and investment industry. Presently, while businesses are more willing to accommodate the needs of mothers, she sees the male-dominated culture of this industry as still being prominent. While advising the Aristotle Fund, Daugherty has observed a wider range of ideas and problem solving strategies brought to the table when female and male students are collaborating. She urges more women to jump into the world of finance in order to bring different perspectives into this industry and ultimately bring a change to the current culture.

With her 35 years of success in the financial world, Daugherty would give young professionals this specific piece of advice, “Absolutely get a job, any job, and then be the best at that job you can possibly be.” This is certainly how Daugherty has seen such success in each aspect that her career path has taken her. Nevertheless, it is clear to see that, as a professor, she has ended up in a position she is highly skilled at, truly passionate about, and that which provides her an abundance of gratification. She recognizes how fortunate she is to be able to say that she leaves her “office”, her classroom, almost every day with a smile on her face!

 

Student Interviewer

Maria Vitale is a sophomore at the University of St. Thomas studying Economics and Political Science. She grew up in Stillwater, Minnesota and plans on pursuing careers in the financial industry upon graduating in 2020. Maria hopes to incorporate her passion for writing in any position that her career path may take her.

2018 Annual Dinner Recap

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By Elliot Smallidge, a student at the University of Minnesota Carlson School of Management, Class of 2019

I was ecstatic when I heard about the opportunity to see Professor Jeremy Siegel speak. As the highly acclaimed author of Stocks for the Long Run, I knew that Dr. Siegel’s lecture would complement everything I had learned in school. His take on investing would corroborate the conclusions of class after countless class: buy and hold stocks because you can’t beat the market. I arrived at the Minnesota CFA Society Annual Dinner eagerly awaiting his remarks.

Dr. Siegel contracted the flu and was forced to withdraw on short notice. Replacing him would be Doug Ramsey, CIO at Leuthold Weeden Capital. This change of speaker didn’t just shake up my night, but rather my entire perspective on investing.

Every undergraduate portfolio management class teaches that markets are efficient. No amount of fundamental analysis, and especially not technical analysis, could give an investor a sustainable edge. Enter Doug Ramsey, CFA, CMT, and master of market technicals.

His remarks upended everything I had learned in class about investing. Never had I seen anyone seriously attempt to understand markets by examining patterns in the relationships between various economic data in the way that Mr. Ramsey did. His opening comments centered on what he called the eight “Bellweather” indices. Displaying a chart of the S&P 500, Dow Jones Industrial Average, and several sub-sectors, Mr. Ramsey pointed out that every sector (except utilities) had trended upward in unison through January 26; the market was rising broadly across all industries. In a further analysis, we broke the S&P into deciles based on market capitalization and found a similar result: strong stock performance across the board. This pattern, Ramsey explained, has historically indicated not the peak of a bull market, but rather an average of 59 more prosperous weeks.

All my life I learned that there was no science to historical trends, yet here it was so clear before me. I will admit, some of Mr. Ramsey’s further analysis went a bit over my head, but his message has stuck with me. I now know that, however unpredictable the markets are, I cannot discount the value of patterns in historical data.

I was fortunate enough to meet Mr. Ramsey the next week at his office. In a phrase, the theme of our conversation was trust yourself. News outlets and publications are important, but at the end of the day, he cautioned me, your own analysis and critical thinking are the most valuable assets.

Although I did not have the chance to hear Dr. Siegel speak, my experience at the Annual Dinner altered my perspective on investing and opened my eyes to a brand new skill set in a way that I never could have imagined.

Thank you, Doug Ramsey and CFA Society Minnesota, for this wonderful opportunity.

Too Big To Fail

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Susanna Gibbons, CFA

On May 16th, The Heller Hurwicz Economic Institute at the University of Minnesota hosted Neel Kashkari, President of the Minneapolis Federal Reserve, in a conversation on his Too-big-to-fail initiative. During the financial crisis, Mr. Kashkari ran the much-maligned TARP program, in which all banks in the US were infused with cash in an effort to “un-clog” the financial plumbing and allow markets to return to normal functioning. Mr. Kashkari was very clear that he felt the TARP program was necessary, that the Fed’s primary mistake in the crisis was that they were always reacting late, but that they were nonetheless very uncomfortable with the interventions which they felt were required. He was also very clear that the conversation he has started is intended to explore a wide range of transformational options with respect to the banking system, including breaking up the largest banks, or regulating them as public utilities, and that the Minneapolis Fed  is in the process of gathering information and opinions on this topic.

Mr. Kashkari was, however, resolute in his opinion that some action needed to be taken, and that the perhaps-majority opinion at the Fed that Dodd-Frank should be allowed to work before they shake things up was not an acceptable outcome. Something needs to be done, he believes, to put an end to too-big-to-fail forever. The basic philosophy, which on its face sounds quite reasonable, is that the public should not have to risk anything to support banks, that it is inherently unfair to use public funds to protect banks’ equity holders during a crisis since banks are private, for-profit institutions.

But does this philosophy actually makes sense? What we are really concerned about is having a banking system that is able to withstand a crisis, but we do not want to be forced to rely on systemically-focused tools like providing crisis-based market support. Instead, we are determined to identify a banking structure – whether through a better mix of businesses or a higher capital requirement – that has no negative impact on the public wallet.

The underlying philosophy, in my opinion, is illogical. Let’s just focus on the capital requirement. Many theoreticians would like us to believe that higher capital requirements are costless (or even beneficial), since they result in lower debt costs and greater capacity for risk-taking by banks. This is essentially a souped-up version of Miller-Modigliani, an application of that frictionless world of firm capital structure to the entire economy.  Most bankers are on the other side of this argument – they believe that higher capital requirements result in a higher overall cost of capital, which constrain a bank’s ability to lend, thereby limiting economic growth overall. A recent review of academic literature in a DNB Working paper titled Effect of bank capital requirements on economic growth: a survey, found that most empirical evidence suggests that an increase in capital costs of 100 basis points reduces lending by anywhere from 1.2 – 4.5%. While the paper was careful not to extrapolate from this to an expected impact on GDP overall, I would argue that a lending reduction of this amount spread across an entire economy would have a measurable impact on GDP. If the growth impact on our $18 trillion economy was just 10 basis points annually, over a ten year period this lower growth would cost the US Economy about $1 trillion in GDP – more than the 2008 bailout. And let us not forget that the entire amount lent under TARP was repaid, so the cost to the taxpayer is probably best summed up as the interest paid on funds borrowed.

I fully realize that in that last paragraph I am just making numbers up. My point is to simply place what seems like a modest growth impact in context with respect to the perceived unfairness of providing stability to the banking system during a crisis. There is no solution to this problem that is costless to the public, and it is entirely possible that the cost of building an unassailable fortress around the banking system is significantly greater than the cost of supporting the system in crisis.