December’s Two-Part FPA Chapter Meeting Recap

“The Connection Between Our Investment Beliefs and Assumptions and The Standard of Care” and “Analyzing Asset Management Firms” - Thomas Brakke, CFA

Tom Brakke challenged the audience to be very clear about their investment beliefs, since it is those beliefs which is the foundation for the investment advice which will actually be provided. Specifically, Mr. Brakke urged the audience to go deeply into such investment beliefs as efficient market theory, various meanings of risk, momentum, mean reversion, relative and absolute performance, so that each one of us can explain to prospects and clients how our core beliefs are embedded into the advice we give.

Mr. Brakke has been on the institutional side of the investment business for most of his 31-year professional career. His perspective was very different from those in the audience who serve primarily individuals. His perspective is rooted in personal experience and access to information on how asset management firms are actually functioning. On the client-facing side of the business, we rely heavily on the marketing representatives (wholesalers) of the asset management firms. A financial planner’s “independent” research is often limited to a third party provider (i.e. Morningstar) and that provider’s proprietary rating system. Mr. Brakke, with his comprehensive description of the organizational structure, culture, philosophy and numerous other important elements of asset management firms, introduced the audience to a much higher level of due diligence in evaluating asset management firms.

Tom Brakke, CFA is a consultant, writer, and investment advisor. He works with organizations on investment process, research, due diligence, organizational design, competitive advantage and the communication of investment ideas. He is the author of the e-book Letters to a Young Analyst, publishes a newsletter The Prudent Fiduciary and blogs (