A Career in Financial Planning: Insights from a San Francisco Firm

Waypoint
GGU’s Office of Career Planning hosted an Employer Spotlight session that featured Chuck Bowes and Jesse Pence from Waypoint Wealth Partners. The event was attended by GGU alumni and students and covered the evolution of the financial planning industry and its current best practices.

What skills do financial planners need?

A self-professed “finance geek,” Bowes says that he serves three roles for clients: a “financial advisor, a psychologist, and a marriage counselor.” Waypoint’s big picture approach requires a team of people, which typically includes a senior staff member and an associate supporting each client. The Waypoint team includes CFPs®, MBAs, as well as a CPA. (Jesse Pence has passed the exams and will become an official CFP® professional this year.) With many different backgrounds, the team can provide a method that ties in rigorous technical education, coaching skills, and behavioral finance in research and practice.

Do you want to say your life accomplishment is staying ahead of S&P for 30 years? Or is it something else? No one says the former.

Why do people go to financial planners?

The main trigger for clients, says Bowes, can be a simple lack of time and an increasing level of complexity in their lives. If saving time is a benefit, what other problems can wealth managers solve?

The first is a lack of clarity about financial decision points, desires, or anxieties. “Clients may not even be aware of the emotions that lead to a conscious choice, so we call the first step ‘Discovery’.” Bowes provided an example of those who are “under-insured versus self-insured,” those who make a decision about what level of risk they are comfortable with and those who don’t even consider the difference.

Waypoint often asks clients: “What would they want to do if they were not too busy growing a career?” A successful discovery process can start clients on a journey toward a more satisfying life experience on the client’s terms, not the advisors.  As part of their “establishing clarity process,” Bowes asks: “Do you want to say your life accomplishment is staying ahead of S&P for 30 years? Or is it something else? No one says the former.”


Photo caption: From Waypoint Wealth Partners: Jesse Pence, Associate Wealth Manager (third from left) and Chuck Bowes, Founding Partner & Senior Wealth Manager (third from right). From GGU: MBA/JD Alumni (unknown) (far left), David Kaczorowski, Academic Program Manager and Professor of Finance at GGU (second from left),  Quyen Le (MBA, Finance ‘19) (second from right); and Kandis Rodgers, Assistant Director, Office of Student Affairs at (far right). 


We invite you to explore GGU’s certificates and degrees in Financial Planning and Financial Life Planning. If you want to learn more about the Financial Planning profession, see the article by Dave Yeske, DBA, CFP®, A Concise History of the Financial Planning Profession. Yeske is Director of the GGU’s Financial Planning programs and Distinguished Adjunct Professor.

What comes after CFP® certification?

By Dr. Dave Yeske, CFP®
Director of the GGU’s Financial Planning Programs and Distinguished Adjunct Professor


According to Michael Kitces, it might just be our unique MS in Advanced Financial Planning.

Another appealing option is Golden Gate University’s “Masters in Taxation and Financial Planning” program, specifically for those who have already completed their CFP marks, who want to go deeper into both financial planning and income or estate taxation. What’s the difference between getting a graduate degree in financial planning, and “just” the CFP certification? Simply put, the Master’s degree programs go deeper into the subject matter (even for those who already have their CFP marks, as in the end CFP classes are the equivalent of “just” undergraduate-level coursework).”
Nerd’s Eye View

The MS in Advanced Financial Planning is available in the classroom or entirely online and allows you to earn an advanced financial planning degree while taking a deep technical dive into the areas of income taxation or estate planning. For those choosing the Taxation or Estate Planning concentration, this program is taught in conjunction with GGU’s highly ranked Bruce F. Braden School of Taxation, the largest tax school in the country and routinely named among the top 10 by tax professionals.

The MS in Advanced Financial Planning also offers a concentration in Financial Life Planning.


Watch the most recent webinar.


Beyond the core courses, you’ll also have access to cutting-edge electives that represent the best of 21st-century financial planning, including the following:

Our faculty’s commitment to the profession is unparalleled: we count three past national FPA presidents, five past national board members, two Foundation for Financial Planning chairs, five Heart of Financial Planning recipients, and a P. Kemp Fain, Jr. Award honoree among our professors. You truly learn from the best of the best, who become a permanent part of your professional network.

Financial Planning Association (FPA) members also receive a 10% tuition grant for all classes. Apply online now or register now for our next webinar.


About Dave Yeske

Dr. Dave Yeske CFP®, Director of the GGU’s Financial Planning programs and Distinguished Adjunct Professor, designed the new concentration. A Financial Planning Evangelist, he has made national TV appearances, led professional organizations, and published articles and books such as Evidence-Based Financial Planning: To Learn . . . Like a CFP.  The financial planning investment strategy he pioneered—The Yeske Buie Approach—has been profiled in The Wall Street Journal. The Financial Planning Association®(FPA) has recognized Dr. Yeske as one of the profession’s leading minds by awarding him their highest honor—The P. Kemp Fain Jr. Award (2017). He earned a doctorate in Finance from GGU in 2010.

Which Financial Industry Designation is Right for Me?

SPECIAL EVENT PRESENTED BY CFA SOCIETY SAN FRANCISCO
Thursday, March 1st (12:00 P.M. – 1:30 P.M.)
Golden Gate University, San Francisco [Map]
Room 6208 (6th Fl.)

Whether you’re searching for a new career path or just curious about the different finance credentials, this panel will help guide you through some of the best known professional designations in the financial industry: Chartered Financial Analyst (CFA), Certified Financial Planner (CFP®), Certified Public Accountant (CPA), Certified Management Accountant (CMA),  Financial Risk Manager (FRM), Master of Business Administration (MBA) and Master of Finance (MFin). Each of these has a core career focus, and although their abbreviations often sound interchangeable, each designation gives you something unique. Join us for lunch* on  March 1st to discover what careers each designation typically leads to.

Register Now >>

Registration is free for Golden Gate Unversity Students. For the special registration code, contact David Kaczorowski Professor of Finance and Program Manager at GGU.


Speakers


Lu Cheng, CFA, CPA
Associate Portfolio Manager, BlackRock

Lu Cheng, CFA, CPA, is an Associate Portfolio Manager within BlackRock’s ETF and Index Investments (“EII”) group, currently responsible for the US iShares ETFs. Prior to joining BlackRock, Ms. Cheng was an Assistant Vice President at State Street managing the Equity Index Client Operations team providing fund accounting, custodial services and financial reporting for index equity and asset allocation portfolios. Ms. Cheng earned her B.A. in Economics and International Relations in 2009 from University of California, Davis.

Bryan Hasling, CFP, EASenior Financial Planner, JW Harrison

Bryan Hasling, CFP, is a certified financial planner and enjoys using his expertise to guide clients through their various financial topics, such as tax planning, investments, stock options, retirement, and more. Previously, he worked with firms in the Dallas-Ft Worth and Lubbock, TX areas, serving high net worth families and business owners. Mr. Hasling is Co-Director of his local chapter’s NexGen group within the Financial Planning Association – a group dedicated to helping young professionals with their personal growth and continuing education. Mr. Hasling attended Texas Tech University, receiving a degree in Personal Financial Planning and a minor in economics. In addition to his CFP® designation, Mr. Hasling also earned the IRS Enrolled Agent certification, which marks one of the highest degrees in tax education.

Jonathan Short, CMA, MBADirector of Revenue Management – Wine & Spirits, Constellation Brands

Jonathan Short joined Constellation Brands in 2008 to build out the company’s Grape Strategy capabilities. He was responsible for optimizing the $0.5 Billion spend on Constellation’s annual grape and bulk wine purchases and 12,000 acres of internally farmed fruit. Since 2014 Jon has worked in his current role where he manages pricing and promotional effectiveness for Constellation’s Wine & Spirits business. Mr. Short holds a B.A. in Economics from UCLA and an M.B.A. from UC Davis. He earned the Certified Management Accountant credential in 2016 and is the Director of Outreach for the San Francisco chapter of the Institute of Management Accountants.

Valerie Wong, MFinVice President, BlackRock

Valerie Wong, Vice President, is an Equity Index Strategist within BlackRock’s ETF and Index Investments group. Ms. Wong joined BlackRock from MSCI where she spent almost 8 years, most recently as a Senior Associate and part of the Index Client Coverage team supporting West Coast Asset Managers. Before MSCI, she served as a Financial Analyst at HSBC. She began her career as an Auditor at KPMG. Ms. Wong graduated Summa Cum Laude from the EGADE Business School (Tec de Monterey) with an MFin. She earned a B.Sc. in Accounting with a minor in Public Accounting and a B.A. in International Business with a minor in Economics from John Brown University. Ms. Wong passed Level II of the CFA Program.

Gene Yoshida, CFA, Senior Director of Enterprise Risk Management, Prosper Marketplace

Gene Yoshida is the Senior Director of Enterprise Risk Management at Prosper Marketplace and became a CFA charterholder in 2014.  Gene is a practitioner of operational, credit, and new product risk at the line and in an oversight capacity. Diverse background in asset management, insurance, real estate, and consumer finance.

Moderator

Dave Kaczorowski, CFA, MBAProfessor of Finance & Program Manager, Golden Gate University

David Kaczorowski has experience in the finance industry that spans both academic and industry practice.  He is a Professor of Finance and Program Manager at Golden Gate University.  He has also worked in both equity research and portfolio management.  His most recent industry position was as lead manager of a startup family office. Prior to that position, he spent five years as an equity research associate, covering technology companies.  Dave has both a CFA charter and an MBA in Investment Management from Yale University.

Price:

$15 Member/$25 Non-Member

This event qualifies for 1.5 hours of continuing education credit for CFA Charterholders.

*Lunch Provided.


Register Now >>

A Behavioral Finance View of Cryptocurrencies

By Rick Lehman, Adjunct Professor of Behavioral Finance, Golden Gate University

INTRODUCTION

We are in the grip of a social phenomenon like no other we’ve ever experienced. People are paying thousands of dollars for something that is essentially a reward for playing a computer game. It has no physical properties, questionable use, no regulation, and only exists when a sufficient number of other people’s computers say it does. It may already qualify as the greatest asset bubble in recorded history, yet may only just be getting started. National governments have been compelled to denounce it or restrict their citizens from purchasing it out of concerns for mass hysteria and the corruption of their youth. It exists on a software system that is maintained through a consensus of volunteer software engineers, and no one seems to know the true identity of the creator. If it were a futuristic novel, it would certainly be on the best seller list, but it’s a striking reality – a live theater performance unfolding before us in real time, and a financial, political, and social phenomenon of historic proportion. It may yet end up as having been a total farce or the beginning of a radically new global payment system.

Opinions on the cryptocurrencies are buzzing all over the Internet. Most, however, rely upon conventional financial analysis and historic comparisons, mixed with a stew of personal emotions and biases. Representative bias is rampant in these assessments, as people try to evaluate the concept of a cryptocurrency in the context of a stock, which is as grossly inadequate as comparing an iPhone to a dial telephone. While elements of conventional finance and economics do exist, they must be viewed as only partially applicable here and elements totally unique to cryptocurrencies must be considered. In sum, I contend that…

the cryptocurrency phenomenon is better understood from a behavioral perspective – one that understands the key behavioral groups involved and the motivations of each.

The intent of this writing is to add a behavioral dimension to the current discourse on cryptocurrencies and to raise awareness of the behavioral impact on financial markets. It should be viewed in the context that behavioral science is still a relatively new approach to financial markets and that there is extremely little empirical data to draw from regarding cryptocurrencies.

Nonetheless, I expect to provide insights I believe will be valuable to those involved, or looking to get involved, and I expect to build upon this foundation with future writings on the topic. References to other articles and contributions from others on the subject are welcome.


A MARKET DRIVEN ALMOST ENTIRELY BY BEHAVIORAL FACTORS

As a behavioral science academic, it is almost impossible not to be captivated by the cryptocurrency phenomenon, which is easily the most significant behavioral event to occur since the emergence of behavioral science and its application to financial markets (which the world is only now beginning to comprehend). For a behaviorist, this could be as momentous as a physicist witnessing the discovery of a new atomic particle. Bitcoin may be as pure a behaviorally driven market as we will ever see. Among other things, we are witnessing herding, fear of regret, speculation, envy, and anti-establishment sentiment on a grand scale. In addition, adopters are placing faith and trust in a radically new concept. Wherever it eventually goes, it will undoubtedly provide some of the most enlightening information to date on the psychological and emotional mechanisms that drive human financial actions.

A common view is that the bitcoin market is totally irrational and therefore simply a house of cards waiting to collapse. By historic standards, this would be true, but such an approach fails to see irrationality as a human reality, and forces one to treat events such as the market crashes of 1987, 2000, and 2008 as either never having happened or simply unexplainable, neither of which represent a constructive conclusion. Behavior has been proven to violate the principles of Rational Utility in many instances, and efforts to deny or ignore irrational behavior are therefore counterproductive. How humans should act is often different from how humans do act, and those who only look at the should part are simply altering reality to suit their own judgments. Evaluated on the basis of conventional financial fundamentals, the intrinsic value of bitcoin would most certainly be zero and the market value considered to be 100% anomalous. Where does that leave you? Evaluated on a behavioral basis, you can at least make judgments about the speculative value of a potential new world currency, the speculative value of a possible a gold substitute, the merits of cryptography for securing value, the effectiveness of blockchain as a secure and sustainable technology, and the value of supporting bitcoin’s anti-establishment mission. I find this to represent a far more insightful and productive approach.

IN OTHER WORDS, TO PROPERLY UNDERSTAND AND ASSESS THE BEHAVIOR OF ANY MARKET, ONE MUST APPRECIATE THE BEHAVIORS, AND THE CONSTRAINTS OR INFLUENCES ON THOSE BEHAVIORS, OF ALL MAJOR PARTICIPANT GROUPS.

This has rarely been done effectively for current, let alone historic markets, even by professional analysts. Market analysis, whether fundamental, economic, or technical tends to be far too limited in context and all too frequently tainted by the author’s employment, training, self-interests, or inherent biases to be objective or complete. In addition, most market assessments have paid too little attention to behavioral science to appreciate the full nature and scope of emotional and psychological influences.

BEHAVIORALLY DEFINED (PSYCHOGRAPHIC) MARKET SEGMENTS

Viewed through a behavioral lens, cryptocurrencies come into focus not only as an entirely new concept with unique characteristics, but as an item that has a different identity and appeal to different people. We know that people use cognitive shortcuts to simplify their purchase or investment decisions, often reducing the decision to perhaps only one or two key criteria or rationales. We can take these key purchase rationales and define arbitrary market segments around them. While this represents an oversimplification of the market, it can be very useful for establishing a high-level view of the key psychographic variables at work here.

People are purchasing bitcoin, for example, not just because it has multiple characteristics as a currency (costless transferability, cryptographic security, etc.), but different groups are buying it for entirely different reasons altogether. Using the cell-phone analogy again, a certain group of people purchase iPhones because they represent the next generation of telephones. Another group purchased because iPhones represented the next generation of music-playing devices. A third group purchased because iPhones represented a new type of personal data assistant, and a fourth may have purchased primarily to have hand-held access to the Internet. Of course, there is overlap in these purchase rationales, but the incredible popularity and acceptance of iPhones was at least in part due to its ability to appeal to different audiences for different reasons, and bitcoin has these same properties.

IF WE WERE TO ASK PEOPLE WHO PURCHASED BITCOIN WHY THEY DID (OR WHAT THEY PERCEIVED THEY WERE BUYING), WE WOULD GET A VARIETY OF ANSWERS, AND WE COULD USE THOSE ANSWERS TO SEPARATE THE BUYERS INTO GROUPS BASED ON THEIR MOTIVES, ESSENTIALLY DEVELOPING PSYCHOGRAPHIC MARKET SEGMENTS FOR CRYPTOCURRENCIES.

In the absence of empirical data, we can hypothesize that we would probably see segments such as these:

Bitcoin founders, insiders, and whales

Description: This is the inner circle of bitcoin developers, originators, miners and major backers. It includes Satoshi, the Winklevoss Brothers; miners; etc.

Insights: This group holds most of the largest positions in bitcoin and stands to gain the most from its success or lose the most from its failure. They are the insiders who are dealing most closely with the evolution and sustainability of the concept.

Behavior profile: These are the most ardent promoters and supporters. They are most likely to hold their assets for some time and see it through. They are also the strongest advocates of the bitcoin mission and they would likely act to preserve the mission before they would be tempted to sell out.

Bitcoin believers

Description: Large numbers of small players who support the mission and who view bitcoin as a political statement

Insights: These would be small players from around the world who bought into the mission during the initial years. They were likely making a statement of support rather than investing. Some might be tempted to take a profit, but most are probably going to support the cause for as long as they can.

Behavior: This group is likely to represent net buyers and holders rather than sellers for some time.

Techies, millennials & disruption hopefuls

Description: Young investors with a tech orientation who embrace digital technology as the driving force of the future and who buy into every new technology. This includes programmers, technophiles, gamers, etc.)

Insights: These are the early adopters who view this as a valid alternative investment and a worthy cause. Many thrive on the idea that they can use clever software to disrupt the global financial system and governments.

Behavior: This group is likely to hang on as well, and is likely still adding to its overall stake as more enter the market.

Currency players

Description: Those who see bitcoin as replacing fiat currencies as a medium of exchange.

Insights: These are people (or institutions) that trade the currencies or who make markets I the currencies and who will simply add new ones that come online.

Behavior: The traders will do pairs and spreads using bitcoin, mostly in the futures markets. Exchange players (banks & forex firms) will need to own bitcoin for inventory, but will likely hedge it to remain neutral.

Gamblers, speculators, day traders, etc. 

Description: Those who see bitcoin as a get rich quick or trading vehicle (these are people who day trade, buy small-cap stocks, etc.) Gold-rushers and gold-bugs.

Insights: This is arguably the largest and fastest growing group of participants now. These are small to medium-sized individual traders who are the ones propelling price into the stratosphere and creating all the volatility.

Behavior: These are primarily traders and they will hedge and short as necessary. They will create liquidity and will attempt to trade bitcoin in the short term along with the other cryptos. They will likely be net long as they accumulate trading positions.

Traditional Investors

Description: Broad section of mom and pop investors, many of which may already hold gold or other alt investments

Insights: This group is ripe for diversifying into any reasonable new asset class, just to augment their stock and bond holdings. Also included are those who (mistakenly) believe that they are essentially investing in blockchain technology. Little of this group is probably in yet, but they could represent a huge upswing when they do get in. When an ETF is available, this is the group that will be the prime market for it.

Behavior: This group will also be looking to execute long holdings, which will force the ETFs to buy. These people may hedge a little with derivatives, but will not short.

Professional traders & Arbitrageurs

Description: Hedge funds, big banks, exchanges, ETF issuers, Goldman Sachs, etc.

Insights: These are the professionals who are purchasing to establish market-making inventories, hedge derivatives, build ETFs, etc. They would love to get a shot at an inefficient market like this with lots of volume from non-professionals to exploit and they will jump in to the maximum extent liquidity allows. For arbs and market-makers, it will be like shooting fish in a barrel. However, there will have to be improvements in electronic connections and clearing before they can jump in whole hog. The derivatives will also be rich with arb opportunity, but few players are likely to short without hedging.

Behavior: Professional traders will primarily be scalpers, market makers, and arbitrageurs. They will improve the market tremendously once they can easily trade, clear, and cross trade. They may end up net long or short at different times, but they can make plenty of money just being neutral and making markets for others.

US financial institutions

Exchanges, banks, ETF issuers, broker/dealers, currency dealers.

Insights:  They want in, lest they be caught on the outside. Bank America received a patent for Cryptocurrency exchange already and several others have announced others are definitely working on participating.

Behavior: Banks are extremely defensive here as they have a lot to lose. They will likely look to provide exchange services and maybe even offer wallets. But they are unlikely to take net positions unless required for their operations.

THE SOCIAL COMPONENT OF BITCOIN

Importantly, there are new behavioral factors inherent to this phenomenon that transcend formal finance and economics, and which bear serious consideration.

The founders of bitcoin did not conceive it in a vacuum, nor was it put into effect frivolously. There are clearly stated goals that seek to remedy global problems such as inflated fiat currencies, mistrust of financial institutions, high payment transaction fees, and the impracticalities of using gold as an international store of value. These are unique rationales that can appeal to different audiences. This adds a non-trivial social component – a statement being uttered by (and on behalf of) a large and agitated segment of earth’s population. We have witnessed these statements through populist events around the planet and in elections in numerous countries, including our own. They convey highly charged emotions of mistrust and frustration regarding the actions and policies of governments and large financial institutions.

FOR MANY PEOPLE, THE PURCHASE OF BITCOIN MAY THUS BE THE  EQUIVALENT OF DONATING TO A POLITICAL CAUSE, EXCEPT THAT IN THIS CASE THEIR MONEY IS NOT JUST HELPING TO GET A MESSAGE OUT, IT IS ACTUALLY FUNDING THE PROGRAM.

By design (and as a direct snub to central banks), bitcoin has also been positioned as a possible replacement for gold as a long-term store of value. As the argument has both inherent merit from a practical viewpoint (easy storage and transferability, limited supply, etc.) and a healthy techno-appeal to the younger generations, bitcoin is experiencing a speculative rush, not unlike the dotcom rush of the late 1990s and the California gold rush of 1848. This introduces a behavioral group interested almost solely in making fast money. A few years ago, bitcoin was an interesting experiment that few took seriously, except for the usefulness of the underlying blockchain technology. But it appears to have hit a tipping point, arguably around June of 2017 when the price broke out of a long slow multi-year trend to go parabolic. This was likely caused, or at least aided by the addition of this speculation group.

AS A RESULT, SOME ASPECTS OF THE PHENOMENON ARE NOW SIMPLY FOLLOWING THE TRIED AND TRUE SPECULATORS’ PLAYBOOK, FUELED BY AN INTRIGUING STORY, SCARCITY, UNTOLD POTENTIAL, AND UNBRIDLED HERD INSTINCT.

It is also this group who is likely adding the most to price volatility, though that will abate as the bitcoin exchanges become more efficient and the professional market makers enter the fray.


This article was previously published on Lehman’s Bitcoin Blog, where you can read part II of this series: Millions Of Blind People And A Very Large Elephant. You can also subscribe to his blog.


About Richard Lehman

Richard Lehman teaches behavioral finance at GGU. His financial career spans more than thirty years beginning with an eleven-year stint on Wall Street with EF Hutton, Thomson McKinnon, and the New York Stock Exchange. An authority on options, Rick was named Top Broker in the US Trading Championships – Option Division in the 1980s and assisted in the launch of two closed-end mutual funds specializing in covered call writing. Rick’s first book with co-author Lawrence McMillan, New Insights on Covered Call Writing – the powerful technique that lowers risk and enhances returns in stock investing, was published by Bloomberg Press in 2003. Concentrating now on technical analysis and behavioral finance, Rick’s latest book, Far From Random, draws a link between these two disciplines, creating an entirely new avenue of opportunities to employ behavioral factors in trading and long-term investment management. Rick holds a BS in Management Engineering from Rensselaer Polytechnic Institute in Troy New York and an MBA from the State University of New York at Albany.  He is also the founder of the San Francisco Behavioral Finance Symposium.

Looking at Risk Tolerance after the February 2018 Market Plunge–7 Tips to Lower Blood Pressure

After last week’s stock market drop, it’s fair to say that a few panicked emails landed in the in-boxes of financial planners and finance professionals. The writers of these emails may not have realized that their tolerance for risk was not what they thought it was, lulled by a multiyear bull market or an inadequate planning session with their advisors. For professional advisors, a more realistic determination of how much risk an investor can tolerate before a downturn can lighten their inboxes if the market dives and perhaps even prevent a few client defections.

“During stable moments in the market, you might say: I can tolerate X amount of risk,” says GGU Adjunct Professor of Behavioral Finance Richard H. Lehman. “They think they knew their tolerance for risk and then all of a sudden they are confronted with a 5 or 10 percent decline, and it is not always easy for them. They don’t know if there is another 10 percent drop coming or what’s next. Recency bias – a tendency for people to assume things will continue as they are – makes the drops even more shocking.”

A process for determining risk-tolerance that works a lot better than simplistic client surveys is needed. Says Lehman: “The advisor needs to be able to assess their clients psychologically in a way that clients cannot effectively do themselves. You cannot just ask people directly about their risk tolerance because it is a concept most people cannot articulate well.”

The Problem & Challenge

Advisory practices have by and large failed to take advantage of what academia now knows about financial behavior and the psychology of financial decision-making. The basic role of the advisor is to help tailor a financial plan and strategy for each client. The implicit assumption is that to do that, they need to fully understand the client’s risk tolerance, goals, and objectives — which is essentially their legal requirement as fiduciaries.

“The advisor needs to be able to assess their clients psychologically in a way that clients cannot effectively do themselves. You cannot just ask people directly about their risk tolerance, as it is a concept most people cannot articulate well.”

Lehman knows first-hand how challenging it has been to get the financial industry to embrace behavioral concepts. When he was at the NYSE more than 30 years ago, he managed a major study of investors that showed how psychographics are integral to the investing process. Like proper capitalists, however, Wall Street denizens couldn’t see much further than how much money their clients had to invest. The NYSE study told another story, though the results were way ahead of the industry’s thinking.

The challenge to make change happen brought him to roles as an author, teacher, blogger, and conference organizer. In 2013, he teamed up with a technical analysis and behavioral finance legend, GGU’s Hank Pruden, to create the Behavioral Finance Symposium. At the time, it was a new discipline with few courses available and almost no industry-targeted events. The Symposium, a first-of-its-kind, has been successfully held at GGU every year since.

How do you determine the real risk tolerance of an investing client?

How can Behavior Finance help clients (and their advisors) better understand their own risk comfort so that blood pressures don’t spike when the market goes down? Here are some of Lehman’s insights on risk tolerance that are part of his Behavioral Finance course at GGU’s San Francisco campus.

Differentiate risk, volatility, ambiguity, and loss.

Richard Lehman

People have misconceptions about the concepts of risk, volatility, loss, and ambiguity, frequently assuming they are all the same. They don’t fully understand risk (the potential for negative returns) versus volatility (the dynamics of up-and-down movement) and loss (the actualization of a negative return). Ambiguity is the sense of how much uncertainty one can deal with in terms of future returns.

Prospect Theory teaches us that when we evaluate the probability something is going to happen, we do it in biased ways. For example, consider the probability of a major earthquake in the Bay Area. It is so small on a daily basis that most people think it is essentially zero–but it is a finite number. On the other extreme, people overestimate the probabilities of winning the lottery, where the chances are infinitesimal–but people are willing to bet that it’s greater. Prospect theory also tells us that losing X amount of money feels roughly twice as bad as the pleasure of gaining the same amount of money. Understanding such ideas leads to much more realistic assessments of risk and reward.

Don’t sugar coat risk.

Even bonds can blow up, and people need to understand that. They also need to understand that occasionally companies do go bankrupt. It is better to understand and plan for risk than to be blindsided by it later.

Consider scenarios.

Investors need to appreciate all possible scenarios and plan ahead for how they might deal with them. For example, before the recent decline, people should have already had an idea what they might do in the event of a 10% decline.

Lehman knows first-hand how challenging it has been to get the financial industry to embrace behavioral concepts. When he was at the NYSE more than 30 years ago, he managed a major study of investors that showed even then how psychographics are integral to the investing process.

Examine trade-offs.

Investment choices produce numerous trade-offs between risk and return. Examining alternatives works well as a way of developing a portfolio that one is comfortable with. For example, you can construct model portfolios with various different asset classes and easily backtest them to see how they performed in historical periods.

Recognize downsides as well as upsides.

Clients will tend to focus on upside potential more than downside risk. It is important to change the focus to risk-reward or risk-adjusted return so that both are given proper emphasis.

Understand reference points.

A fundamental tenet of Prospect Theory, which informs much of Behavioral Finance, is that when we evaluate possible outcomes, we do it differently because we each have different reference points. When you are young, a $10K loss has much more impact than to a 50 or 60-year-old. Also, people who experienced a big negative impact from the financial events of 2008 are more sensitive to current risk than people who are older and who have seen several downturns. There are studies that indicate differing risk attitudes in different countries as well. Some Asian cultures, for example, will characteristically tolerate more or less financial risk than US investors. Investors in China, for example, exhibit a greater tendency to speculate; while Japanese investors are more risk-averse.

Consider Interactive games for assessing risk

A standout from the 2017 Behavioral Finance Symposium was Dr. Shachar Kariv, a well-known UC Berkeley Economics Professor and experimental researcher. He argues that interactive methods of assessing one’s risk tolerance represent a substantial improvement over classic risk surveys. Dr. Kariv shows that a simple computer game can reveal clients’ attitudes about risk much more scientifically than simply asking what they think they are. A company called TrueProfile is already using Dr. Kariv’s ideas in its profiling service.

More to be done

Lehman has made progress as an educator and continues to work at connecting industry with academia on the subject of Behavioral Finance. In recent years, more Nobel Prize winners in Economics (such as Yale’s Robert Shiller and University of Chicago’s Richard Thaler) are providing more visibility and acceptance of Behavioral Economics. However, Lehman says: “Human nature is very hard to change, and that will continue to challenge both investors and the financial industry for a very long time.”


About Richard Lehman

Richard Lehman has more than 30 years of experience in the financial industry, including eleven years on Wall Street with EF Hutton and the New York Stock Exchange. He later worked for financial data giant Thomson Reuters, startup Avenue Technologies, and the Wealth Management group at Mechanics Bank. Lehman has authored three financial books published through Bloomberg/Wiley and has been teaching Behavioral Finance and Options courses for three years at Golden Gate University. He is also the founder of the website BehavioralFinance.com and the San Francisco Behavioral Finance Symposium.

Dr. Dave Yeske Elected to Foundation for Financial Planning Board

The Foundation for Financial Planning (FFP) has elected Dr. Dave Yeske, CFP® — Director of GGU’s Financial Planning programs and Distinguished Adjunct Professor — as a new member of its Board of Trustees. Dr. Yeske joins fellow members who are leaders of the nation’s top financial services companies including AIG Financial Distributors, Fidelity Investments, Schwab Advisor Services, and BlackRock.

The FFP provides pro bono financial planning to wounded veterans, domestic violence survivors, people with serious medical diagnoses, and other vulnerable populations.  This charitable organization has delivered $6.6 million in grants to nonprofits to support financial capability programs, worked with partners to activate more than 15,000 volunteer financial planners to serve their communities, and acted as a leader and catalyst to embed a rich commitment to pro bono across the financial planning profession.

David Yeske
Dr. Yeske

“Dr. Yeske, who describes himself and his team as ‘Financial Planning EvangelistsSM,’ has made national TV appearances, led professional organizations, and published articles and books such as Evidence-Based Financial Planning: To Learn . . . Like a CFP.  The financial planning investment strategy he pioneered—The Yeske Buie Approach—has been profiled in The Wall Street Journal. The Financial Planning Association®(FPA) has recognized Dr. Yeske as one of the profession’s leading minds by awarding him their highest honor—The P. Kemp Fain Jr. Award (2017). He earned a Doctorate in Finance from GGU in 2010.

Jon Dauphiné, Chief Executive Officer of the FPP, says: “Our Board of Trustees represents the best and brightest of the profession – from individual practitioners to corporate leaders, all committed to giving back.” The contributions of the new trustees will be especially valuable as FFP continues to grow its Pro Bono for Cancer Campaign, which is fueling the development of programs that can help lower-income families navigate the costs of a serious cancer diagnosis.


Request information about GGU’s Financial Planning programs >>

New Graduate-Level Certificate in Financial Life Planning

By Dr. Dave Yeske, CFP®

Crunching numbers is (relatively) easy but facilitating change is hard!

That’s why GGU’s new graduate certificate in Financial Life Planning is designed to provide the trust and relationship skills that will allow financial planners and coaches (as well as therapists) to become more effective change agents for clients. Often, clients have trouble evaluating the quality of the service even after it’s delivered. In other words, financial planning has high “credence” qualities. As a consequence, clients focus on a secondary characteristic: how they’re served as much (or more) than the content of the service. That makes relationship-building a primary skill for Financial Planners.

Certificate Courses

Introduction to Financial Life Planning

Financial Life Planning offers a holistic and humanistic approach to financial planning that encourages students to consider the clients themselves, “beyond the numbers,” to create greater potential for financial well-being, life satisfaction, self-awareness, and resiliency.

Coaching Skills for Financial Planners

In its truest form, coaching is a collaborative approach that recognizes clients as the “experts” in their own lives and the coach as “partner” to co-create a relationship that supports the clients’ goal fulfillment. Coaching is about change. How do we, as financial professionals, help clients do the things they must do in order to create the life (financial and the rest of it) they want? Topics include an overview of the four core coaching skills and ways financial professionals can engage more deeply with clients by using those skills. Professor: Saundra Davis, MSFP, FBS.

Facilitating Financial Health: Tools for Financial Planners, Coaches, and Therapists

Integrated financial planning brings together the fields of psychotherapy, coaching, and financial planning. It enables students to go beyond the traditional boundaries of financial planning to help clients build healthy relationships with money, to explore the roots of destructive financial behaviors, and to develop techniques to support constructive change. Professor: Rick Kahler, MSFP, CFP®

Students will gain the following capabilities:

  • Building deeper insights into their own history, attitudes, and relationship to money
  • Advanced coaching skills to help clients affect positive change and achieve goals
  • The skills necessary to facilitate financial health
  • Understanding of the drivers of client trust and relationship commitment and ability to use this to develop and sustain highly functional client relationships.

Taught by Leaders in the Field

Elizabeth Jetton, CFP® has been a thought leader in the financial planning profession for the past 20 years. She has been in the financial services industry since 1981 and served as President of The Financial Planning Association in 2004. She trains planners how to become conversational leaders and to use group conversational processes to engage, attract, and build trust.

Saundra Davis, MS is nationally recognized as an expert in the financial coaching field and founder and Executive Director of Sage Financial Solutions. She developed a financial coach certification program and received a special invitation to attend President Obama’s 2014 White House Summit on Working Families.

Rick Kahler, MS, CFP® is a pioneer in the emerging field of financial therapy that integrates Financial Planning and Psychology. He has been featured by NBC’s Today, ABC’s 20/20, Good Morning America, The Wall Street Journal, The New York Times, The Washington Post, and MarketWatch. He is a co-author of books such as Facilitating Financial Health and Conscious Finance.

Guest lecturers include George Kinder, Susan Bradley, Carol Anderson, Amy Mullen, Rick Kahler, Saundra Davis, Roy Diliberto, Elissa Buie, Courtney Pullen, Sarah Asebedo, Martin Seay, Dennis Jaffe, and Derek Lawson.

Why the Certificate is Important

Ultimately, fostering new client relationships or deepening existing ones requires a special set of skills. Anderson & Sharpe (2008) identified some of those skills. They found that higher levels of client trust and relationship commitment flow from a systematic process for clarifying Goals & Values, explaining how advice reflects Client Goals & Values, having the willingness to facilitate difficult conversations about money, and initiating conversations about life changes

As George Kinder, who has been named “One of the 35 most influential people in financial services,” states: “ …a very personal conversation [with a client] is a very powerful vehicle for delivering freedom, starting with trust and relationship skills, and then moving into inspiration, and then rounding it out with the solid foundation of financial planning.”

You can also major in Financial Life Planning through GGU’s MS in Advanced Financial Planning.

 


About Dave Yeske

Dr. Dave Yeske CFP®, Director of the GGU’s Financial Planning programs and Distinguished Adjunct Professor, designed the new concentration. A Financial Planning Evangelist, he has made national TV appearances, led professional organizations, and published articles and books such as Evidence-Based Financial Planning: To Learn . . . Like a CFP.  The financial planning investment strategy he pioneered—The Yeske Buie Approach—has been profiled in The Wall Street Journal. The Financial Planning Association®(FPA) has recognized Dr. Yeske as one of the profession’s leading minds by awarding him their highest honor—The P. Kemp Fain Jr. Award (2017). He earned a doctorate in Finance from GGU in 2010.



For more information on the certificate, contact program director Dr. Dave Yeske, CFP® or request information about GGU’s Financial Planning programs.

Financial Planning Luminary Outlines GGU’s Degree Programs

This webinar recording provides information on both masters-level financial planning programs at GGU: Financial Planning and Advanced Financial Planning. The presentation is led by Dr. Dave Yeske, CFP® who is Director of the GGU’s Financial Planning programs and Distinguished Adjunct Professor. The Financial Planning Association® (FPA) has recognized Dr. Yeske as one of the profession’s leading minds by awarding him their highest honor—The P. Kemp Fain Jr. Award (2017).

Catch the Latest Webinar
January 23rd at 12 – 1pm (Pacific Time)

If you want to ask questions about the degrees in financial planning we invite you to the next webinar hosted by Dr. YeskeAn Enrollment Counselor will also be on hand to answer application-related questions. Participants will receive a waiver code to apply to one of our programs at no charge (up to $110 in value).

Register Now >>

Questions about the event? Contact Amina Kasumov.

Video: Director of Financial Planning Programs Accepts Prestigious Award

Dave_web_2Dr. Dave Yeske, CFP®, was recently presented with the 2017 P. Kemp Fain, Jr. Award: the highest honor bestowed by the Financial Planning Association®. This award represents the pinnacle of recognition in the financial planning profession, honoring one exceptional individual who has made significant contributions in the areas of service to society, government, and academia.

We invite you to watch these portions of the award ceremony.

Career retrospective >> Acceptance speech >>

Dr. Yeske earned his doctorate in Financial Planning from Golden Gate University and has been a spokesperson for the profession at conferences and with the media. He has appeared on CBS, CNBC, CNN and NBC News. The Wall Street Journal has profiled Dr. Yeske and the Yeske Buie approach to investing.

Dr. Yeske has led the way in bringing science-based insights into the profession through writing and his position as Director of the GGU’s Financial Planning programs. He also holds an appointment as Distinguished Adjunct Professor and co-teaches the Capstone Cases in its Financial Planning course.

A practicing financial planner since 1990, Dr. Yeske founded the San Francisco Society of the Institute of Certified Financial Planners (ICFP) and has held many leadership roles in FPA, including president of the FPA Board of Directors in 2003 and chair in 2004; chair of the FPA Political Action Committee (PAC) in 2005 and 2006; and chair of FPA’s Research Center Team and its Academic Advisory Council from 2007 to 2012. At present, Dr. Yeske serves as Practitioner Editor of FPA’s award-winning Journal of Financial Planning. Currently, he is Managing Director of Yeske Buie, a comprehensive financial planning firm with offices in Vienna (VA) and San Francisco.

CFP® & CFP® are trademarks of the Financial Planning Association.


Request information about GGU’s Financial Planning programs >>

Financial Life Planning Concentration Added to MS in Advanced Financial Planning

The Master of  Science in Advanced Financial Planning degree is designed for those who have passed the CFP® certification exam and wish to pursue advanced studies in taxation, estate planning – and now Financial Life Planning. Research in psychology and behavioral finance has provided new insights into what it takes to facilitate positive change in clients’ lives—and we have incorporated this knowledge into this innovative, research-based degree program. Students will gain the following capabilities:

  • Application of positive psychology
  • Advanced interviewing skills for uncovering client history, vision, and values
  • Understanding behavioral finance and the ability to identify specific client behavioral biases and heuristics
  • Advanced coaching skills for helping clients affect positive change and achieve goals
  • Understanding of the drivers of client trust and relationship commitment and ability to use this to develop and sustain highly functional client relationships
  • The skills necessary to facilitate financial health
  • Deeper insights into their own history, attitudes, and relationship to money

About the Faculty

The Financial Life Planning concentration and Advanced Financial Planning degree is taught by founders and leaders in the field who have deep expertise in the areas of life planning, coaching, facilitation, communication, and counseling skills. You truly learn from the best of the best, who become a permanent part of your professional network.

Dr. Dave Yeske CFP®, Director of the GGU’s Financial Planning programs and Distinguished Adjunct Professor, designed the new concentration. A Financial Planning Evangelist, he has made national TV appearances, led professional organizations, and published articles and books such as Evidence-Based Financial Planning: To Learn . . . Like a CFP.  The financial planning investment strategy he pioneered—The Yeske Buie Approach—has been profiled in The Wall Street Journal. The Financial Planning Association® (FPA) has recognized Dr. Yeske as one of the profession’s leading minds by awarding him their highest honor—The P. Kemp Fain Jr. Award (2017). He earned a doctorate in Finance from GGU in 2010.

Elizabeth Jetton, CFP® has been a thought leader in the financial planning profession for the past 20 years. She has been in the financial services industry since 1981 and served as President of The Financial Planning Association in 2004. She trains planners how to become conversational leaders and to use group conversational processes to engage, attract, and build trust.

Saundra Davis, MS is nationally recognized as an expert in the financial coaching field and founder and Executive Director of Sage Financial Solutions. She developed a financial coach certification program and received a special invitation to attend President Obama’s 2014 White House Summit on Working Families.

Rick Kahler, MS, CFP® is a pioneer in the emerging field of financial therapy that integrates Financial Planning and Psychology. He has been featured by NBC’s Today, ABC’s 20/20, Good Morning America, The Wall Street Journal, The New York Times, The Washington Post, and MarketWatch. He is a co-author of books such as Facilitating Financial Health and Conscious Finance.

For more information and course list, contact program director Dr. Dave Yeske, CFP® (415-442-6524 or dyeske@ggu.edu).