I have the privilege of speaking to diverse groups of investors and investing professionals in the U.S. and Canada. I often find I learn more from them than they do from me. Recently, I had an epiphany I want to share you. It relates to the way entrepreneurs and employees of technology companies view investing.
I have spoken at the headquarters of both Google and Facebook. I recently addressed a group of investors in Ottawa and Montreal. While I was in Canada, I met with a small group of very successful technology executives. Here's what has become clear to me: Technology employees view investing very differently than other investors. Let me explain what I mean.
They aren't influenced by convention: They have seen their parents deal with brokers and advisors. They find nothing about it they want to replicate. The nature of those who enter the technology field is a desire to disrupt the status quo and not to blindly follow it. They view the fact that it has "always been done this way" as a challenge to find a better way. Fortunately, this is not difficult.
They're data driven: With degrees in engineering and computer science, technology executives have the ability to crunch and understand complex data. They use these skills when making investment decisions. They use their Internet savvy to research investment ideas and strategies. When I speak to them, they don't sit passively and take notes. They ask probing, data-driven questions indicating they've done their homework.
They focus on results, not relationships: I have had many technology executives tell me how the major brokerage firms solicit their business by appealing to their sense of elitism and asking them to defer to the expertise of the firm. They find this approach amusing and ineffective. "Affinity marketing" was (and is) very effective with their parents. It doesn't work with them.
They are smart and savvy: Complex investments like hedge funds and derivatives make no sense to them. They understand the motive of Wall Street to profit by selling products that have high commissions and are unlikely to "beat the market." They will pay a fee to an advisor who delivers value, but they want the value quantified. They challenge the premise of every claim of "superior performance" and insist on support they can independently validate. One member of this group told me a broker extolled the performance of a particular fund over the past year. He replied: "I thought past performance was not indicative of future results. Are you telling me it is?" He got the deer-in-the-headlights look in response.
It will come as no surprise that these technology entrepreneurs and employees are very receptive to evidence based investing. It meets all of their criteria. Every investor can learn from their experience.
Dan Solin is the director of investor advocacy for The BAM ALLIANCE and a wealth adviser with Buckingham Asset Management. He is a New York Times best-selling author of the Smartest series of books.
The views of the author are his alone and may not represent the views of his affiliated firms. Any data, information and content on this blog is for information purposes only and should not be construed as an offer of advisory services.
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