Alpha-centric Investing on Main Street
Apr 25th, 2007 | Filed under: Investment Management FeesWhile we argue that alpha/beta separation will have a broad-ranging impact on the world of asset management, we are often hard-pressed to find articles or papers written by or for financial advisors. However, this article in April’s issue of Financial Advisor illustrates clearly how an alpha-centric view of the world can be a powerful differentiator for financial advisors. As many advisors have told us, this is particularly important in an era of increased competition (saturation?) of the advisory industry.
So to determine how these ideas are playing on “Main Street”, we look to Columbus, Ohio and Matthew Brandeburg a planner with John E. Sestina and Company, a fee-only planning firm. He writes in Financial Advisor that financial advisors can’t just look to the mutual funds they recommend to produce all the alpha. They too must produce the good stuff:
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Nonsense. It’s a sales based industry, the decision process shows little sign of becoming commoditized. Salesmen work to get paid, today. A Brandeburg has got to know his limitations. End of story, but it’s a lovely concept. Brandeburg would do everyone a service if he focuses on a sequel to Goldilocks.