In the past, applying behavioral insights was predominantly used to install “sludges” to make us consume goods and services not necessarily in our best interest. The consumer psychology literature is full of those destructive forms of nudges (Shiller, 2015).
Small to medium sized asset managers (anyone below USD 1 trillion) can buy time through the use of technology, cost management and the persistence of client loyalty.
We know from other industries with intact competition, that the most effective response to size is specialization. Instead, the asset management industry tends to interpret specialization as form over substance, where pseudo-innovations a la MinVar, Smart-Beta, VaR-optimized portfolios or risk parity still dominate the distribution pipelines.
All of the above share the same or similar basic assumptions and are made for a relatively static world, in which a correlation-based understanding of risk has proven sufficient. This is not how capital markets work: the world is dynamic, markets are adaptive and human decision makers rely on bounded rationality.
How to assess, which financial innovation is worth a consideration for you investment process? Participants will learn how to validate/falsify innovations in finance.
- family office
- wealth managers
- private/regional banks
MORNING / SESSION ONE / 90MIN
INTRODUCTION TO INNOVATION ASSESSMENT
- The Case for Financial Innovation
- “Phishing for Phools”
- Sludges / Nudges / Heuristics
- The Hype Cycle
- Moving Beyond the Hype
MORNING / SESSION TWO / 90MIN
HOW TO ASSESS FINANCIAL INNOVATION
- Financial Innovation: adapt or ignore
- The Assessment Process
- The Innovation Scorecard
- The Adapt/Ignore-Decision
AFTERNOON / SESSION ONE / 90MIN
Participants will study their own investment teams/committees and explore how to optimize it by applying previously introduced techniques and lessons learned.
CASE STUDY - ASSESSING FINANCIAL INNOVATION
AFTERNOON / SESSION TWO / 90MIN
REVIEW YOUR FINDINGS
Moderated by the lecturer, participant share their findings and reflect together on eventual further improvements of their own or other findings.