Sunday Conversation: Oct. 5 event aims to help investors be better stewards of assets

Fred Martin, the founder and lead portfolio manager for Disciplined Growth Investors of Minneapolis, is also the founder and host of an event he hopes will recur annually called Objective Measure. The first is an all-day event on Oct. 5 at the Ames Center in Burnsville. Martin sees his conference as the start of teaching what he calls financial leadership. He expects to see families, foundation executives and even other money managers among his audience. Martin will kick things off in the morning.

Q: As the leadoff speaker, what do you hope to get across to your audience?

A: No. 1, that our industry is in pretty tough shape. We have squandered a lot of trust. Two, the fix, the repair, has to start at the ground level. And that's between advisers and clients. What I am doing is assigning roles; my speakers are going to have to do the heavy lifting. My role is going to be to teach them, to inspire and inform them via an annual conference that's going to go on at least 10 years.

Q: So what are you personally planning to teach?

A: First, I will ask people to consider changing their mind-set from a transactional mind-set to a ­relational mind-set.

Q: You mean both clients and advisers?

A: Yes, both. I am then going to delve into what is a great client. I'm actually going to introduce a great client, a local clinic that hired me 38 years ago, then shifted to [Disciplined Growth]: Noran [Neurological] Clinic, just down the street. They have had the same investment objectives for the entire 38 years, the same performance standards. We've done nothing but invest in publicly traded stocks and bonds, a balanced account. That's it. Then I'm going to challenge the audience to think about how to become great clients, and challenge advisers how to help their clients become great clients.

A: There's three things to it, just three elements to work on. They have a clear sense of purpose about their life and their portfolio. They have to have great habits, particularly saving and spending habits. And they are relationally healthy. The family relationship is healthy, if it's a state pension fund, whatever. The adviser has to be healthy within their own firm. And then they, the adviser and client, can work together to build a strong relationship.

Q: What's next in your talk?

A: I have to give people a couple of pieces of real meat. So here is one. There are three questions, three things, whether you manage your money yourself or have an adviser, that people just have to know. One, how am I doing? How much are we making or losing? It's called dollar-weighted results. Two, what's it costing me per year for my investment activity? And three, what percent of my portfolio is in stocks and what percent is in bonds? If you've got money in a bunch of mutual funds you have to cut through all the stuff to find out.

I don't want it to get too complicated. These are simple, straightforward questions.

The last thing I'm going to do is get into the "why" question. Why save? We're all going to die anyway, right? What's the point? There are things that wealth, or extra assets, can't do. Can't buy you happiness. If you have bad health it could maybe help a little bit, but it can't get you good health. Can't take it with you. But here's what wealth gives you. It gives you choices. It gives you resources, so you can go do stuff.

Just to give you a story … I have had this employee, so I teach her the questions to ask her adviser. How are we doing? How much are we making and losing? Second, how much is it costing me? Well the adviser looks at her through crossed eyes, and that was seven months ago. Still hasn't answered the questions. So I said to her, you need to think about what you want to do with this money to put up with the hassle of having to push your way through to getting those answers. So if you had extra money, what would you do? So she said, well there's this dental clinic down in the Dominican Republic. … I'd like to be able to support them this year because they do great work.

Isn't that a purpose? Why can't she set that up to be one of her goals? So if I am asking people to do this work, there has got to be some payoff for them. Retirement, by the way, is perfectly valid as an objective, as a purpose for the money.

Later in the day I am going to come back and talk briefly about investments, and this is going to be three things they can know about investing. Very simple. Otherwise nobody understands it.

Q: Where does your project go next?