Having a conversation with Bryce Skaff is a little bit like talking with a therapist…one that happens to be extremely financially savvy. As Joe points out, he has a keen ability to boil down complex ideas into cold hard facts, but in a way that makes you feel ‘safe’ about it. A trait that is particularly valuable in today’s stress-inducing economic environment. Bryce is the Co-Head of Dimensional Fund Advisors, a global investment firm best known for its uniquely academic approach to money management. When he’s not nose deep in the investing world, you can find this self-ascribed ‘odd duck’ at the beach (either surfing it or saving it, but we’ll get to that later).
The label might seem like a misnomer, but Bryce has a point: his nearly quarter-century stint at the investment firm is unprecedented in today’s world of movers and shakers – and the story of why he’s stayed as long as he has is eerily similar to sentiments of previous guests on the show.
“I often get the question, ‘how could you be at the same place for 25 years?’ and the answer always is: I have not. For me, if I’m learning, challenged, given the latitude to create, disrupt a bit, and that keeps on expanding…you’re never at the same company. I think the endeavor for me is always “let’s make sure next year doesn’t look the same as last year.”
In short: the hallmark trait of a company worth sticking around for is one that’s always providing new challenges and opportunities.
It’s fitting that for our final episode of the season, we come full circle with perhaps the one common theme that runs through an incredibly impressive group of people. They don’t sit still, even if they’re in the same place.
In the episode, Bryce offers a heap of practical advice for investors of all levels of expertise – all provided with the slant of someone who is the definition of cool and calm. Bryce isn’t a therapist, but he could certainly moonlight as one. Tune in to the full episode at the link below, or keep reading for a quick skim of the highlights.
“The investment philosophy is different. We are a bit of a disruptor in the industry. You’ll look around the halls at Dimensional and you’ll see lots of people at the 20-year mark. That’s also because of the employee experience – we want people to have careers there. Our view is always, if we’re going to invest in someone, let’s really invest in them and make them want to reinvest that human capital back with us and our clients.”
Odd duck? Only outside the walls of Dimensional. It’s fitting that the investment firm takes the concept of human capital so literally, and given that we’re on the heels of the Great Resignation, other firms may want to take a page out of the Dimensional playbook.
As you can imagine, Bryce is on the road. A lot. We asked if he could draw any correlations between business and travel post-Covid and this is what he had to say:
“I am so appreciative to be with people again. The connective tissue that’s built…my opinion is that nothing replaces that. Now, I’d say that the content of the meetings might be taking on a different tenor. I used to fly somewhere for a very contained, surgical conversation. That’s probably done virtually done now. It seems to me that a lot more relationship building and group meetings are happening on the road. When decisions have to be made, I just find that in person is just so much better.”
“One of things that’s really cool about that, is we all used to go to a 90-minute meeting and that is not happening anymore. For us, it’s forced me to distill everything to its most essential elements. Get rid of the fluff. What are the three things I need to communicate and can I do that in 45 minutes? That’s transcended every area of our business.”
Joe McBride spoke for us all when he asked: “Am I dumb for looking at my brokerage account everyday?”
“We have these reptilian instincts, I think, that result in a behavior pattern that’s quite common among investors. There’s nothing wrong with it as long as you know why you’re doing it and you know the proper response to whatever you’re seeing. Most often the proper response is to do nothing. There is nothing that you’re going to learn from the market on a daily basis that should cause you to take action – as long as you have the right financial plan in place.
Investing should not be a haphazard activity. Investing is deferred gratification: I will forgo today with the hopes that I have a higher amount of money in the future. Many people confuse investing with gambling. Most people invest in a way that looks like gambling. It doesn’t have to be as scary as people make it out to be.”
Thanks, Joe.
The value of a financial advisor is pretty self explanatory, but what about for those that are already deep in the world of investing?
“Even I have a financial advisor. I have been in the investment business working with markets for 28 years and all of my investments are in the funds we manage. I don’t need someone to tell me how that all works. What’s particularly helpful is the process of discovery and goals clarification. Financial advisors and wealth managers ideally do four things really well, I call them the four D’s.
- Discovery – Step one is to uncover the experiences, tolerances, aversions and opinions objectives of the client.
- Design – Then you develop a plan that’s directly informed by what you’ve learned.
- Delivery – You’ll need to put the blueprint to work to ensure you have a structurally sound ‘house’. What tools and resources are needed to accomplish that?
- Discipline – We know that markets will be volatile — it’s not a question.
Discipline refers to moving away from any unrealistic expectations about short-term fluctuations in the market. The expectation should be high discomfort if you actually pay attention to it. But that’s not the point…if you need your money tomorrow, you should not be in financial markets.”
“Are markets functioning properly? Are they doing what we we expect them to do? What are markets intended to do? Markets are not intended to react to what just happened. Markets are an information processing machine that are trying to assess what’s going to happen from this point forward. You’ll notice that oftentimes it happens that the fed changes interest rates and nothing happens in the market. Why is that? It’s because investors have come together and are trying to calibrate well in advance. Nobodys waiting for an announcement, they’re calibrating on the go – always always always.
The challenge for all investors is going to be avoiding judging ‘rational’ and ‘irrational’ when it comes to market pricing because to me the market level it’s kind of like the meniscus of the ocean and it’s always moving. But it’s the equilibrium point. The price of a stock, the yield of a bond, and so on, they are at every instance the reflection of an equilibrium point of buyers and sellers. So, to say rational or irrational suggests that you have some additional information that the aggregate knowledge wisdom preferences of all those market participants setting that equilibrium point is somehow irrational. I don’t know how to do that. Nor does the academic evidence suggest that people on the whole know how to do that.”
Joe: I knew you were a surfer.
And on that note, it’s imperative that we mention the cause that is so near and dear to Bryce’s heart. The Surf Conservation Partnership is an unprecedented strategic alliance between Conservation International and Save The Waves to protect the world’s best waves and the incredible marine and coastal ecosystems that surround them. To learn more about this incredible organization and what they’re doing to help save our oceans, click the link below.
Click here to listen to the full episode
Lindsay Curry | Head of Marketing