Michael Kitces: Power Tweeter delves into financial science

Dec 18, 2011 @ 12:01 am

By Davis D. Janowski

His day job is director of research for Pinnacle Advisory Group Inc., but probably more people know Michael Kitces for his prolific writing on the art and science of financial planning.

His writing is multifaceted, and he is able to keep up a near-constant daily flow of tweets (they numbered 5,687 at the time of this writing, going out to nearly 2,000 followers).

Mr. Kitces also files longer, more thoughtful pieces on his website kitces.com, as well as more-light-hearted commentary on his blog, the cheekily named Nerd's Eye View.

“I would describe Michael as an "adviser's adviser.' He's a thought leader but speaks from the perspective of someone who has spent a lot of time with clients, as well as other advisers, and can offer an in-the-trenches point of view, both on overall industry issues as well as issues specific to advisers,” said Russ Thornton, an adviser with Wealthcare Capital Management who knows Mr. Kitces and often exchanges social-media content with him.

“I also like that Michael isn't afraid to challenge conventional wisdom, whether in investing, planning, adviser-client behavior or other sacred cows in our industry,” Mr. Thornton said.

He and others acknowledged that while they don't always agree with Mr. Kitces, he gets them to think critically about their approach to planning.

Mr. Kitces himself said that he sees a place for iconoclasts.

“A lot of the pieces I write now sort of grow out of holes or problems I see in the industry,” he said.

Even though Mr. Kitces is just 34, when asked what he most wants to be known for, it is to be thought of as someone whose life's work has contributed to advancing the profession.

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That is something for which he has already been recognized, having been presented last year with the prestigious Heart of Financial Planning Award from the Financial Planning Association.

Two of Mr. Kitces' biggest concerns for the near term are the threats that another market downturn could pose to the planning and advisory industry, and how major changes in the regulatory environment might shape it.

“We need to be cognizant and concerned by the regulatory environment we are in and the battle under way. It can shift entire industries into new directions,” he said.

“A lot of my concern right now about the profession is how we really withstand it, if there is another bad bear market cycle where the S&P [500] takes a plunge, [and] how we as a profession can weather that.”

If that happens, the industry will have to embark on a serious study of alternative investment strategies, because many of the consumers of financial planning and advice can ill-afford to accept the risks of buy-and-hold-based stock portfolios any longer, Mr. Kitces said.

A much more holistic approach will be demanded, he said.

“I'm generally a big fan of asset-based models, and if the worst did happen, it would force us to take a look at the business models, and the investment process and philosophy,” perhaps even leading advisers back to forms of tactical asset management and active management last employed successfully in the 1970s, he said.

This answer doesn't surprise Bill Winterberg, a fellow blogger and friend.

“Michael is a human Wikipedia for financial planning,” Mr. Winterberg said. “Whenever advisers encounter an obscure set of client circumstances, Michael almost always provides an answer, accompanied by a thoughtful response, complete with supporting references.”

djanowski@investmentnews.com

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