Com­bin­ing Ed­u­ca­tion with a Sci­en­tific Ap­proach

Pro­fes­sional Fi­nan­cial Strate­gies

The Suit - - Contents -

Cer­ti­fied Fi­nan­cial Plan­ner® Paul Bryon Hill looks for a qual­ity of “teach­a­bil­ity” in po­ten­tial clients. While clients need not learn ev­ery­thing, they are ex­pected to be knowl­edge­able in the ba­sics of what re­ally mat­ters for suc­cess in plan­ning and in­vest­ing for their lifetime goals.

“They must be smart enough to learn the ba­sics,” he said, em­pha­siz­ing the im­por­tance of ed­u­ca­tion. Hill – pres­i­dent and founder of Rochester, N.Y.based Pro­fes­sional Fi­nan­cial Strate­gies – re­lies on re­search by lead­ing econ­o­mists, in­clud­ing aca­demics on the board of Di­men­sional Fund Ad­vi­sors. “[Some] ac­tu­ally wrote to­day’s book on in­vest­ing. While aca­demic re­search evolves, Wall Street keeps do­ing what it did 30 years ago, just in another fash­ion.”

Hill uses an in­vest­ment strat­egy drawn from the pi­o­neer­ing work of re­cent Nobel lau­re­ate Eu­gene Fama to de­liver as­tound­ing re­sults. Uti­liz­ing in­no­va­tive “mul­ti­fac­tor” as­set al­lo­ca­tions de­vel­oped by Di­men­sional Funds Ad­vi­sors in col­lab­o­ra­tion with Pro­fes­sor Fama and oth­ers, Hill has re­de­fined in­vest­ing at his firm, and by do­ing so, he has helped his clients not only sur­vive ma­jor mar­ket ups and downs over the past 20 years, but even thrive be­cause of them.

Given the dis­ap­point­ing out­comes for most in­vestors dur­ing and after the Great Re­ces­sion and the ear­lier tech bust – which to­gether have been called a “Lost Decade” by some – his strate­gies have re­sulted in solid client re­sults. Hill ex­plained how he be­gan to use a sci­en­tific ap­proach after earn­ing an MBA at the Univer­sity of Rochester’s pres­ti­gious Si­mon Business School. “I was in­tro­duced to mod­ern fi­nan­cial eco­nomics and ad­vanced in­vest­ing con­cepts I never un­der­stood be­fore, even though I had earned a CFP,” he said. “I learned to think in a new way.”

How it started

Be­fore Hill earned his MBA, like the majority of fi­nan­cial ad­vi­sors still do, he sold prod­ucts us­ing con­ven­tional meth­ods, in­clud­ing spec­u­lat­ing about “op­por­tu­ni­ties” or mak­ing pre­dic­tions about stocks, fund man­agers, the econ­omy and of course, mar­ket move­ments.

Found­ing Pro­fes­sional Fi­nan­cial in 1993, Hill com­mit­ted to us­ing a sci­en­tific in­vest­ing ap­proach to plan­ning for clients, a decision crit­i­cized by many peers, ac­cus­tomed to “tried and true” ways. Hill said that his new di­rec­tion in in­vest­ing was firmly based on decades of aca­demic em­pir­i­cal re-

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