The Investment Scientist

‘The Investment Scientist’ or ‘The Investment Fiduciary’: Help me Choose

Posted on: January 17, 2010

When I started this blog 30 months ago, my only goal was to disseminate the best investment research done in academia.

Much of the so-called investment research produced by the financial industry (aka Wall Street) and purveyed by the media is nothing more than advertisement in disguise. The truly rigorous and unbiased research is often done in the nation’s best universities, like Yale, Harvard, and the University of Chicago. This research is not accessible to the vast majority of investors who are not academically trained. My blog was meant to change that, thus the title “The Investment Scientist.”

Then, in the course of my advisory practice, I began to realize that financial salesmen masquerading as advisors were doing much more damage than ignorance. I began to write about the dangers of conflict of interest, often using fresh examples from the clients who switched to me. That was the impetus for changing the blog title to “The Investment Fiduciary.”

Though I have been using the latter title for about a year, many people still remember me as “The Investment Scientist” since “fiduciary” is an obscure word that is not easy to remember. This has caused me to consider resurrecting the old title, if only for easy-to-remember sake. I put the issue to my newsletter subscribers, and here is what they had to say, both pros and cons:

In favor of ‘The Investment Fiduciary’

Fiduciary..implies trust…key to your business

The Investment Scientist would fit well your DFA investment approach but I have a bias toward the responsibility and trust implied by the word “fiduciary.”

Fiduciary seems best to me. It sends a signal that you are about people’s money and you make suggestions to their level of risk tolerance.

To my way of thinking, “scientist” conjures up images of Wall Street types slicing and dicing to create the next “Super security” that will have huge payoffs and little risk It implies a sense a working on behalf of yourself and not necessarily on behalf of the client.

Fiduciary implies that you will keep the safety of a person’s investment as your paramount consideration. Scientist can imply a somewhat abstract or theoretical emphasis that could or could not include a commitment to a capital preservation. In this era, capital preservation is on everyone’s mind – hence fiduciary will have resonance with a greater number of potential clients.

People understand the connotations of fiduciary re financial decisions and responsibilities. Scientists are normally not associated with finance; so that term may cause confusion or misunderstanding from what you are trying to achieve.

The ‘Investment Fiduciary’ seems tells the story better but ‘fiduciary’ is a difficult vocabulary and I have to look for dictionary to figure it out.

Fiduciary sounds more “trusting” and use of the word “scientist” might cause confusion.

Scientist is worn out. Fiduciary tells me something; You operate differently than the rest of them and you are there to help me.

“Scientist” has the connotation of experimenting, tinkering, looking for something. The fraud committed by the so-called “global warming” scientists has tarnished the reputation of all scientists.

“Fiduciary” is much more appropriate for investments because we want someone who will put our best interests ahead of theirs and adhere to prudent standards of professional conduct, too.

To me, Fiduciary, means being responsible, and when we think of money/investments, —we want responsibility for our actions. My quick thought.

I believe the term fiduciary makes the investor feel more secure in knowing that you are acting in that capacity. Investing is not an exact science and in my mind leaves the wrong connotation to an investor.

The fiduciary aspect implies that you will take care of me and have an obligation to. The scientist is a detached professional looking at the facts (except in the case of global warming).
I want the former.

I think The Investment Fiduciary is about “trust” and the word Scientist is more about “marketing”.

(1) Fiduciary is better b/c it emphasizes something that’s been lacking in conventional Wall Street $ management.
(2) Scientist doesn’t work because the “experiments” aren’t repeatable and the data simply too limited.

Fiduciary is a less common word and that’s a minus but I doubt that someone who doesn’t know it is going to value your service?

Science implies refutation by counter-example. Fiduciary implies judgment and responsibility. The former is for mastery of simple systems which are of limited dimensionality and generally linear; the latter implies mastery complex systems of high dimensionality and consideration of non-linearity. Think on it.

Fiduciary connotates trust and confidence. Scientist implies systematic knowledge, analytical precision, and even sapience.
In the financial world, the former is much more imporatant than the latter. Actually a Fiduciary can have all the attributes of a Scientist, whereas a Scientist may have to work hard to gain the status and respect of a Fiduciary. My schooling and trade are in the field of science. I humble confess my limits.
Therefore, my vote is on Fiduciary.

In favor of ‘The Investment Scientist’

I like them both, but I chose scientist because a lot of your articles support your ideas using the scientific method and deductive reasoning. I felt that the Investment Scientist is more in line with the educational aspect of the articles.

Much better Scientist because decisions must have a scientific basis

I recommend the “Scientist” because it is an individual with authority in the subject matter.
On the contrary, “Fiduciary” is a relationship with legal and principle bond between you and your client.

Investment fiduciary sounds too complicated and confusing – i think of lawyers when i hear the word fiduciary

Almost everyone knows that a scientist is grounded in using facts to support a hypothesis, but I have only a vague idea of what a “Fiduciary” “does” (without looking up the definition).

I think the fiduciary is assumed.  The differentiation is scientist.

It may just be my own bias but I connect better with the title “The Investment Scientist”. I believe it better reflects the process of analysis, data review and reassessment when necessary.

Scientist sounds better in technical prowess and quality of assessment.

Everybody knows what a scientist is and generally what he/she does. Furthermore scientists are, in general, perceived positively by the public. Fewer people know what a fiduciary is, what they do, etc.. Also, your own credentials, intellect and demeanor as I have come to know you fit well with the term scientist.

(Scientist) connotates a process based on facts and history whereas Fiduciary is a responsibility that every investment adviser regardless of process has to have.

This is the title by which I already know you and it implies a scientific and methodical approach to your work.

Hi Michael — I’d use “scientist” as most people understand what that means. Many people might not understand what a “fiduciary” is, although likely most of your target clients will. Either way, scientist sounds sexier in a strange sort of way.

Implies more research, thought and analysis.

I like the idea of “science” being brought to the investment arena.

But, entrusting your money to someone to invest on my behalf would also lead me to like the “fiduciary” word. However, I am not sure how many people understand the term fiduciary.

You apply more critical thinking to the blog/newsletter than a “fiduciary.” I think of a fiduciary as an officer of a corporation and those individuals make as many decisions by information as they do by “gut feel.” You are much more information-based. Also, Investment Scientist seems to differentiate your style/approach and draws attention (better marketing).

It highlights your empirical, analytic approach to investment advice. You go where the data takes you like a scientist would do.

In favor of neither

Your core strengths are a) scientific training at top notch university and b) ability to offer personal touch. I think you can come up with a name and tag-line on your blog that captures both. I don’t think these do. Investment scientist gets at one, but leaves you potentially cold and heartless. Fiduciary sounds good, but then we wonder about skills.

I’d like to hear from you as well.

4 Responses to "‘The Investment Scientist’ or ‘The Investment Fiduciary’: Help me Choose"

How about “The Fiduciary Investment Scientist” both words are important.

If only one or the other fiduciary is it. Scientist leaves a connotation of “I can build an investment better than you” – IMHO the bane of the industry and Wall Street.

Josh, thx for the suggestion.

Well, Michael Investment Fiduciary Scientist Zhuang…you really work hard at figuring it out!

Tom,

You are hilarious, I probably not going to use that long winding title.

Maybe I should just use what you like to call me – grass hopper.

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]mzcap.com.

Twitter: @mzhuang

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