Everybody who’s tuned into financial media knows about Ken Fisher and Fisher Investments.
They’re always in your face, whether it’s Ken Fisher talking to you about investments on financial TV programs, or whether you’re being directly targeted by his email marketing promos or sales team. If you’ve read any of his books or any of the content written by his anonymous team of writers, you’re familiar with the company’s writing style--the “in your face” mentality is present in virtually every sentence.
Ken gives it to you straight. His firms favor equity exposure to almost any other mix of assets that may underweight equities. He hates annuities, and to a lesser extent, gold (which he finds a bad investment).
The firm’s preferences are based on solid research--something Fisher Investments does quite well--and they are skillful in exploiting this advantage well with high-pressure sales, and high fees well above the industry standard: According to a Bloomberg report, “fees range from 1% to 1.5% for private clients. In contrast, active U.S. stock funds typically cost about 0.7% of assets per year, according to a Morningstar report earlier this year. Index funds cost about 0.08%.”
That’s quite an expense for research that any diligent investor can do for himself or herself (the Fisher team is counting on your lack of self-reliance and tendencies toward fear).
To learn more about the Fisher Investments’ culture of control, fear, and high fees, read this Bloomberg article.
Ken Taunts the World, and the World Bites Back
During a staff meeting in 2008, when markets were plunging, there was an exchange, noted in a recent Bloomberg piece. One of the women on the Fisher team asked Ken Fisher if he’d considered allocating more funds into defensive assets. A reasonable question, wouldn’t you think?
Ken’s response: “Why would I want half a dick?”
Apparently, Ken wants the “full monty,” but are we talking Ken’s gain, or Ken on behalf of his clients?
That was crude, but here’s another one that reveals a more serious flaw in the way Ken Fisher sees his position in relation to others:
In 2018, he tweeted “Douglas C. North proved slavery was profitable at the time of the war. Wait 30 years and technology would have rendered it profitless and slavery would have fallen peacefully...And had it African Americans and everyone today would be hugely better off.”
This statement follows a separate tweet in which Ken Fisher called Abraham Lincoln his least favorite president. But who cares? The point is that Ken seems okay with the idea of people being enslaved for another 30 years until its profit potential gets transferred over to another means of operational efficiency (at which slaves would have served their purpose).
In other words, profit is more important than people.
Is this the moral foundation on which Fisher Investments operates?
What does that mean for Fisher Investment clients?
The latest scandal happened during the Tiburon CEO Summit at the Ritz Carlton Hotel in San Francisco.
Ken Fisher said: “Money, sex, those are the two most private things for most people...It’s like going up to a girl in a bar ... [inaudible] ... going up to a woman in a bar and saying, hey, I want to talk about what’s in your pants.”
He actually said this in San Francisco of all places (think progressive, liberal-leaning, and #MeToo).
Wouldn’t you think that he’d make the prudent choice to weigh the positive payoffs against the risks, as he does with his own investments--where he would maintain his image as “billionaire investor” rather than expose himself as a “legendary lecher”?
In short, it was a dumb move, and now it’s costing him big time.
Bailing On Fisher Investments
The first to withdraw funds was the State of Michigan Retirement Fund. Fisher Investments managed $600 Million of its pension fund.
Next came the Iowa Public Employees Retirement System which pulled out $386 Million.
Following shortly was the Boston Retirement System which announced they are terminating a $248 Million relationship.
Next to bail was the Philadelphia board of pensions, withdrawing $54 Million from Fisher.
The fifth to go was Fidelity, who terminated its $500 Million relationships with the firm--Fisher Investments was a subadviser for Fidelity’s Strategic Advisers Small-Mid Cap Fund.
The most recent to flee Fisher was the New Hampshire Retirement System, which ended its $239 million relationships with the firm.
All in all, Fisher Investments has lost over $2 Billion in the last two weeks.
And it’s likely that the bleeding won’t stop there.
But What’s Wrong with Bad Morality if They’re Making Money for Clients?
If you’re asking yourself this question, then you may not be thinking about the hidden risks that reside in privileging profits over matters of ethics and morality.
How’s “trust” for a start? Not just trust in matters personal, but trust in general...the kind of morality that can potentially slide from the personal to the professional.
We’re not alleging anything here, by the way. We’re just saying that, as a general principle, it’s important to consider institutional morality when entrusting your funds over to that institution--especially if you’re giving them a large portion of your wealth.
The Moral Shadiness Goes Much Deeper Than You Think
When someone apologizes after being exposed for a crime or some kind of bad behavior, often the person is not sorry for what he or she did, but for getting caught.
Is Ken Fisher is not the only bad character here? He even said himself “I have given a lot of talks, a lot of times, in a lot of places and said stuff like this and never
gotten that type of response,” said Fisher in a Bloomberg interview “Mostly the audience understands what I am saying."
In other words, bad publicity may be the only reason these institutions are pulling out. If the audio recording had not gone viral, who’s to say these funds wouldn’t have done anything?
Doing the “right thing” when nobody's looking counts so much more than doing the right thing to save face. And until now, virtually no institution who attended a Ken Fisher private talk seemed to have cared about what he said, otherwise, someone would have said something.
And what about the Fisher Investments staff, particularly the women? If it is true that Ken Fisher had “said stuff like this” many times before, they didn’t seem to have cared.
They may be thinking “who cares if our founder speaks of ill of women (and slavery) as long as I receive a paycheck?”. By not speaking up, the Fisher staff enabled this to go on.
But if they’re willing to bypass issues of personal ethics and morality, might they be willing to do the same when it comes to the interests of their financial clients?
We don’t know. But why trust them?