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Tiburon CEO Summit XXI

Tiburon Strategic Advisors is pleased to announce the recipients of its Tiburon CEO Summit Awards. Rob Arnott (CEO, Research Affiliates) and Bill Sharpe (Professor Emeritus, Stanford University) were recognized as Tiburon CEO Summit award recipients who exemplify three central themes; Focusing on Consumer (and other Client) Needs, Challenging Conventional Industry Wisdom (innovation), and Taking Responsibility..

These awards were presented at Tiburon CEO Summit XXI October 12=13, 2011. Click here to learn more...

Rob Arnott
(CEO, Research Affiliates)

Rob Arnott (CEO, Research Affiliates)

Rob Arnott founded Research Affiliates in 2002 as a research-intensive asset management firm focused on innovative products, especially as they pertain to quantitative investing. Today, the firm manages over $50 billion in assets and continues to explore novel approaches to active asset allocation, optimal portfolio construction, & more efficient forms of indexation. Research Affiliates distributes investment products globally in partnership with leading financial institutions.

Mr. Arnott was previously chairman of First Quadrant, which he built out of the former internal money management operations of Crum & Foster. Prior to this, he was global equity strategist at Salomon Brothers (now part of Citigroup), the founding CEO of TSA Capital Management (now part of Analytic Investors), and a vice president at The Boston Company. In recognition of his achievements as a financial writer, Mr. Arnott has received five Graham & Dodd Scrolls, awarded annually by the CFA Institute for best articles of the year. He has also received two Bernstein-Fabozzi/Jacobs-Levy awards from the Journal of Portfolio Management and Institutional Investor magazine.

As it pertains to Tiburon CEO Summit award criteria, some of Mr. Arnott's accomplishments include:

• Challenging Conventional Industry Wisdom (Innovation): Mr. Arnott has pioneered several unconventional portfolio strategies that are now widely applied, including the fundamental index approach to indexation, which has at its crux the belief that because some stock prices are inefficient, capitalization weighted indexes necessary lead to the purchase of more of the overpriced securities and less of the underpriced securities. Specifically, Mr. Arnott said “(the) Market is not passive at all from a company centric point of view”, and went on to site current premium for AAPL (Apple Inc. – NASDAQ) and discount on BAC (Bank of America Corporation – NYSE). Mr. Arnott has challenged conventional industry wisdom in other areas as well, including asset allocation whereby he argued for including a broader range of risky asset classes, tactical asset allocation (“which some call market timing”) that he promoted before its current trendiness, global tactical asset allocation, & tax-advantaged equity management.

• Focusing on Consumer (and Other Client) Needs: Mr. Arnott has a well earned reputation as one of the world’s most provocative and respected financial analysts. He seeks only products that add value for clients and investors, eschewing marketing gimmicks. For instance, Mr. Arnott likely could have maintained the fundamental index approach in a black box and charge far higher fees as an active manager. He explained that it “comes down to the fact that the end customer has to win...”, and believes that “our industry, contrary to many views, has ethical standards” in alluding to the lower cost model for delivery of his technology.

• Taking Responsibility: Mr. Arnott speaks at many conferences, often for no fees, and has written over 100 articles in journals such as the Journal of Portfolio Management, the Harvard Business Review, & the Financial Analysts Journal, as well as being the co-author of The Fundamental Index: A Better Way to Invest. He has served on the board of the Financial Analysts Journal, including as editor-in-chief from 2002 to 2006, and as a visiting professor at the UCLA Anderson School of Management. When asked about his academic and professional accomplishments in this regard, Arnott replied “I blame it on my urge to test ideas and see if they’re true...” pointing to his fundamental curiosity and his willingness to share his findings.

Bill Sharpe
(Professor Emeritus, Stanford University)

Bill Sharpe (Professor Emeritus, Stanford University)

Bill Sharpe is the STANCO 25 Professor of Finance, Emeritus, at Stanford University’s Graduate School of Business and also Director Emeritus at Financial Engines, which he cofounded in 1996. Professor Sharpe’s research interests focus on macro-investment analysis and equilibrium in capital markets. He is associated with dozens of widely utilized investment concepts, including being one of the originators of the Capital Asset Pricing Model (CAPM), and the creator of the Sharpe Ratio for risk-adjusted investment performance analysis, the binomial method for the valuation of options, the gradient method for asset allocation optimization, and returns-based style analysis for evaluating the style and performance of investment funds. Professor Sharpe received the Nobel Prize in Economic Sciences in 1990.

Professor Professor Sharpe previously taught at the University of Washington and the University of California at Irvine, and also worked at the RAND Corporation. He has written six books, including Portfolio Theory & Capital Markets; Asset Allocation Tools; Fundamentals of Investments; and Investments. He has also written articles in many professional journals.

Professor Sharpe humbly regaled the Summit Attendees with his influences, past and present research and projects, a humorous retelling of his experiences receiving the Nobel Prize, and a professional philosophy that he summed up with “if at first you don’t succeed, keep trying...”

As it pertains to Tiburon CEO Summit award criteria, some of Professor Sharpe's accomplishments include:

• Challenging Conventional Industry Wisdom (Innovation): Professor Sharpe has proven to be a master at expressing complicated concepts in elegant simplistic terms, making them widely usable. For instance, Professor Sharpe’s Nobel Prize work on Modern Portfolio Theory captured the simplicity of the risk & reward relationship. Sharpe was quick to share credit for his inspiration with one of his early mentors, Armen Alchian (Professor Emeritus - UCLA), saying “I guess it goes back to my original influence, Alchian encouraged us to simplify things...” so “I think of things simplistically..”.

• Focusing on Consumer (and Other Client) Needs: Professor Sharpe’s more recent work at Financial Engines, which “came out of helping defined benefit (pension plans) understand risk”. Upon recognizing that the 401K market had shifted the problems of pension management to consumers, Professor Sharpe led the building a firm that has as its mission an effort to address the fact that average investors are not well served by financial advisors and product companies. Sharpe said “I started turning all my academic research and writing on the individual”, and in fact, the goal of Financial Engines is to put the proper advisory tools in the hands of these investors. Even at the beginning, Professor Sharpe was credited with focusing on the consumer, often referring to the Chilean consumer where defined contribution plans had first grown. Founded in 1996, Financial Engines is now the largest RIA serving consumers directly, with $44 billion assets under management, 518,000 clients, and a moderate median client of $38,000. One of the early business decisions made by Financial Engines was to sell no proprietary products and accept no commissions, the two common drivers of industry profitability at the time.

• Taking Responsibility: Professor Sharpe has given back substantially in his business activities focused on average consumers; Financial Engines has a noble purpose. Sharpe added, “(the) objective was to help that employee at that firm to save and invest” and “it’s still that simple”. He was also the past president of the American Finance Association and a trustee of the Economists for Peace & Security.

To learn more about attending Tiburon CEO summits, please contact Sarah Sage at SSage@TiburonAdvisors.Com or 415-789-2540.