On Moats

CAIA Association brought back our Strategy Week at the end of June. This is something we started early in my tenure, but COVID disrupted the flow until now. Not only was it back, but it was also very familiar and very different at the same time. During the Covid season we have added many new remote colleagues in the US and around the world. We Teams daily via calendar invites and even all come together fortnightly on Zoom but never has this group collectively met. We came together this June not to build out our strategy, but to reaffirm and sharpen it, as a team. Our focus remains on the client and her outcomes, which can only be sustainable when professionalism is within the very fabric of our industry. Our Members are certainly a part of that fine woven silk. We remain so grateful for their commitment and the difference they make, as we enter our third decade as a professional body serving the end client. And we also talked about moats.

A CliftonStrengths moderated session told us a little bit about who we are as professionals and as people. Turns out my top five strengths are Arranger, Achiever, Ideation, Restorative, and Empathy; for those wondering, my bottom five are Discipline, Context, Deliberative, Command, and Significance (dead last and code for ego... thank god!). Armed with this data we role-played with small groups and were asked to talk about the most important thing in our lives. Not surprisingly, it was family for all at my table. As my chosen picture suggests, this has been a particularly gratifying period in my house as we celebrated my son Zach’s engagement to Cleo, six months of marital bliss for my son Sam and his spouse Mari, a 26th birthday celebration for my daughter Abbey, a high school graduation for my son Will, and the ongoing fortune that my special son Max brings into our lives.

But I realized that this is my family and while the concept might be ubiquitous, the true meaning is as unique as an NFT to everyone around me. My happiest days at home could be amongst the most trying times for a colleague or a friend. There was someone from India in my group, where family takes on a more expansive construct under one roof. There was a single parent, a parent via adoption, and even one colleague still living at home. Experiences, demands, fulfillments, and setbacks were so very different by person, but for all, protecting their family was their moat. We work to provide for them and to also learn and grow, but all of that sits on the other side of our moat. If family is truly first, maybe it should be the last place we want to compromise. I’m not sure what this all means when the post-Covid conversation moves toward ‘back-to-work’, but maybe we should reset policy by first understanding its corollary, ‘away-from-family,’ which is also real and very much in play too.

We also talked about CAIA Association’s moat. We started with the premise that all businesses should have one, and it is their edge. We should define it and protect it, because if it is copied or co-opted, we are toast. What then is our moat? Our curriculum: not possible as it is mostly open-sourced for all to read. Then it must be our exams and modules, and the fees they generate: never, as professionalism must be sought and embraced as a necessary and pervasive value that goes far beyond just the pursuit of letters after ones name.

Then it has to be our Members? This led to an interesting discussion on moats and if they are built to protect, it is the client on the inside, and not CAIA, nor our business model, or even our Members. ?On the outside of the moat is our industry replete with managers, general partners, regulators, service providers, lobbyists, legislators, and even the media. Paraphrasing Commodore Perry via the American Cartoonist Walt Kelly, we have met the moat, and the moat is us! But it is not only our Members or just CAIA Association. We need that moat to be both wide and deep, as professionalism is what defines us, and any breach will compromise a fiduciary duty that the client expects and deserves from those on the other side. It is here that we need all of us to take a stand where solutions come before product, value creation bests asset gathering, and we put the long-term needs of the client above all else. Professionalism is a single moat, but it takes a village, where a willingness to collaborate is the only price for admission.

Seek education, diversity of both your portfolio and people, and know your risk tolerance. Investing is for the long term.