The 2015 NAAIM annual conference highlighted the importance of collaboration.

The investment advisory industry can be a very challenging environment for established advisors, let alone new entrants. By taking an active management approach, financial advisors potentially step outside the protection of the herd. With a buy-and-hold approach, there’s always the easy scapegoat of “the market”—while the active manager takes the battle to the market. In times of uncertainty, particularly with a market that many believe is at the mercy of global central banks and financial engineering, the sharing of knowledge among peers is critical.

The National Association of Active Investment Managers (NAAIM) Uncommon Knowledge 2015 National Conference provided that insight to more than 100 RIA attendees during three days of presentations and networking. Held on May 3-6 in Newport Beach, California, the conference offered attendees extended, interactive sessions that promoted peer-to-peer exchanges, complemented by presentations of interest to the active investment community.

As active managers step outside the protection of the buy-and-hold herd and into the market battle, insight from one’s friends is welcome.

“There’s a lot going on in the investment advisor space and no better time to reach out to peers in the industry for new ideas and directions,” said Jason Wilder, outgoing NAAIM president. “For all attendees, this was a great opportunity to build relationships with other managers who face the same challenges. As individuals, we are the experts when it comes to providing active investment management through an RIA format. We have a lot to offer each other.”

Three extended sessions focused on the business development plan, building a collaborative trading model, and succession planning. In each session, NAAIM members led the discussion, explaining their thoughts and frustrations, what they have found works and doesn’t work, and where they were still looking for answers. But the interaction of the audience transformed the sessions from presentations to a networking exchange of ideas designed to change lives and businesses.

The conference also saw the conclusion of the 2015 NAAIM Shark Tank/Manager Showcase with John McClure of ProfitScore Capital Management taking top honors with a long-short government bond strategy. Ken Graves, of Capital Research Advisors LLC, captured second place with a short-term equity index model, followed by Potomac Advisors’ Rich Paul with his EVO-Evolution Market Timing System.

There were also many insights from thought leaders in the financial industry. Anne Mathias, senior macro strategist with Guggenheim Investments, presented the case for continued strength in the U.S. equity market. While weather is often blamed for the unexpectedly low growth in Q1 GDP, Ms. Mathias believes the West Coast dock workers’ dispute had a significant impact. With 40% of U.S. exports and imports moving through the West Coast ports, the labor slowdown had widespread economic repercussions. With the renewed movement of imports and exports, she anticipates the economy will return to higher growth rates, driving equity values.

Shahira Knight, vice president of government relations and public policy at Fidelity Investments, offered a view from Capitol Hill of the Department of Labor’s proposed fiduciary requirement for financial advisors in the management of ERISA retirement accounts. As currently proposed, she said, the rule will make the brokerage model obsolete and impact investment advisors more than they realize. The core of the DOL’s concern is related to rollovers from company retirement plans to IRAs and the belief that individuals are better provided for within the constraints of the company plan.

The effect of the rule will be to reduce guidance in the management of retirement accounts. Ironically, guidance requests have skyrocketed at Fidelity, with people looking for more help, not less.

Asbury Research’s John Kosar, CMT, presented “A Technical Look at Stocks, Market Sectors, Interest Rates, and Gold,” offering a number of investable ideas and analytical wisdom. Mr. Kosar’s near-term forecast is for vulnerability in Q2 for the U.S. stock market. For the bigger picture, however, he views a potential summer correction, amid the right conditions, as a potential longer-term buying opportunity. Mr. Kosar said it is usually wise to follow some fundamental technical guidelines:

Asset flows matter
Asset flows provide the horsepower for market moves and signal that when everybody is getting out of the pool, it would be wise to follow.

Simple is better
The more moving parts, the more chances of surprise and of something breaking down in an investment model.

Look for confirmation
You don’t want to be “the first one in a good idea.” Does price trend correlate to what is happening in asset flows?

Watch the VIX 50-day moving average
It has identified every near-term market bottom.

Frank Barbera, CMT, executive vice president of Sierra Investment Management Inc., took the prize for the most worrisome, if not downright scary, set of charts and graphs.

The current zero interest rate policy (ZIRP) has not helped anyone but the banks, he maintained, resulting in a $7 trillion transfer from individual savings to financial institutions since 2001 and taking discretionary spending out of the economy. With growth now the scarcest global commodity, he maintains the prospect for global deflation is very real.

“There is no better way to confirm the wisdom of active management than to talk with peers in this business.”

NAAIM member, technical analyst, and consultant Greg Morris asked attendees, “How many things about investing and finance do you believe but have never questioned?” He proceeded to knock the pins out from under a multitude of investing truisms—from the wisdom of dollar-cost averaging to the illusions of forecasting. Mr. Morris is the author of “Investing with the Trend: A Rules-based Approach to Money Management,” which makes a strong case for trend-following and critiques some of the fundamental tenets of buy-and-hold investing.

Cybersecurity expert Jeffery Ingalsbe, who recently joined Flexible Plan Investments, stressed that the first priority of Internet security is to avoid providing unwanted access to IT resources. For example, too many financial firms make it relatively easy for security breaches to happen by failing to follow the most basic security protocols around filters, apps, security patches, and wireless systems. When it comes to protecting data, Mr. Ingalsbe recommended that investment advisors first identify, “What is your treasure? Draw a picture of it, know how it moves, and make certain it is protected at rest and in motion.”

The final takeaway from three days of discussion came down to the growing importance of active investment management of client assets. Volatility and political uncertainty, slowing global economic growth, a bull market of over six years, and many indicators reaching extremes, all have made for a cautious NAAIM crowd. The positive counterpoint—voiced by many attendees—was that with active management, they have a plan firmly in place to manage risk.

Mr. Wilder perhaps said it best: “It is more important than ever that managers maintain their awareness and discipline and stick to their plan. There is always going to be an opportunity to make money in the future as long as the investor’s principal is preserved. I know of no better way to have one’s belief in the wisdom of active management confirmed than to meet and talk with peers in this business.”

The opinions expressed in this article are those of the author and do not necessarily represent the views of Proactive Advisor Magazine. These opinions are presented for educational purposes only.