What your broker doesn't want you to know
About T.I.
This web site provides investment insights and consumer advocacy. We help you become aware of how to make smart decisions regarding what services to buy and how much to pay. If you’re going to become a smart consumer of investment products and services, you’ll need to understand at least the basics of fees, or how advisors and investment managers get paid by you.

Please do not contact Patrick Geddes or the Aperio Group for investment advice. Aperio is not seeking wealth management clients.  Read pages 33-35 in The Full Story for advice on how to find a financial advisor.


Our perspective on investing

Short Biography of Patrick Geddes

Acknowledgements



Our perspective on investing

Any investor should look at investing from three different perspectives when choosing a portfolio, which I’ll describe here as wearing three different hats. I’ve worn each one of these hats in my career, so I know these viewpoints personally.

Chief Investment Officer
First look at your total portfolio rather than just the individual pieces. Your total portfolio should be diversified, which means an optimal blend of different asset classes since that’s how you lower risk without sacrificing return. Furthermore, you should choose within each asset class the investments that will provide the highest level of return for the amount of risk borne. Indexing provides a superior way to achieve the best returns for most asset classes since the returns have historically been higher than active management.

Chief Financial Officer
CFOs focus on both cash outflows as well as inflows. Most investors ignore fees because they believe (erroneously) that they will be earning superior returns that justify the fees they pay. If I were your CFO, I would recommend that you should be stingy with fees, since good CFOs know how to save their companies money by finding low-cost yet effective vendors. They know how to balance the trade-offs for services a company truly requires while avoiding paying for useless services. Furthermore, CFOs look at taxes as just another cash outflow, whereas most investors incorrectly view taxes as proof of success rather than as an unnecessary drag on after-tax returns. Index funds offer the lowest fees, the best trade-off of cost and return, and the least amount of loss to income taxes.

Research Professor
The academic research on U.S. stocks overwhelmingly shows the superiority of indexing over the average active manager, certainly in the mutual fund world. Even though a few managers do manage to beat the index, the odds are heavily stacked against being able to pick the managers that will beat the market in future. Thus the smartest default for individual investors is to choose indexing since it’s so effective and yet so simple. Furthermore, the institutional investment world that has the best access to the superior managers relies much more heavily on indexing than individuals even though institutions generally are not subject to income tax. While some active strategies can beat the market, you should still default to indexing because of the oft-repeated research results.


Biography

Patrick Geddes is a co-founder and Chief Investment Officer of Aperio Group LLC, a quantitative money-management firm in Sausalito, California with approximately $1 billion under direct management and $6 billion under advisement. At Aperio, he creates unique after-tax diversification strategies and Monte Carlo-based models to forecast after-tax client wealth.

Prior to co-founding Aperio, Patrick was the Director of Quantitative Research and CFO of Morningstar, where he created performance benchmarks and mutual fund research tools for individual investors. Before Morningstar, he spent five years with Amoco, now part of BP, in the U.S. and Europe providing quantitative analysis, currency hedging and corporate tax optimization.

Patrick received his MBA with honors in finance from the University of Chicago and his BA from Yale University. He has won teaching awards as an instructor of MBA-level portfolio theory and financial modeling courses for the University of California Berkeley Extension.

Acknowledgements

I had lots of help putting together this web site. I’d like to thank Suzanne Badenhoop for her legal advice on non-profits, Ann Geddes for her long hours creating the website, Larry Berger for ideas on accessibility, Kathryn Shantz of Tanjable for PR help and an anonymous attorney with SEC expertise who by donating some of his time proved that there are some very pro-consumer people in the financial services world.

I’d also like to thank my business partner Bob Newman for being so supportive through the creation of TransparentInvesting.com and my partner Guy Lampard, who has encouraged this project from inception. Finally I’d like to thank my partner Paul Solli, since almost all of the material contained herein grew out of countless conversations he and I have shared on the wealth management industry over the years.