Ken Fisher

It’s hard to miss Ken Fisher. You’ve probably seen one of the ubiquitous full-page newspaper or magazine ads touting his investment firm (“Take our global- investing quiz. The answers may surprise you!”) Or caught an infomercial for Fisher Investments, starring Hal Holbrook, on cable TV. Or heard one of Mr. Fisher’s radio commercials. Or opened up your mailbox to find one of his personalized direct-mail offerings (“One sentence about what this letter is not about. It’s not about asking you to buy anything.”). You get the idea — bashful he is not.

In person, Mr. Fisher is bigger than he looks in his ads. He is utterly self-assured, doesn’t blink or hesitate when answering questions and speaks in a low, rumbling, oracular baritone, each word precisely measured.

Mr. Fisher exudes confidence to the point of arrogance, and why not? With nearly $50 billion in assets under management, the man is one of the world’s most successful money managers.

In addition to being chief executive and chief investment officer of his Woodside, Calif.-based firm, Mr. Fisher is also a long-running columnist for Forbes magazine and a best-selling author, most recently of “The Only Three Questions That Count: Investing by Knowing What Others Don’t” (John Wiley, 2007).

Not surprisingly, he’s a man of strong opinions:

Q. How do you view the wealth management business?
A. I disdain what’s called wealth management. There’s a notion that you have to be either a manufacturer or distributor [of financial services], that you can’t do both. That’s a dumb notion. All wealth management does is add another layer of fees while separating the client from the quality control of the actual underlying products. If wealth managers actually knew beans about anything, they would be in asset management.

Q. How is your firm different?
A. We’re both a distributor and manufacturer. Almost no one does that. We’re the biggest direct marketer by a factor of 10 and the largest asset manager by far. We’re also a vertically integrated research shop and asset manager.

Q. What’s your investment philosophy as an asset manager?
A. We have a query session with clients and ask them what the purpose of money is for them. The most common answer is, they want enough money to be taken care of. They are used to a 60/40 allocation between stocks and bonds. But people are living longer, and having only 60% of your money in stocks just guarantees that you will be poor later in life. We have a different orientation: an all-equity portfolio. Once you get used to that notion, we don’t think you’ll go back.

Q. What about the argument that an index fund usually outperforms actively managed stock portfolios?
A. I think John Bogle is right. Most people who trade stocks lag the market. Most people are better served taking the passive approach.

Q. Then why use Fisher?
A. We have a long-term history of beating the market. It’s not perfect, and some years, we lag, but the key is to know something that others don’t.

And in my mind, our research department is the best in the business.

Q. You certainly attract customers and assets.
A. Actually, I consider myself a failure. We don’t have much market share. We have about $50 billion in assets under management, or one-half of 1% of the estimated $50 trillion in global stocks. I can’t think of one reason I shouldn’t have 3% market share.

Q. How do you plan to do that?
A. The same way other consumer services businesses do. We apply the full spectrum of marketing technologies, ranging from direct marketing to focus groups to figure out how to better attract and keep clients. We aim at high-net-worth individuals in vertically integrated separate accounts, targeting consumers who have $500,000 plus to invest, via direct marketing. Eighty percent of them need someone to tell them what to do, but only one in five will actually respond to our marketing.

Q. Why do people respond?
A. We don’t know. In direct marketing, the “what and how” are everything and the “why” isn’t very important. A lot of our best direct-marketing pieces, whatever the medium, have been ones that didn’t seem to make a lot of sense, but pulled exceptionally well. Direct marketing is often counterintuitive.

Q. How much do you spend on marketing annually?
A. More than anyone else.

Q. Do you ever buy other firms?
A. We plan to acquire smaller firms, based on the clients we can get. We acquired a firm in Detroit last December and will buy another firm this month. We can pay a bit more than industry standard multiples and offer a perfect exit strategy for owners who want to retire: We shut down the business and then move the clients to our platform.

Q. Do you have any face-to-face interaction?
A. Everything is done on the phone. It’s a very effective service model.

Q. What do you charge?
A. We have a tiered fee schedule. It’s typically 1% to 1.25% of assets under management.

Q. Do you plan to expand overseas?
A. We went into Germany last year, and we’ve been in the United Kingdom since 2000. We plan to go into more countries in Europe in 2009. You don’t make a killing right away. There’s a lot of struggling, but you’re planting seeds that will flower in 20 years.

E-mail Charles Paikert at [email protected].