The worldwide recession will cause financial markets to fluctuate for at least five years, according to a panel of investment experts who traded ideas at a March 2 alumni gathering.
Investors will rely more than ever on savvy wealth management to protect their assets, said speakers at “The Demands of Expertise in Investing in Challenging Times.”
“The condition in which everything is always going up, that’s not going to happen again anytime soon,” said Gabriel Burstein, Ph.D., global head of investment research at Thomson Reuters.
The invitation-only event was hosted by Fordham University Trustee Robert Daleo (CBA ’72), executive vice president and chief financial officer of Thomson Reuters, at the corporation’s Times Square headquarters. On hand to listen and learn from the panelists were roughly 50 alumni of the College of Business Administration at Fordham and other guests.
The conversation, which featured speakers from Thomson Reuters and the Chartered Financial Analyst (CFA) Institute, focused on the future of global finance and changes wrought by the worldwide economic crisis. All agreed that financial growth will be slow in coming, and will be predicated on the actions of governments and willingness of investors to accept risk.
“Given the state of the world economies, the solution will have to involve some combination of cutting spending and increasing taxes,” said Stanley G. Lee, senior vice president of Newberger Berman. “That hasn’t been factored into the market right now, but when it comes, it will cause some pretty major shocks.”
Steven Wilson (CBA ’89, GBA ’91), adjunct business professor at Fordham, said he is consistently surprised at how disconnected people are from their retirement accounts. Many have no knowledge of their asset allocations, while those who do don’t know how to manage their funds.
“Two years ago, some people who were near retirement lost 40 percent of their value,” he said. “There’s no way you should tolerate that kind of risk at that age.”
Panelists differed on how the crisis has changed investors and financiers, with some believing that the recent turmoil will be a watershed event.
|CBA Dean Donna Rapaccioli told guests about Fordham’s plans to renovate Hughes Hall.
Photo by Chris Taggart
“There have been several bubbles and bursts, but I don’t think that people have observed major institutions go out of existence,” said Eric Jones, global head of product management and strategy at Thomson Reuters. “People know now that risk really means that you could lose everything.”
Others argued that human nature and the emergence of new financial leaders will continue the cycle of financial bubbles and bursts.
“People will go right back to doing what they did before unless they learn new habits. Greed has not changed. Ignoring the fundamentals has not changed,” said Patricia Doran Walters, Ph.D., clinical associate professor of accounting at Fordham.
“The crisis hasn’t affected my day-to-day life very much, nor has it for many of my students,” she said. “Part of the problem is that most of the people who are going to be the financial leaders of tomorrow haven’t been affected.”
The biggest change in global finance, the panel agreed, will be a shift in leadership from the economies of Western Europe and the United States to India and China.
“We’ve seen growth markets decouple from established Western economies,” said Stephen J. McGuinness (CBA ’82, GBA ’91), co-chief operating officer of the investment management division at Goldman Sachs.
“It’s hard to understand these places unless you go there,” McGuinness said. “Seeing the drive and efficiency of the people in Southeast Asia and India—you’re really bowled over. To the people in Western Europe, you have to say, ‘Folks, wake up here. The rest of the world is coming.'”
Supporting McGuinness’ assertion about emerging Asian dominance, Thomas R. Robinson, Ph.D., managing director of the CFA Institute’s educational division, said that the organization’s fastest-growing area is Asia, including India. He pointed out that while attrition in the institute’s training program hovers around 30 percent worldwide, in India it stands at less than 9 percent.
The CFA Institute, a global association of investment professionals, is a program partner of the College of Business Administration.
“CBA is the only undergraduate school of business in the tri-state area to receive that distinction,” Daleo said.
After the discussion, Donna Rapaccioli, dean of CBA and the Fordham business faculty, extolled the virtues of CBA’s partnership with the CFA Institute and presented her vision for the future of the college. The coming years will include the transformation of Hughes Hall into a new home for undergraduate business.
For more information about the Hughes Hall Renovation, please click here.