So I went to a due diligence meeting

One of the mutual fund industry’s favorite perks for large asset gatherers is on-site “due diligence” meetings.  Here’s what this typically looks like:

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1) I get an email from the wholesaler at Next Big Thing mutual funds (NBT).

“Hi James,

Thanks for all of the business you guys have done in the NBT Super-Fund this year.  NBT is hosting a select group of advisors at a by-invitation-only due diligence meeting March 19-21 at the home office in Manhattan. We would love if you could join us for an intense two day study session of the current market environment, political events and NBT’s insights into where the best opportunities can be found in the coming year.  NBT will cover airfare and hotel for you and a guest for the conference.  We have rooms reserved at the Ritz Carlton Battery Park and day-trip excursions planned for your guest.

Space is limited so please let us know if you will be able to join us for this exciting event.


Tim Trusted Wholesaler
Vice President of Distribution

Next Big Thing Funds, Inc.

2) I, being offered a free trip to Manhattan where my wife can spend 2 days at the MET, take the trip.

3) In the guise of “due diligence” I sit through two days of presentations from NBT directors, managers and economists who dazzle me with their knowledge and insight and why they have a handle on what the markets will do next and how their funds are positioned for success. At night my wife tells me how amazing the MET is, and I wonder if I will ever get to see the inside.

For NBT, the goal of this meeting is not for me to conduct thorough due diligence.  It is a marketing bonanza, a circus in the truest form, a bedazzaling spectacle of all that is great about NBT. It is an opportunity for NBT to tell me why THEIR Ph.D.s and CFAs are smarter and have better information than everybody else’s Ph.D.s and CFAs.NBT hopes that I will leave the meeting convinced that they and they alone employ brilliant economists, fund managers, analysts and technicians, and as a result I will recommend their product to my clients.

4) I come home and tell my clients I attended a due diligence meeting on NBT funds and they all breathe a sigh of relief that I am “monitoring” their investments. My discomfort with the charade grows slightly once more.

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