The Big Three U.S. auto workers went on strike in September. Labor and management couldn’t come to an agreement about how to split the proceeds from producing automobiles. This is such a pivotal economic and political issue that the two leading presidential candidates visited Detroit within a day of each other. The struggle between auto labor and management is as old as Henry Ford’s assembly line.
When Henry Ford built that first assembly line, productivity skyrocketed. By breaking down the manufacturing process into small, repeatable tasks — with workers specializing in specific roles and management overseeing operations — the production of automobiles increased substantially. But there was a downside — things got more complicated.
Before the Industrial Revolution, coordination within a business was easy. A cobbler had one goal when making shoes: meet customers’ needs + limit costs = maximal profit. Within the shop, one person was the owner, operator, and labor. Simple.
Along with the efficiency gains of the assembly line comes the subdivision of tasks — different manufacturing jobs, oversight of the plant, and ownership of the company. While everyone still wants a profitable and viable company, now each party also wants to make sure they capture their fair share of the profit from producing the cars (and everyone has a different understanding of “fair”). Getting everyone rowing in the same direction is more difficult.
The investment industry today faces some of the same issues as the auto industry. As specialized roles were created (e.g. financial advisors and investment managers), coordinating to meet the client’s goals became more complicated. When we were setting up City Different Investments, we gave a lot of thought to aligning interests, getting everyone focused on the same goal – improving long-term financial outcomes for clients.
This goal shaped our firm’s structure and how we operate in three primary ways. First, from an investing standpoint, we focus on a long-term horizon by matching the duration of our clients’ investment goals. Second, all the employees within the firm are owners, linking our success to the success of our client. Lastly, for our clients, we emphasize transparency and accessibility. Financial markets can be volatile, but open communication with our clients helps them sail through the short-term volatility to meet their long-term financial goals.
Economic specialization can be linked to much of the progress in human history. While this advancement has been amazing, it would be foolish to ignore the associated side effects. It is only by addressing these complications that we can achieve optimal outcomes, together.
IMPORTANT DISCLOSURES
The views and opinions expressed by individuals are their own and not the views or opinions of their employer. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. No discussion or information contained herein serves as the provision of, or as a substitute for, personalized investment advice. To the extent that a reader has any questions regarding the applicability above to his/her individual situation of any specific issue discussed, he/she is encouraged to consult with the professional advisor of his/her choosing. City Different Investments is neither a law firm nor a certified public accounting firm and no portion of this content should be construed as legal, tax, or accounting advice.