E change For Friends
of the
Tippie College
of
Business Department
of
Finance
Summer 2016
We’re number 1!
Exchange is an annual publication for alumni and friends of the Department of Finance, Tippie College of Business, and the University of Iowa. Department Executive Officer Erik Lie erik-lie@uiowa.edu Editor Misti Huedepohl misti-huedepohl@uiowa.edu Design Benson & Hepker Design Contributing Writers Art Durnev Lesanne Fliehler Misti Huedepohl Tom Snee Ashish Tiwari Contributing Photographers Anders Bjerkness Jonathan Chapman Photography Misti Huedepohl Impact Photo/Joe Photo Executive Director of Development Greg Lamb gregory-lamb@uiowa.edu Contact Us Your feedback is always welcome. Direct correspondence to: Misti Huedepohl Editor, Exchange 108 Pappajohn Business Building, S208 PBB University of Iowa Iowa City, IA 52242-1994 Phone: 319-335-1554 misti-huedepohl@uiowa.edu Address Changes Email: alumni-records@uiowa.edu U.S. Mail: Alumni Records, UI Alumni Association, 100 Levitt Center for University Advancement University of Iowa, Iowa City, IA 52242-1797 The University of Iowa prohibits discrimination in employment, educational programs, and activities on the basis of race, creed, color, religion, national origin, age, sex, pregnancy, disability, genetic information, status as a U.S. veteran, service in the U.S. military, sexual orientation, gender identity, associational preferences, or any other classification that deprives the person of consideration as an individual. The university also affirms its commitment to providing equal opportunities and equal access to university facilities. For additional information on nondiscrimination policies, contact the Director, Office of Equal Opportunity and Diversity, University of Iowa, 202 Jessup Hall, Iowa City, IA, 52242-1316, 319-335-0705 (voice), 319-335-0697 (TDD), diversity@uiowa.edu.
Inside this issue of Exchange
Amrita Nain dives T
he realm of finance is like a body of water; one moment it is turbulent and choppy, and at other times it resembles the smoothness of glass. It’s no wonder Amrita Nain, assistant professor, enjoys her work as a finance researcher, because she’s accustomed to navigating complex financial issues and she’s spent plenty of time in literal rough waters. “Exploring finance in the United States, the most capitalistic society in the world, is really interesting,” she says. “Free markets create incentives that are needed for growth, but also create disparity like that which you find in any profit models.” “I find those tradeoffs fascinating.” Amrita studied economics at the University of Delhi and completed a Master of Science degree in finance and economics at the University of Warwick in London. She earned her Ph.D. in finance from the University of Michigan. “Finance is effectively applied economics. My field of interest is corporate finance, which examines how corporations, i.e. people running the corporations, make decisions in an attempt to maximize profits and shareholder value. There are so many trade-offs and factors at play that can create conflicts of interest.” Her research has included exploring the impact of mergers and acquisitions on product pricing and how that affects customers who purchase products from merging companies. Her paper, “The Product Market Impact of
Departments Finance News Alumni News
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into decision-making research Minority Stake Acquisitions,” with co-author, Yan Wang, was recently accepted for publication at a quality journal. Details are forthcoming. This paper is the result of four years of intensive work. Working as a researcher requires professional endurance and stamina, concepts Amrita is very familiar with. While teaching a class in the Executive MBA Program, she was first asked by a student to join a triathlon team as the swimmer. In the 2013 Hy-Vee Triathlon in Des Moines, the student, Shane Morris, EMBA12, biked 40k, another teammate ran 10k, and Amrita swam 1.5k in open water. “The runner, Ryan Harms, was outstanding. He is the husband of another Tippie EMBA graduate, Brea Harms, EMBA12. Shane Morris, who was the driving force behind the team, also biked a super fast 40k. And then there was me.” The team placed 11th out of 137 teams and had the opportunity to advance to a higher level of triathlon competition. “I really don’t swim for competition. I do it because its healthy and I love being in the water.”
Amrita has also participated in Chicago’s Big Shoulders 2.5k swim where swimmers face the ruthless conditions of Lake Michigan. Amrita generally trains in the Campus Recreation and Wellness Center’s 50-meter pool about three times a week and logs 3,000 meters per session. “I’ve also had a good experience taking part in the iCOWS,” (Iowa City Open Water Swimmers group). Although some admirable iCOWS members eagerly slip into the water at Lake MacBride, near Solon, at temperatures below 50 degrees, Amrita’s coldest iCOWs swim was in 59 degree water. This open water helps her body adjust to real-life conditions and temperatures that a swimming pool simply can’t replicate. “I find the distance not to be a problem because I can train and prepare myself for the distance; however, the open water conditions can sometimes be more difficult to overcome.” Amrita’s future research plans include considering health policy complexities with the goal of providing more transparency to a multifaceted topic.
“Free markets create incentives that are needed for growth, but also create disparity like that which you find in any profit models.” Features World Ranking Mutual Funds Research Get Flipped New World Diversity
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tippie college of business
Department of finance News
Ph.D. Program Update
A Art Durnev
s we are heading toward the end of another great academic year for the Tippie Finance Ph.D. Program, I would like to share with you our successes. I greatly enjoyed serving my first year as Ph.D. director. The program’s mission is to recruit and train a select group of students for careers as innovative researchers and teachers at leading academic institutions around the world. Currently, the department ranks among the leading finance groups in the world, in terms of both research and teaching. According to the University of Texas Dallas Research Ranking (based on faculty publications in the top three finance journals during 2011-2015), the department is ranked number 40 in the U.S. According to the Financial Times ranking, the department’s MBA offerings are ranked number one in the world. The quality of a Ph.D. program in finance is determined by the quality of academic placement of its students, and this department has a long history of producing successful scholars. During the last five years (2011-2015), the academic placement of our students was generally better or at least at par with other Big Ten Ph.D. programs in finance. We are proud that many of our students subsequently receive tenure at leading universities in North America and worldwide. I am excited about the current state of our Ph.D. program. First and foremost, Jin Sook got an academic tenure-track job at Canisius College where she will be an assistant professor in the fall. We congratulate her for this achievement. This year we accepted two new students into the doctoral program. Scott Thelen is joining us from the University of Missouri, and Mosab Hammoudeh is coming to Iowa from the University of TexasArlington. All of our third-year students have successfully passed their finance Ph.D. comprehensive exams: Keyang Yang, Jie Ying, Chris Penny, and Bo Meng. In addition, Dennis Hamilton passed his Graduate Minor in Statistics for Non-Majors exam. Ke Shen and Colin Swaney are two strong students entering the job market in the fall. They are busy polishing up their papers and preparing for the challenges of an academic search. They will need our full support. The Department of Finance allocated some funds to help them with expenses. We had several students who have already experienced the joy of academic publication. Chris Penny published a paper in PS: Political Science & Politics (with Joyce Berg and Thomas Rietz from Tippie). Jue Wang published a paper (with David Ong from Peking University-HSBC Business School) in a top economics journal, Journal of Economic Behavior & Organization. A few other students had their papers submitted and accepted for prestigious academic conferences: Steven Irlbeck is waiting for good news from American Risk and Insurance Association, Ke Shen’s paper is accepted for a Conference on Professional Asset Management in Rotterdam, Netherland; the China International Conference in Finance in Xiamen; and the FMA in Las Vegas. Colin Swaney will be presenting at Applied Finance in Chicago. Jie Ying produced a very interesting paper on shadow banking and won $1,000 as a part of the 2015 Best Summer Paper award from the Tippie Department of Finance. In addition to their research drive, some of our students are classroom superstars. Chris Penny was nominated for both the best overall Ph.D. student teaching assistant and the professional promise Ph.D. student teaching assistant award from the college. Chris’ favorite quote about teaching is from William Arthur Ward, who said, “The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires.” We have a wonderful batch of Ph.D. students (the full list along with their research interests is to the right) and we wish them continued academic success! Go Hawks!
—Art Durnev, Associate Professor and Director, Ph.D. Program in Finance Henry B. Tippie Research Fellow
Gordon Adams Risk Manager in Residence Through a grant from the Spencer Education Foundation, we welcomed Gordon Adams as a risk manager in residence in March. He held several faculty discussions, met with students and delivered class presentations. He also traveled to the Quad Cities to present at the Property and Liability course where he was joined by Greater Quad Cities IMS members.
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Retirements Ph.D. Placements Among the 14 students who graduated from 2011–2015, six were placed as tenure-track assistant professors in researchintensive universities in North America (University of Arizona, University of Missouri, University of Saskatchewan, Fordham University, University of Alabama, University of Texas-El Paso); four students were placed as tenure-track assistant professors in researchintensive universities outside North America (two students to Bilkent University in Turkey, City University of Hong Kong in Hong Kong, Higher School of Economics in Russia); two students were placed as visiting assistant professors (Tulane University, University of Alabama); and two students took on prestigious industry employments (State Street Advisors and Promontory Financial Group).
Ph.D. Candidates Prerna Agarwal: corporate finance Dennis Hamilton: real estate Steven Irlbeck: asset pricing Jin Sook Lee: empirical corporate finance Eric McKee: politics and finance Bo Meng: corporate finance Christopher Penny: capital structure Ke Shen: mutual fund performance Colin Swaney: market microstructure
Gerry Suchanek Gerry Suchanek, associate professor of finance, retired from the department this year. He received an M.S. degree in mathematics and a Ph.D. in economics from Northwestern University, both in 1977. Gerry joined the department in 1987, becoming a tenured professor in 1989. His expertise and research focused on financial economic theory, derivative security evaluation and financial institution management, and fixed income securities. Gerry primarily taught Commercial Banking and Fixed Income Securities courses for the department. He served as a referee for the Journal of Economics Dynamics & Control and the National Science Foundation. He was a member of the American Finance Association, American Economic Association, and the American Mathematical Society. During his time at Iowa, he was on military leave in 1991, serving in Operation Desert Storm and Operation Provide Comfort (Saudia Arabia, Kuwait, Iraq); in 1993, participating in the Vann-Owen Peace Plan (Ft. Bragg, North Carolina); and from 1995-96, participating in the Operation Joint Endeavor (Bosnia-Herzegovina). We thank him for his service both to our country and our college.
Gerry Suchanek
John Gallo John Gallo, lecturer, retired from the Department of Finance. He received a doctoral degree in finance and MBA both from the University of Texas, Arlington. He also holds the Chartered Financial Analyst and Certified Risk Professional designations. He joined the department as a visiting professor in 2008 and his expertise is primarily real estate. While at the Tippie College of Business, John taught courses in real estate, wealth management, portfolio management, managerial finance, security analysis, and futures and options. He also was an assistant professor at University of Nevada and University of Texas from 1994 to 2008. His professional finance experience includes work at North Taxes Asset Management where he was president; Snider-Lund Management where he was vice president; and Eppler, Guerin and Turner where he was pension consultant. As an undergraduate student at the University of Iowa, he worked at Hancher as a concert promoter and eventually became road stage manager for the Eagles. He worked in the rock-and-roll industry for 10 years with other recognizable acts including Bruce Springsteen, Jimmy Buffet, and Ray Davies.
John Gallo
Jue Wang: mergers and acquisitions
Undergrad Receives $5,000 Scholarship
Keyang Yang: corporate board structure
Jon Langel, a finance and economics major from West Des Moines, received the 2016 John T. Lockton Memorial Scholarship from the Spencer Educational Foundation. He is one of 64 students entering the risk management and insurance (RMI) industry to receive one of the $5,000 scholarships. In addition, Langel, who is studying to receive the RMI Certificate, received an Anita Benedetti Scholarship to attend the RIMS conference in April.
Jie Ying: asset pricing
Gordon is a senior member of the Servco Pacific risk management group and is serving a fourth term as director on the RIMS Board of Directors. He has been a guest lecturer at the Center for Insurance Studies at Cal-State Fullerton University. Special thanks to the Vaughan Institute’s 10-year celebration sponsors: Principal Financial Group, Grinnell Mutual Reinsurance, United Fire Group, Nationwide, Greater Quad Cities Chapter of RIMS, the Dana Company, The IMT Group, and NCMIC/Professional Solutions. Summer 2016 | Exchange | 3
tippie college of business
Department of finance News
Emmett J. Vaughan Institute of Risk Managemen The Vaughan Institute is a stellar example of how academia and industry can forge a partnership to provide vital education and relevant experience for tomorrow’s risk management and insurance workforce.
It’s
been 10 years since the institute began offering courses leading to a Certificate in Risk Management and Insurance. During its relatively short existence, the institute has realized great success:
• Student Achievement: The first Certificate of Risk Management and Insurance was awarded in 2006. Since that time, 293 graduates have earned the RMI certificate. • Student Organization: By utilizing the valuable resources of Gamma Iota Sigma, students establish a strong network and distinguish themselves as young risk management and insurance professionals. • Student/Industry Mentoring Program: Developed with support from the Greater Quad Cities Risk and Insurance Management Society (RIMS), the RMI Industry Mentors Program links students with industry professionals to nurture the next generation of RMI leaders. • Vaughan Institute Advisory Board and Young Alumni Board: The RMI industry-related leadership provided by these boards has helped the institute establish strong ties with its students, faculty, staff, and alumni. Their guidance has been instrumental in keeping the RMI program current and relevant.
10-YEAR ANNIVERSARY
In the Classroom The institute’s highly qualified and dedicated faculty members blend academic content with practical experiences, which help illustrate the realities of the risk management and insurance world. Through their work and research, they stay abreast of current topics and share this knowledge with students. This ensures that potential employees in insurance and risk management are well educated, informed, and prepared. RMI students can focus on a specific career path through exposure to diverse topics, including: • principles of risk management and insurance, • risk modeling, • corporate and financial risk management, • finance, • property and casualty insurance, • life and health insurance, and • employee benefits. “In this dynamic industry, my goal is to enable students to take abstract concepts and apply them in real-life work situations,” says lecturer Phil Brooks. “Through team teaching and learning, we equip them with the problem-solving skills they will need throughout their careers.” Two new faculty members joined the institute last fall: Thomas R. Berry-Stöelzle, associate professor of finance, came to the college from the University of Georgia Terry College of Business. He
The Institute’s highly qualified and dedicated faculty members blend academic content with practical experiences, which help illustrate the realities of the risk management and insurance world. 4 | Exchange | Summer 2016
nt and Insurance: A Successful 10 Years
Thomas Berry-Stöelzle
Richard Peter
Dana Ramundt
Larry Hershberger
received a Ph.D. in business administration in 2007 from the University of Cologne in Germany. He is the associate editor of the Journal of Insurance Issues. Berry-Stöelzle will become the institute’s faculty director in July. Richard Peter, an assistant professor of finance, was a junior professor at the LudwigMaximilians-Universitat (LMU) in Munich, Germany, before coming to the college. He received a Dr. oec.publ., from the LMU in 2013. His research interests are the microeconomic theory of insurance, risk reduction, and health economics. He serves as a reviewer for several journals, including the Journal of Risk and Insurance, Journal of Insurance Issues and the European Journal of Health Economics. Dana Ramundt, president of The Dana Co. insurance agency in Des Moines, has been named the business director of the Vaughan Institute of Risk Management and Insurance. Ramundt, BBA74, is a member of the Iowa Insurance Hall of Fame and is a longtime member of the institute’s board. He replaces Larry Hershberger, who is retiring as the Vaughan Institute director in July.
Outside the Classroom A key component of the Vaughan Institute is the career and academic advising offered to students in the RMI certificate program. Students have a dedicated staff member who helps them explore the course requirements and the many career paths available to them. The institute offers scholarships, internships, and a resource center for RMI students. There are numerous opportunities to network with industry leaders and hear special speakers through both the institute and its affiliated student organization Gamma Iota Sigma (GIS). Chartered in 2007, the GIS student organization has received national awards for its membership development, alumni relations, and public relations activities. In the Tippie College, it has received several awards, including Speaker Series of the Year, Program of the Year, and Outstanding Service to the Community for a project that helped a nonprofit organization identify and navigate risks. The Mentoring Program brings industry professionals together with current students for informal career coaching and professional development activities.
A Little History Early supporters of the institute included the Independent Insurance Agents of Iowa (IIAI) and four of its member agencies—TrueNorth Companies of Cedar Rapids; United Fire Group; A.W. Welt Ambrisco Insurance Inc. of Iowa City; and The Dana Company, headed by Dana Ramundt (BBA74), of West Des Moines. Des Moines-based Allied Insurance (a Nationwide company) provided a lead gift and generous contributions followed from many more donors in the ensuing years. Dr. Emmett Vaughan directed the college’s efforts in insurance education beginning in 1963. His leadership was instrumental in helping the university earn a distinguished reputation in the field of insurance education and in the establishment of the institute. Following his death in 2004, the institute was aptly named in his honor. Larry Hershberger (BBA66) has served as director of the institute since its inception and is retiring from the department in July. We extend great appreciation to Larry for his leadership and expertise in making the last ten years a tremendous success. Prior to joining the college, Larry retired as senior vice president, Group Insurances Services Division, of TIAA-CREF before joining the institute in 2003 to help raise funds and implement the program. His expertise includes employee benefits, pensions, 403(b) and 401(k) plans, and risk management.
Celebrating all that’s been accomplished and what is yet to come for the Vaughan Institute. Pictured are Thomas Berry-Stöelzle, Scott Fisher, Larry Hershberger, Viana Rockel, Bob Fulwider, Phil Brooks, and Richard Peter.
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tippie college of business
Department of finance News
Zaharis Receives Hawk of the Year Award
C
athy Zaharis, director of professional/employer development in the Undergraduate Finance Program at Tippie, received the 2015 Hawk of the Year Award, presented annually by the National I-Club to an individual or couple who has exhibited an exceptional level of loyalty, enthusiasm, and generosity to Iowa athletics. Cathy has been a longtime supporter of the University of Iowa and Hawkeye athletics, serving as a member of the National I-Club Board, UI Foundation Board of Directors, the Vice Chair of the University of Iowa Medical Center Council, and member of the Presidential Committee on Athletics. The National I-Club has dozens of local I-Club chapters, which form a strong presence within their communities to gather Hawkeyes together and to serve as a united voice of support for Iowa athletics across the state and beyond. Each year the National I-Club presents a slate of awards to a special few of the many outstanding contributors and volunteers. She was recognized on the Kinnick Stadium field at halftime of the Iowa vs. Purdue football game last November.
“I have been a Hawk all my life. I appreciate the culture of ‘win, graduate, and do it right’ at Iowa. In this world of win at all costs, I am delighted to represent this institution.” Cathy Zaharis, BBA82
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Fishkin Joins Finance Academy as Director Last fall, Charles Fishkin joined the Tippie College as business director of the Finance Academy in the Full-time MBA Program. After receiving a B.A. in economics from the University of Chicago in 1982, he spent over 30 years working across the finance industry spectrum, holding leadership positions in global financial services firms in New York and Boston. From 2002 to 2004, he served as the first head of risk management for the U.S. Securities and Exchange Commission in Washington, D.C., where he was the director of the Office of Risk Assessment. While at the SEC, he finished writing a book on risk management entitled The Shape of Risk (Palgrave Macmillan, 2006). In the last four years, he served as an adjunct faculty in the master’s program in financial engineering at Baruch College of the City University of New York. Charles’s father completed a doctoral degree in biochemistry from the University of Iowa in 1957 and his mother was an undergraduate in speech pathology and a student of Wendell Johnson. Among other family members with ties to the university, his younger brother, James, holds both undergraduate and law degrees from UI. He was born in New Orleans, La., and subsequently spent most of his youth in Omaha, Neb., graduating from Central High School in 1978.
Achievement Award Isaac Oberlin was selected to receive the Alliant Energy/Erroll B. Davis Jr. Achievement Award. The award recognizes underrepresented minority students for leadership in on-campus and community organizations, academic success, and potential for future career success. Oberlin is a double major in finance and economics with a certificate in leadership studies and international business. The Wheaton, Ill. native has demonstrated academic success throughout his career at the University of Iowa. He has been recognized on the Dean’s List, received several scholarships, and is a member of the University of Iowa’s Honors Program.
After Hours: Don’t be surprised to see Tom Rietz (second from right), professor and faculty director, MBA Finance Career Academy and Soumyo Sarkar Professor, entertaining on stage in Iowa City. From time to time, he and fellow Tippie professor Tom Gruca (far left) of the Department of Marketing jam with a rock band called Chaotix. Other band members include Lucy Sharp, Alan Reed, Antonio Sanchez, Isaac Samuel, and Mike Hooley.
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The View
from the Top
T
he Financial Times named the Tippie Full-time MBA Program as the best in the world for finance. The London-based financial journal ranked Tippie College of Business over No. 2 Columbia Business School and No. 3 Warton School of Business at the University of Pennsylvania for its two-year, Full-time MBA Program tracks in finance. The ranking is based on the 2012 graduates’ ratings of their programs. For the UI program, the employment rate at three months after graduation is No. 2 in the world and No. 1 in the U.S, according to the ranking. The overall program ranks No. 45 nationally and No. 93 globally. “The ranking will mean additional eyes will be on the program in terms of prospective students considering whether to enroll,” said David Frasier, associate dean for MBA programs at UI. “When you look at the top five, we are by far the smallest program. So we take more of a boutique niche.” The Full-time MBA Program includes about 118 students, with 50 students enrolled in one of the two finance tracks. “Since 2008, the MBA finance program has been structured as a focused academy with two tracks: corporate finance and investments,” explains Tom Rietz, Professor and Faculty Director, MBA Finance Career Academy. Each track gives students specific coursework and experiential learning opportunities to develop the skills they need in their future careers. In addition, students receive individualized career coaching and placement. He says alumni surveys, such as the Financial Times, show how much the students value their education as they develop in their careers. While rankings don’t provide a complete picture for any MBA program, the Tippie College of Business is proud to be one of the world’s top MBA programs.
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Summer 2016 | Exchange | 9
Some mutual funds aren’t so
mutually b
M by Tom Snee
utual-fund investors are losing hundreds of millions of dollars in annual returns because of a potential conflict of interest in their fund’s management they probably don’t even know about, according to a newly published paper by a University of Iowa researcher. A study by Ashish Tiwari, associate professor of finance and Henry B. Tippie Research Fellow in Finance, found funds with advisors who engage in cross trading of securities could cost investors as much as 1 percent per year in underperformance. Cross trading refers to transactions between a fund advisor and other funds managed by the same advisor or transactions between the advisor’s client funds and an affiliated broker. Though legal, advisors and brokerage houses can benefit financially from the transaction, posing serious conflicts of interest. “Cross trading is legitimate if it’s in the best interest of the investor and follows SEC regulations relating to consent and disclosure,” says Tiwari. “But it could also lead to situations where the advisors violate their fiduciary duty to the client.” Tiwari says cross trading in some cases can save investors large sums of money by avoiding brokerage or other transaction costs. But conflicts of interest abound. For instance, the fund advisor could favor one of its client funds over another or generate excessive fees through portfolio churning. Tiwari and his co-author, Lorenzo Casavecchia, of the University of Technology in Sydney, Australia, looked at the performance of 1,636 actively managed U.S. mutual funds that were linked to 560 investment advisors between 1995 and 2007. Based on information contained in advisor filings with the SEC, they gave each advisor a conflictof-interest score that reflected the degree to which an advisor was subject to a conflict of interest related to cross trading of securities. They found a link between increased cross trading-related conflicts of interest and decreased fund performance. Those funds managed by advisors with the highest cross trading-related conflicts of interest saw their benchmark-adjusted performance dragged
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down by about 1 percent per year compared to funds managed by advisors with fewer cross trading-related conflicts of interest. On top of that, the study found the advisors’ affiliated brokerage houses earn significantly higher commissions for executing cross transactions, which was a major reason for the funds’ underperformance. Tiwari points out that with more than $4 trillion invested in actively-managed U.S. stock mutual funds, that amounts to hundreds of millions of investor dollars funneled to advisors and brokerages that investors probably don’t even know they’re losing. Among the potential factors for a conflict of interest that seemed to most affect a fund’s performance: a larger number of employees on the advisor’s staff who are registered representatives of brokerdealers, a higher value of assets subject to the discretionary trading authority of the
beneficial “If a fund has performed well in the past, people will invest in it, even though it’s been established that performance chasing is a poor investment strategy.” Ashish Tiwari, Associate Professor of Finance and Henry B. Tippie Research Fellow in Finance
advisor, and a larger number of clients managed by the advisor. Tiwari says the results suggest that the opportunity to generate revenues through affiliated broker-dealer operations provides powerful incentives for advisors to execute cross trades. Tiwari says his research found only that performance is dragged down by potential cross trading-related conflicts, and he found no direct evidence of legal violations. Tiwari says investors are either unaware of the cross trading-related potential conflicts of interest or don’t care because the amount of money that was invested in potentially conflicted funds was no different than what flowed into other funds. “Investors chase performance and ignore potential conflicts of interest or other past bad actions by the advisors,” says Tiwari. “If a fund has performed well in the past, people will invest in it, even though it’s been
established that performance chasing is a poor investment strategy.” The study’s findings are timely in view of the recent regulatory focus on conflicts of interest that often plague the investment advisory business. In April 2016 the U.S. Department of Labor released its final Conflict of Interest Rule that requires certain investment advisors to conform to a fiduciary standard by putting their clients’ best interest ahead of their own profits. The fiduciary standard would apply to any individual receiving compensation for providing advice to a particular retirement plan sponsor, plan participant, or individual retirement account (IRA) owner. Tiwari noted that until now, only financial professionals and firms registered as investment advisors with the Securities and Exchange Commission (or individual states) were subject to the fiduciary standard. Other professionals including brokerdealers and insurance agents were subject to a “suitability standard.” This meant they only needed to ensure that their investment recommendations were suitable for their clients but not necessarily the best or the lowest cost option. Under the new rule, which is scheduled to go into effect in April 2017, all financial professionals offering investment advice for retirement accounts, including 401(k)s and IRAs, must adhere to the fiduciary standard. Among other things, this would require them to determine whether fees on the products they recommend are reasonable, if the investments are adequately diversified, and to verify and disclose any conflicts of interest. According to Tiwari, the new rule should be particularly beneficial for the more than 40 million American families with individual retirement accounts who were especially vulnerable to bad advice regarding rollovers of retirement assets from 401(k) accounts to IRAs. Tiwari’s paper, “Cross Trading by Investment Advisors: Implications for Mutual Fund Performance,” was published in the January 2016 issue of the Journal of Financial Intermediation. Summer 2016 | Exchange | 11
Get Flipped in Finance
MBA student Stuart Hemesath assists undergraduate students with a group assignment in Jon Garfinkel’s flipped classroom. Hemesath graduated in May 2016 and will return to Dimensional Fund Advisors in Austin, Texas, where he held a summer internship the previous year.
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“This helps students learn better because I’m available to answer questions and assist them as they execute principles they’ve learned from lectures and the materials they’ve viewed on their own time.” Jon Garfinkel
C
lassroom delivery is morphing at the Tippie College of Business. Sure, some instructors still lecture during class time and expect students to read material and complete homework outside of class. But others like Jon Garfinkel are taking a different approach by turning classroom instruction 180 degrees. It’s called “flip.” In Garfinkel’s flipped classroom, students are required to view mp4 video lectures he prepares in advance, accessible only on a university server, complemented by PowerPoint slides, and a required online quiz made available until 4 a.m. on class day. Class time is used for work in groups and to complete real-world-oriented assignments due at the end of the class period. “This helps students learn better because I’m available to answer questions and assist them as they execute principles they’ve learned from lectures and the materials they’ve viewed on their own time,” says Garfinkel. Garfinkel says this teaching approach has been around more than a decade, but he has implemented it for over five years in the Executive MBA Program in classes of approximately 40 students. Last fall, Garfinkel decided to take this pedagogy to the next level. He took on the challenge of flipping an undergraduate Financial Management course of nearly 500 students, divided into two sections. “Flipping a class of this size requires a significant amount of work up front, like recording the lectures, preparing the slides and the student materials,” he says. It also required Garfinkel to recruit and build an army of assistants. “It is impossible for one instructor to assist 50 student groups working through challenging financial exercises in a 75-minute session, so I acquired the help of several experienced students to also work in the classroom to answer questions and provide necessary guidance.” At times, Garfinkel enlisted up to 12 assistants to help students. John Sheeley, originally from Fort Myers, Fla., is majoring in finance and seeking a
certificate in entrepreneurial management. He joined Garfinkel’s legion of teaching assistants. “Like many undergraduates, I struggled at first with finance complexities in this introductory course. So I was able to break things down from an undergraduate’s perspective, and I think that was helpful to students who were struggling,” says Sheeley. Sheeley originally experienced the course in a traditional teaching style, and now he’s witnessed it using both techniques. He recognizes the benefits a flipped classroom can offer. “Flipping allows students to focus on the course materials whenever it fits their schedule and replay areas of the lecture they missed,” says Sheeley. “It also encourages interaction with the professor, or TAs, in the classroom.” Garfinkel perceives one of the biggest benefits to be the multiple learning approaches afforded to students through flipping. “Different students learn in different ways. More traditional lecture-consumption learning is offered through the recordings. More active learning-by-doing and personalinteraction type learning occurs in the classroom, within the groups,” he says. He plans to continue to flip in his future teaching. “This has been a revelation for me. I find that student learning outcomes are much better than they were when I taught in a more traditional lecture-in-front-of-the-class format. No matter what I teach in the future, I really don’t think I will ever teach another way than I do now.” Garfinkel says he likes to facilitate flipping to other faculty. “I always offer to make my materials available to other interested faculty. I think it helps remove the up-front costly barrier of creating the materials from scratch. And I hope this moves the department toward an educational model that more easily differentiates from the massive open online courses and other emerging free online learning,” he says. In the long run, Garfinkel believes this is an important step to maintain the value of a campus-based education.
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New discoveries. New world.
L
iana Tamakloe filled her luggage with the essentials for a two-year journey that would take her far away from Ghana to a new continent, a new culture, and a new beginning. “I knew that graduate school would be an opportunity to improve my skills and abilities and make myself more marketable. I decided on getting an MBA and I was seeking international exposure; I was ready to experience new things,” she says. She already had investment banking experience from an internship at Goldman Sachs International in London, but she was open to broadening her search for a graduate program that offered more opportunities. After carefully comparing one-year MBA programs in the U.K. and two-year programs in the U.S., she decided the latter would be more comprehensive and a better fit for her learning style. Her online searches consistently found the Tippie MBA, and after reviewing the website and reading reviews, she decided to apply. She interviewed virtually with Tippie, using Skype, through Tippie’s MBA One and Done rapid admission session. This consisted of a virtual meeting with a Tippie admissions representative and an accelerated admissions decision in less than one business day. Liana had already met the required GMAT score, and she was ready to make the journey to Iowa City sight unseen. In August 2014, she arrived in Iowa City and started to absorb the cultural nuances of life in Iowa. “At home in Ghana, I lived with my parents – especially as a single woman, you do not live alone there,” she says. “I did not have the experience of making daily decisions on my own.” Life in Iowa City brought Liana independence, but it also brought solitude. “In Ghana, we are very social people. There was always an event to go to and people to be with. But here, when I moved
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in, I didn’t have anyone to talk to when I returned home from school. I just had my class work to do, and that was it. That felt strange and unfamiliar at first.” There were cultural differences in the classroom, too. “In Ghana, young people, especially children, are generally seen and not heard. You grow up being cool, calm, and quiet, but in American culture, you are encouraged to be vocal, to let your opinion be known. That was quite a change for me to go from a reserved, quiet person to being vocal and engaging with others.” Classroom participation is a vital element in college-level courses in the U.S. and Tippie is no exception. “Instructors would say on the first day of the term, ‘I would like this to be an engaging session and I want you to share your opinions,’” she recalls. She says she found all Tippie professors open to hearing students’ opinions and that sometimes they called on her in class to get her input. Despite being proficient in speaking and reading English, language was also an early obstacle for Liana. “I needed to train my ear to the accent of Americans. I would attend class, but struggle to understand everything the instructor or my classmates really said, so I would go home and read my textbooks again for clarity. Once I became comfortable with the accent, everything was better.” She says it is one thing to understand American movies, and a very different experience learning in an American environment. Liana discovered her friends and classmates were also valuable resources. “I found that once you use this network and people around you, you can accomplish many things,” she says. Liana has also adapted to differences in teaching style. “Here, when you have a new concept,
“In Ghana, young people, especially children, are generally seen and not heard. You grow up being cool, calm, and quiet, but in American culture, you are encouraged to be vocal, to let your opinion be known. That was quite a change for me to go from a reserved, quiet person to being vocal and engaging with others.” Liana Tamakloe
you’re almost always required to apply it to a real or nearly real-life situation like Harvard Business Cases. In Ghana, you are required to know and to some degree reproduce the concepts in assignments and tests. Our way of thinking didn’t include the application. It’s been a nice paradigm shift for me to apply the knowledge.” She’s particularly fond of the Henry Fund, the Applied Securities Analysis course taught by Todd Houge where students manage a real portfolio of stocks by analyzing economic and industry data, valuing companies, and making real investment decisions. Liana was an equity research analyst for the consumer discretionary sector. She learned about U.S. industries and the stark differences in performance between the U.S. compared to the Ghanaian market. “The Henry Fund made me realize that a number of the economic fundamentals in the U.S. work differently than they do in Ghana. Things in Ghana just don’t work as smoothly as you’d expect. For example, in the U.S., interest rates were raised to move excess money into the economy to control inflation. In Ghana, these interest rate adjustments would not have much of an impact on the inflation, or not as much of an impact as you’d want it to.” She says the Henry Fund is an opportunity to learn creatively. “You have to become very innovative in time management to get things done just to meet the requirements of the class.” Overall, Liana has no regrets about choosing the Tippie MBA. Her younger brother is in undergraduate school in Ghana and she is already talking to him about his graduate school options in the U.S. Liana graduated from the Full-time MBA Program in May and she looks forward to finding employment in the U.S. in corporate finance, corporate treasury operations, or possibly investment banking. Summer 2016 | Exchange | 15
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DEVELOPING DIVERSITY Mark Buthman shares Kimberly-Clark model
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n February, the faculty and staff of the Tippie College of Business crowded into a fourth-floor colloquium in the Pappajohn Business Building for an allcollege meeting. Beginning her fourth year as dean of the college, Sarah Fisher Gardial addressed the packed room to discuss an important issue affecting everyone in the college. She was there to talk about diversity, and she started by sharing the college’s faculty employment data. Tippie employment reports from 1990 to 2010 indicate nearly three times more men are hired in assistant professorship roles than women, and conversely, more women assistant professors are leaving Tippie than men. About 15% more male faculty are promoted than female faculty. “This matters because a more diverse faculty not only broadens perspectives regarding teaching and research during a time of rapid change, it also supports the recruitment and retention of a more diverse student population,” said Gardial. Developing a more diverse student population is critical because Tippie’s corporate partners desire a more diverse pipeline to fill their future leadership ranks. Research increasingly concludes that increased diversity leads to better organizational decision making and performance. “Our college’s strategic plan specifically emphasizes our value for diverse and inclusive learning environments,” said Gardial. “To that end, we need to enhance our conversations and efforts regarding
the recruitment and retention of faculty, staff, and students.” To broaden the diversity conversation, Gardial invited representatives from KimberlyClark Corporation to share their experiences with diversity in the workplace. Mark Buthman, BBA82, retired last December, ending a 33-year career with Kimberly-Clark having served as chief financial officer for the final 12 years of his career. Sue Dodsworth, chief diversity officer at Kimberly-Clark, joined Buthman to share their perspectives on Kimberly-Clark’s journey to becoming a more diverse and inclusive organization. The Kimberly-Clark Corporation was established in 1870 in Neenah, Wis., by four men. Over 140 years, it grew to be a global company with over $18 billion in revenue and 45,000 employees, with operations in 67 countries and sales in nearly 150 countries around the world. One in four people worldwide uses a Kimberly-Clark product every day. “Kimberly-Clark has a remarkably strong heritage and track record of success, but as the world becomes more connected and the speed of business increases, the opportunity to solve problems and unlock innovation only happens when different points of view are at the table,” Buthman said. Dodsworth and Buthman talked about the hurdles KimberlyClark cleared to move forward with a diversity and inclusion plan that would not only ignite its business leaders to embrace diversity, but it would also positively impact the company’s bottom line. In 2010, a five-year people
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Diverse Options for Students The Tippie College of Business values diversity and inclusion. As we continue to build a welcoming environment, we strive to offer programming for all students to develop cultural competencies for success in diverse settings. Students interested in business and diversity issues, regardless of race or ethnicity are encouraged to participate in a variety of events and organizations at Tippie. Some of the opportunities we offer include: Black in Business week events (speakers, socials, etc.) Greater China Business Association International Buddies at Tippie Korean Business Association Multicultural Business Student Association Tippie Gateway Program Tippie Women’s Summit Women in Business Tippie Women’s MBA Leadership Program
strategy was initiated to create a greater demand for and improve the supply of diverse talent within the global Kimberly-Clark organization. A focus on accelerating the development and promotion of diverse talent was initiated while fostering a more inclusive work environment through employee engagement programs. “The overarching goal was to create an organization that looks, thinks, and behaves like the people who use Kimberly-Clark’s products,” Dodsworth said, “and it required us to evolve our culture to be successful.” As a result of this enterprise-wide effort, significant, measurable changes occurred, including, for example, more than doubling the number of diverse women represented at the director level and above. The company received the 2014 Catalyst Award for achieving proven results in recruiting, developing, and advancing the careers of women leaders. “Over my career, I came to value the opportunity that diversity presented,” Buthman said. “In fact, I believe it was a fundamental driver of our success as a company in both the marketplace and with our shareholders.” Gardial said, “The Kimberly-Clark experience helped us understand the impact of truly embracing diversity as an organizational priority. Through their story, our college is better able to understand the benefits that lie on the “other side” of a journey that is yet to come for our college.”
Retirement Plans In retirement, Buthman’s first priority is to spend more quality time with family and friends. He also is looking to invest his time in activities where he can have a positive impact with people and organizations he enjoys. One of those activities is as a member of the Tippie Advisory Board. “I am thrilled to be more engaged with the college. It’s the door I walked through that opened up so many possibilities and gave me the foundation I used through my career. I’m grateful for my time at the UI because it opened my eyes to my interests, the effort it takes to be successful, and what a career could be. The College of Business in particular helped me start to realize my potential, and over the years, I was fortunate to have bosses at K-C that often saw more potential in me than I saw in myself,” he said. Buthman is a member of two public company boards, West Pharmaceutical Services, where he chairs the Audit Committee, and he recently joined the board of IDEX Corporation. He also serves as vice chairman of the Board of Pavillon International, a drug and alcohol treatment program located in North Carolina. He also hopes to apply his leadership experience in new ways to help develop future leaders. “I want to provide coaching for finance leaders as they make the ‘turn’ to their first enterprise CFO role. That was the most challenging career move I ever made, and I believe that through coaching and mentoring it can be much easier—they can learn from all my mistakes!” “It’s inspiring to be part of cultivating success in others, and I see it every time I walk on campus.” The Tippie College appreciates Buthman’s willingness to share how his company’s focus on increasing diversity led to success. His perspective paired with focused recruiting efforts will help this college improve its diversity—for faculty, staff, and students. Mark Buthman
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tippie college of business
Department of finance alumni News
Alumni Updates Ryan Baue, BBA14, is a new member of the Tippie Young Alumni Board. Ryan is a fixed income research analyst at Northern Trust Asset Management in Chicago, Illinois. Jody L. Bennett, BBA87, is vice president of operations for the U/S Sports Advisors marketing agency in Indianapolis. Daniel Brown, BBA13, is an assurance senior associate with McGladrey LLP in Cedar Rapids, Iowa. He lives in North Liberty, Iowa. Gregory Buehner, BBA08, is executive vice president of asset management for Pi Kappa Phi Properties in Charlotte, North Carolina Kelsey (Tumey) Cochrane, MBA10, is the associate director of annual giving at the University of Denver. She and her husband, Jason, welcomed a son, Bennett Daniel Cochrane, on January 20, 2015. Max Crowley, BBA09, was one of the first 30 employees at Uber, helping launch the Chicago market. He moved to San Francisco to launch Uber for Business. Janis K. (Fairbank) Cummings, BBA84, is an accountant at Union Capital Mortgage in Mentor, Ohio. Ivan Deatsch, BBA68, is the chief financial officer of Bridgestone Tire in Edmond, Oklahoma. Luca Di Palo, MBA13, is the business development manager with Ferrero Hazelnut Company. He lives in Max Crowley Luxembourg. Kyle Engler, BBA15, is a consulting associate with McGladrey in Minneapolis. Linda Feiden, BBA83, is assistant director of wellness and engagement at Drake University in Des Moines, Iowa. Kevin Flaherty, BBA08, is a loan originator with Fairway Independent Mortgage Corp. in Chicago. Abhinav Gahoi, MBA11, is the manager of financial planning and analysis with Hayes Locums in Fort Lauderdale, Florida. Gia Gervase, BBA15, is an underwriting trainee with Chubb Insurance Corp. in Chicago. Julie Haverly, MBA15, is a senior business analyst with Renewable Energy Group Inc. in Ames, Iowa. Victoria Hernandez, BBA12, is a new member of the Tippie Young Alumni Board. She is a senior analyst at Abhinav Gahoi GrandView Analytics in Chicago, Illinois. Jenna Herr, BBA13, is a new member of the Tippie Young Alumni Board. She is a technical services specialist at City of Waukee Community & Economic Development in Waukee, Iowa. Alex Gillaspie, BBA09, is a client services manager with LearnVest in Scottsdale, Arizona. Joshua R. Hanson, BBA97, is a marketing consultant at the Stelter Company, which provides marketing and advertising assistance to nonprofit organizations in Des Moines, Iowa. Steven Hensley, BBA15, is an accounting rotational business associate with CNA Financial in Chicago. Cameron Johnson, BBA12, is a relationship manager with Wells Fargo Capital Finance in Santa Monica, California. He recently joined the industries group covering technology companies. Chris Kaskie, BBA73, inducted into the Iowa Rock ‘n’ Roll Music Association. He was a member of Inner Lite, a Marshalltown, Iowa, band. Ryan A. Klatt, BBA14, is a financial advisor with Edward Jones in Downers Grove, Illinois. Stephanie (Andersen) Knox, BBA05, MBA10, is a senior demand planner with ConAgra Foods. She lives in Chicago. Katherine Knight, BBA13, is a new member of the Tippie Young Alumni Board. She is leadership and community engagement graduate assistant at Northwestern University in Evanston, Illinois.
Kelsey (Tumey) Cochrane
Send Us Your News We want to hear from you. It’s easy to update your information at tippie.uiowa.edu/alumni/update. Join Us on LinkedIn • University of Iowa Henry B. Tippie College of Business • Tippie College of Business Alumni Network • Iowa MBA Alumni Network • Iowa Executive MBA Alumni Network • Vaughan Institute Network • University of Iowa Alumni Association • UI Alumni Networking Find Us on Facebook • Tippie College of Business • Tippie Full-time MBAs • Iowa Executive MBA Program • University of Iowa Professional MBA Program
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tippie college of business
Department of finance alumni News
Tippie Young Alum of the Year Todd Nelson, MBA07, was recently honored with the Tippie College’s Young Alum of the Year Award. This recognition not only acknowledges an alumni’s professional success, but also his involvement in the life of the college. Awardees must be under the age of 40. This fall, Nelson will return to the University of Iowa to join the department as a lecturer teaching the Fixed Income and Investment Banking courses. Nelson began his career at Goldman Sachs in 2007 and has most recently served as a vice president in the Investment Banking Division located in New York City. As a member of the Financing Group of the Investment Banking Division, he helped provide capital structure advisory, debt execution, rating agency consultation, and risk management advisory Todd Nelson services to insurance and financial services companies. In addition to his time at Goldman Sachs, Todd also served as vice president, finance at Horace Mann Educators Corporation in Springfield, Ill., for two years and spent the first seven years of his career in public accounting with Deloitte in Davenport, Iowa, in audit with Ernst & Young in Des Moines, Iowa, and Minneapolis, Minn., in tax compliance and consulting roles. “With his fixed income background from Goldman Sachs, he is perfectly suited to teach these courses at Tippie,” said Erik Lie, department executive officer. “Todd’s experience from Wall Street and his vast network will undoubtedly benefit all of our finance students.” Todd is a CFA Charterholder and is a member of the CFA Society Iowa.
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Merritt D. Krause, BBA74, is an insurance executive with Iowa Bankers Insurance and Services in Johnston, Iowa. Cory Lukens, BBA06, is the manager of organization transformation for Deloitte Consulting LLC. He lives in Chicago. Robert J. Lynch, BBA00, is chief financial officer of retirement and investment consulting for Aon Hewitt, a human capital and management consulting services provider in Lincolnshire, Illinois. Jason McKibben, BBA07, is a trader with JM Fertilizer. He lives in Tampa, Florida. Maxwell Mohagen, BBA12, RMICert12, is a lease administration analyst with CBRE Group, a commercial real estate company (formerly Caldwell Banker Richard Ellis). He lives in Minneapolis. Joe Moore, BBA2011, is a mortgage loan originator with Capital Works Mortgage in Denver, Colorado. Benjamin J. Nielsen, BBA12, MAc13, and Sara E. Benesh were married on October 24, 2015. Glen E. Perkins III, BBA03, is vice president of Hawkeye Paving in Bettendorf, Iowa. Rachel N. (Kuns) Perkins, BBA03, is a human resources project manager at John Deere in Moline, Illinois. Dana C. Ramundt, BBA74, received a Distinguished Service Award from the UI Alumni Association last summer and was named to the Iowa Insurance Hall of Fame this year. He is president of The Dana Company in Des Moines, Iowa. Jay K. Reavis, BBA05, MBA11, is an assistant vice president and shareholder at Holmes Murphy insurance brokerage in Des Moines, Iowa. Jeanne M. Leone-Schmit, BBA86, is a senior director and accounting manager at Trustmark Insurance in Lake Forest, Illinois. Richard J. Schmidt, BBA87, MBA88, was named vice president of mergers and acquisitions at Rockwell Collins. Ryan Smaha, BBA15, is a new member of the Tippie Young Alumni Board. He is compliance/operational risk associate at Wells Fargo in Des Moines, Iowa. Wayne E. Stoeber, BBA69, is owner of Stoeber Financial in Shavano Park, Texas. Michael Stoker, BBA79, is the senior manager, global accounting, for St. Jude Medical Inc. in St. Paul, Minnesota. Peter Thompson, MBA90, was promoted to president of the Source Group located in London, U.K. Manoj Tomar, MBA15, is president of Amplimark LLC in West Des Moines, Iowa. Sarah (Schulte) Urion, BBA09, and William Urion, BBA10, welcomed a son, Connor Justin, on September 12, 2014. They live in Clive, Iowa. Kevin Velovitch, BBA12, is a consultant with Accenture. He lives in Chicago. He is a member of the college’s Young Alumni Board. Lauren VonderHeide, BBA08, is a vice president with BMO in Chicago. Jeffrey J. Vroman, BBA90, is co-owner of the Vroman Group, an accounting firm in West Des Moines, Iowa. Mark A. Vroman, BBA08, is co-owner of the Vroman Group, an accounting firm in West Des Moines, Iowa. Kevin Velovitch Shachi Vyas, BBA16, is a new member of the Tippie Young Alumni Board and is a transaction services associate at PwC in Chicago, Illinois. Alissa (Doyle) Ward, BBA01, is an insurance agent with Gamrath-Dole & Associates insurance agency in Fairfield, Iowa. Dan Washburn, MBA98, is Chief Financial Officer of CarePro Health Services in Cedar Rapids.
$105 MILLION to the For Iowa. Forever More. campaign. Here’s a look at the philanthropic ROI: OB
125
TC
VISIT GIVETOIOWA.ORG/FINANCE Tippie AD_041916_PQ_FINANCE version.indd 1
In business, return on investment (ROI) is key to success. So far, Tippie alumni and friends have invested in our success with gifts of more than
scholarships awarded to finance majors.
$10M
given for finance programs, strategic initiatives, and student success. Increased support to recruit and retain world-class
FACULTY
through chairs, professorships, and fellowships.
OUR STOCK IS ON THE RISE Please consider your own gift to help us meet our $125 million goal. Together we can make a difference for the future of our state, nation, and our world.
5/6/16 11:52 AM
108 Pappajohn Business Building Suite C120 Iowa City, IA 52242-1994
tippie.uiowa.edu/finance