Flow State, Part One
In the spring of 1990, my mentor, Carl Schweser, had just finished his teaching duties at the Study Seminar for Financial Analysts (SSFA) at the University of Windsor in Windsor, Ontario. On the trip home, a lightning bolt of inspiration had struck him.
Founded in 1965 by Dr. Edward Rosenbaum, CFA, SSFA was the destination for prospective charterholders to gather for a weeklong crash course to pass the rigorous series of examinations which are part of the criteria for earning the prestigious Chartered Financial Analyst (CFA) designation.
For those who are not familiar with this industry-recognized credential, the CFA® designation is an important proficiency and work readiness signal for investment research analysts, portfolio managers, risk managers, corporate finance analysts, high net worth investment advisors, and other key jobs in the investment management field. While there are over 200,000 candidates who sit for the exams globally today, in 1990, the Chartered Financial Analyst (CFA) program was small and very niche. I am a proud holder of this designation.
Anyway, Carl came home from SSFA in the spring of 1990 with the idea that there had to be a better way to help individuals prepare for the three levels of the CFA examination. The study options that were available to candidates during the 1980s were limited to the aforementioned cram course and a few providers of study manuals that were very academic and unapproachable. One of the running jokes within finance circles regarding a leading provider of study materials at the time was that their summaries were longer and more complex than the academic source materials they were derived from.
An Alternative Approach
Carl thought differently. Instead of using unnecessary complexity as a barrier to entry, he wanted his study guides to be more approachable and inclusive. He wanted to open the doors of this then-current exclusive club to more people around the world. He had spent years distilling difficult financial and economic concepts into understandable core components for his students at The University of Iowa and felt that if he extended that model to prospective CFA candidates, more individuals would begin to view the examination process as achievable.
In the 1980s and early 1990s, there was the perception that you had to have graduated from Wharton, NYU, or the London School of Economics and live in or near a major financial center like Boston, New York City, Tokyo, Hong Kong, or London to have a shot at a career in the field of investment management. While that may be a bit of a historical dramatization, the reality of the day is not too far removed from my description.
Carl believed that students from Iowa City, St. Louis, Minneapolis, Denver, and all manner of smaller markets were just as smart and deserved the opportunity to earn the credential that served as a gateway into the industry. After all, the CFA designation was, and still is, thought of as a “talent leveler” and a geographic mobility tool. Put plainly, an individual from Manchester, UK that’s passed the exams and fulfilled the other requirements for earning the credential has presumably checked the same boxes and has the same competency foundation as someone who comes from a more prestigious market or university. These two individuals should, in theory, be on equal footing.
During the summer of 1990, I was a lowly finance graduate student at The University of Iowa. Carl approached me to see if I would be interested in writing the economics summaries for a new set of study guides he was putting together to help candidates pass the CFA exams. Carl disliked writing about economics and I came to Iowa with an undergraduate degree in economics, so he rolled the dice on me. I gave him an enthusiastic “yes!” and dove in headfirst. Even though I had no idea what I was getting myself into, my wife Linda and I needed the money and I had come to respect Carl a great deal during my short tenure as his student. Talk about being in the right place at the right time with the right answer and the hubris to believe I could excel at something I had never done before! [For more on this story, see my book Balancing Act.]
What Carl saw in me that I could not yet see in myself was the ability to distill difficult concepts into consumable, bite-size chunks as well as the ability to convey that information in an approachable, authentic fashion. Over the course of the next six months, Carl and I proceeded to put together our first set of study manuals for candidates that were sitting for the CFA Level 1 exams in the late spring of 1991. We worked very well together.
Going to Market
As we began marketing our new product to Level 1 candidates, we had no idea if our materials would be a hit. During the winter of 1990/1991, we sent single-color trifold brochures through regular snail mail to candidates advertising the printed study manuals as well as a few one-day seminars that Carl planned on teaching during the spring of 1991 in select cities across the U.S.
We crossed our fingers and waited.
Soon after the first mailer went out, Carl’s fax machine began to come to life—that’s right, in early 1991, the fax machine reigned supreme as the primary method to submit an order for a mail-order product—no webpages, no digital marketing, no secure servers. Of the 4,950 total Level 1 candidates that registered for the exam in the spring of 1991, we sold a grand total of 325 sets to customers around the world. Capturing 6.5 percent of the total market in the first year wasn’t too bad a start!
The live seminars were a different story. That first year, Carl criss-crossed the country and gave one-day programs to three people in one city and five people in the next. Having stood in front of a small audience myself, I can attest to how deflating it can be to plan for a big party and have just a few people show. However, the seminars played a valuable role in that they represented a direct conduit to our customers and were a wonderful tool to collect direct, unvarnished customer feedback. Sometimes a small audience can pay big dividends.
The After Action Review
After that inaugural season was “in the books,” Carl invited me to his house for an after action review. Over a beer and a cigar, we talked about what went well and what didn’t with the aim of deciding whether or not we would forge ahead or close up shop. The cigar clearly went to our heads, because after a few hours of informal conversation, we decided that the way was forward.
As our heads cleared, we realized that the decision to move forward was not one to be taken lightly. Yes, we had a good product that was well-received based on the direct consumer feedback Carl collected while he was on the road teaching one-day seminars, but to move forward, we would need to completely build out the Level 2 product and revise the existing Level 1 product to incorporate user comments and suggestions.
So in the summer of 1991, we decided that the way forward was to divide and conquer. Our decisions regarding roles and responsibilities boiled down to this: Carl would revise Level 1, focus on business development, and continue with his Level 1 seminar roadshow in the weeks leading up to the exam. I would take on the responsibility to write the Level 2 materials—mainly from scratch—and join Carl on the road to cut my teeth as a 29 year old seminar leader for the Level 2 exam.
To say that the fall, winter, and spring of the 1991/1992 CFA exam season was a blur would be a gross understatement. Our son, Brandon had just been born in May of 1991 and I was knee deep in graduate school pursuing a Ph.D.; Carl was the chair of the finance department and also had a successful side gig as an expert witness in wrongful death suits—all this was happening as we were trying to get our little CFA prep business off the ground. Oh, and I forgot to mention that I was also sitting for the CFA exams myself as a candidate as we were struggling to achieve liftoff.
Did we grouse about how busy we were? Maybe a little, but for the most part we just got after it. Our spouses were incredibly supportive and were involved in the business from the start—stuffing envelopes, talking to customers, and packing boxes of soft-cover books to be shipped to all corners of the globe.
As I look back, the work didn’t feel like work. We had entered a flow state.
— To Be Continued Next Week —
