Wayne Bloom - CEO of Commonwealth Financial Network and Red Sox fanatic
Boomer Market Advisor: What's been your biggest surprise since recently taking the reins at Commonwealth?
Wayne Bloom: Thankfully, there really haven't been many surprises. Given that I've been at Commonwealth for 20 years I have a solid handle on what we do well and where we have opportunities for improvement.
BMA: What's been (or what do you perceive will be) your greatest challenge as head of Commonwealth?
WB: I'll refer to them as the three C's: compliance, capital markets and capitalizing on opportunities. The tightening regulatory environment is showing no signs of loosening, and investor anxiety will likely keep the compliance pendulum stuck. Our challenge is to help our advisors grow their practices while remaining in compliance. The second challenge remains the uncertainty of the capital markets. Our advisors are in the business of helping investors achieve their goals, and this becomes increasingly difficult through the precipitous declines we've experienced. But it's not impossible, and our research teams have been working overtime to assist our advisors with portfolio strategies. Finally, while the capital markets' performance presents challenges, the silver lining is that they have left disgruntled investors in their wake, and we're very focused on providing our advisors with materials to assist with client acquisition opportunities.
BMA: What is the No. 1 question you're getting from your reps, as it relates to the ongoing crisis and/or baby boomer retirement angst?
WB: The common theme is whether modern portfolio theory is dead. And, if so, what's the new framework for managing money? Not surprisingly, they have been disappointed in the lack of downside protection that asset allocation was supposed to provide. They were also disappointed in the performance of actively managed mutual funds, but, deep down, they understand that there were few places to hide.
BMA: In what areas are your reps asking for the most help?
WB: The unprecedented decline in the market has caused many advisors to take a fresh look at the manner in which they manage money. Accordingly, we are responding to inquiries from advisors seeking help on validating existing methodology or on honing their approaches to portfolio management.
BMA: How (and how well) is Commonwealth taking advantage of high-profile problems at wirehouse and banks -- both in recruiting new reps and in gathering new assets?
WB: [Our reputation] is providing us many opportunities to speak with some terrific advisors who are looking for new affiliations during these uncertain times. The results are very encouraging; our recruited production is up more than 100 percent over the same period last year.
BMA: Fee income is down due to a correlating decline in asset values, and many fee advisors are in serious trouble as a result. Some commission-based proponents are capitalizing on this situation to claim vindication for the commission model. How do you respond?
WB: I've not been exposed to any of the statements or writings vindicating the commission model, but I feel very comfortable with our heavy concentration of fee-based revenue. While each individual advisor practice is different, I think it's fair to say that fee-based advisors with recurring, albeit reduced, revenue are faring far better in this environment given how challenging it is to generate commissions.
BMA: Due to the ongoing crisis, baby boomers have to "re-accumulate" assets, and quickly, before retirement. How does Commonwealth help their advisors to in-turn keep clients calm and ensure they don't make an already damaging situation worse?
WB: It's been difficult to remain true to some of the basic principles that many of us have based our careers on, such as diversification and asset allocation. We have allocated significant resources toward investor education and toward helping our advisors build better portfolios. Advisors are under a great deal of pressure to help these investors, so whether it's illustrating the potential pitfalls of bad investor behavior or the benefits of adding alternative assets to traditional portfolios, we remain in overdrive as we work to provide assistance on both fronts.
BMA: How do you feel about legislation just over the horizon, and how serious will the impact be to the independent broker/dealer and advisory industries?
WB: I think it's difficult to paint with a broad brush, as I see some of the proposed legislation as beneficial, while other items under consideration seem too reactionary.
BMA: Will proposed legislation in response to the global crisis help or hurt previously mentioned baby boomer "re-accumulation?"
WB: I think practical legislation that provides better disclosure and actual bona fide investor protection and that restores confidence in the financial system can only benefit all parties.
BMA: How many games will the Red Sox win this year?
WB: Oh, my real crisis -- David Ortiz's vanishing production. I'll be an optimist and shoot for 95 games!