The First Annual IA 25: 2003

Listing the most influential people within any profession is a daunting task, but the job is particularly difficult within financial planning, where fierce independence is prized but partnerships are the order of the day. The value you provide your clients centers on independence: Whether you’re an RIA, broker/dealer rep, wirehouse broker, CPA, or attorney, you provide customized services that can include everything from preparing tax forms to providing life planning. But along with your independence comes a critical interdependence that guides you in picking the appropriate mutual funds, portfolio management software, custodian, B/D, and outsourcing partners.

That’s the shape of the profession today–independence and interdependence. The people who made the grade for the 2003 IA 25, our list of the most influential people in financial planning, reflect that dichotomy.

We chose the members of the IA 25 because they are the heavyweights of the profession now and will remain so in years to come. They are the planners who have gained the respect of peers for their foresight, business acumen, and ethics. They are the academics who built the foundations of the profession, and the money managers who beat the S&P year in and year out. They are the CEOs and the regulators who keep them in check. They are the visionaries who built the partner businesses planners couldn’t live without.

One honoree, Benjamin Graham, died in 1976, but his influence is as keenly felt today as when he walked the earth. Two other members, SEC Chairman William Donaldson and Smith Barney CEO Sallie Krawcheck, are still getting their feet wet. But each has a chance to exert their influence in ways that could be felt for decades to come.

You’ll notice the absence of a leader of the FPA or the CFP Board. We considered several people from those organizations, especially those who were responsible for the 2000 merger of the IAFP and ICFP. We considered as well the executive directors of FPA and of NAPFA. We looked at a host of other planners, executives, money managers, and journalists. In future years, at least some of those are likely to make the list. But I expect you could argue with some of our choices. Indeed, I hope the IA 25 will spark a healthy dialogue. Just e-mail your comments to me at [email protected].

It was Sir Isaac Newton who wrote, “If I see further, it is because I stand on the shoulders of giants.” You in the profession, and we who observe it, can be thankful for those giants whose names follow.–James J. Green

Harold Evensky

Harold Evensky is one of the most well recognized people in financial planning, and it’s not just for his bow tie. Read almost any financial publication and sooner or later you’ll find him quoted or you’ll discover an article he’s penned.

His thoughts have shaped the media picture of financial planning, and by extension, the public’s view of the profession. The high media profile is good for his firm–Evensky, Brown & Katz in Coral Gables, Florida–but Evensky, 60, says it’s also good for his education. “Talking to reporters is really good for you, because there are always a lot of challenging questions, and it forces you to stay up to date, or at least be comfortable defending your position,” he says.

Evensky identifies two major trends that will benefit the consumer immensely: independent practices transforming themselves into businesses, and wirehouses transforming themselves from product-pushers to professional advisors. “The good news is that I think both sides are getting there,” he says. “But it’s not easy.”–Karen Hansen Weese

Deena Katz

“Deena’s books should be on every planner’s shelf,” says planner Linda Gadkowski of Centerville, Massa-chusetts. Plenty of planners agree, as shown by the popularity of Deena Katz on Practice Management and Deena Katz’s Tools & Templates for Your Practice.

A former schoolteacher, Katz, 53, knows how to tell a story and teach a lesson at the same time. “Ninety-five percent of planning is the ability to explain complex things in an easily understandable way,” says Katz, who is president of Evensky, Brown & Katz. Katz’s considerable communication skills have gained her a following on the national and global industry-conference circuits, too.

Katz says the greatest challenge ahead will be managing expectations–not just clients’, but her own, and the industry’s expectations for its future. “We have yet to present ourselves to the public with one professional voice, and yet we’re now reinventing ourselves again,” she says, referring to the life planning movement.

She wonders, too, if some life planners are overstepping their bounds. “It’s a fine line between coach/counselor and shrink,” she says, “and I’m not sure we’re educationally prepared.”–Karen Hansen Weese

Ross Levin

If Consumer Reports rated cars based on only a single factor, its ratings would be useless. Yet when advisors measure their financial planning performance, they often fix on a single factor: investment returns.

Ross Levin, 43, of Accredited Investors in Edina, Minnesota, wrote The Wealth Management Index in 1996 to help advisors orient their attention to the broad range of wealth management issues. The book teaches advisors how to quantify clients’ progress toward their goals in estate planning, asset protection, disability and income protection, debt management, and investment planning, and then explains how to compute a composite score that shows the client’s relative success in achieving those goals.

Levin says the challenge he faces personally “is and has always been the same: Being a good husband to my wife, father to my children, planner for my clients, and principal for my staff, as I try to make a difference in the world.” As for the industry, “I think the greatest challenge will be delivering great planning to those who need it but can’t afford it,” he says.–Karen Hansen Weese

Alan Greenspan

Federal Reserve Board Chairman Alan Greenspan is often called the second most powerful man in America, and filling his shoes (his term expires in 2004) won’t be easy. Perhaps his most significant contribution during his 16-year reign at the Fed, says Brian Hamilton, CEO of Sageworks, Inc., a provider of technology products to financial services firms based in Research Triangle Park, North Carolina, is his “skill [at] making subtle adjustments to monetary policy that people can expect. Monetary policy can be anticipated, and business people can make long-term plans without them being disrupted.” Geoff Bobroff, a financial services consultant with Bobroff Consulting in East Greenwich, Rhode Island, wonders if Greenspan’s failure “to put the brakes on the economy” in the late 1990s will leave a lasting impression. “Someday people will look back and judge him as to whether or not his ‘good’ period of the early ’90′s was unfortunately wiped out by his ‘poorer’ period in the latter ’90′s.”–Melanie Waddell

Michael Oxley

As a former attorney and special agent at the FBI, Rep. Michael Oxley (R-Ohio), chairman of the House Financial Services Capital Markets Subcommittee, knows how to root out the bad guys. His corporate reform bill, The Sarbanes-Oxley Act of 2002, is hailed as one of the most far-reaching laws ever to hit the financial services industry. “He’s completely restructured, in a good way, corporate boards literally around the world,” says Frank Kelly, head of Charles Schwab’s Government Affairs Office. Now that he’s dealt with corporate corruption, Oxley plans to hold oversight hearings throughout 2003 to investigate potential trouble spots within the investment banking, mutual fund, and hedge fund industries. “He’s keeping the industry on its toes,” Kelly says.

Oxley’s committee pulls a lot of weight, overseeing the goings-on at the Federal Reserve, SEC, and the Treasury. And, as Kelly says, Oxley’s “already established himself as one of the most powerful committee chairmen in Congress.”–Melanie Waddell

Eliot Spitzer

In an April speech to state securities regulators, Richard Grasso, chairman of the New York Stock Exchange, called New York Attorney General Eliot Spitzer a “tireless campaigner for the consumer.” Spitzer’s investigations of shady stock research methods at Wall Street firms have “made a difference in investor confidence,” Grasso said. Tom Grzymala, president and CEO of Alexandria Financial Associates in Alexandria, Virginia, concurs that Spitzer is “doing an excellent job” at trying to “restore America’s faith in capitalism and create more transparency” in the markets. But Grzymala wonders, as do others, if political aspirations are fueling Spitzer’s crusade. Indeed, the SEC’s credibility problems have enabled Spitzer to overstep his authority. But that may change. “The SEC has to figure out how to wrestle the control of issues from the state regulators, like Spitzer and others, because the role [of regulating the markets] belongs on a more national basis,” says Geoff Bobroff, a financial services consultant with Bobroff Consulting in East Greenwich, Rhode Island.–Melanie Waddell

William Donaldson

William Donaldson is faced with an awesome task. As the new chairman of the SEC, he not only has to restore investors’ faith in the U.S. markets, but he has to battle morale problems within the commission. “It’s a cultural shift,” says Rick Cortese, VP of consulting at National Regulatory Services in Lakeville, Connecticut. As head of Wall Street’s watchdog, one of his toughest challenges is proving that he’s no longer part of the good old boy network. Ironically, perhaps his biggest asset is his Wall Street experience. “He knows the industry well, and knows how to operate within it,” says Brian Hamilton, CEO of Sageworks, Inc. Yet another challenge for Donaldson, says Brooke Billick, VP and counsel at Marshall & Isley Trust Company in Milwaukee, is “recruiting appropriate staff members and retaining experienced ones.”–Melanie Waddell

Charles Schwab

If all that Charles Schwab had done was to found a discount brokerage that loosened the wirehouses’ stranglehold on stock trading, his place in history would be secured. But the 65-year-old chairman of Charles Schwab & Co., did not stop there. By building the first mutual fund supermarket and a low-cost, high-service platform for independent advisors, Schwab incubated the notion of truly independent advisors. “Until Schwab Institutional came along in the early 1990s, there was no platform for independent financial planners and investment advisors who targeted investors with portfolios in the $100,000 to $5 million range,” wrote IA’s Andrew Gluck in May 2002.

The fortunes of Charles Schwab & Co. have suffered during the bear market, and some advisors continue to nervously eye Schwab’s intentions regarding the advisor channel. But many more of the 5,800 advisors who custody $220 billion at Schwab remain firm believers in the value of its products, its technology, and especially its referral program.–James J. Green

John Bogle

At an age when many people are settling down, John Bogle is still fighting the good fight. In March, the 73-year-old founder and former chairman of The Vanguard Group testified before Rep. Michael Oxley’s subcommittee: “The [mutual] fund industry has moved from what was largely a business of stewardship to a business of salesmanship, a shifting of our primary focus from the management of the assets investors have entrusted to our care to the marketing of our wares so as to build the asset base we manage.”

“Bogle introduced this concept that at the time was very foreign to most people,” says Ben Warwick, CIO of Sovereign Wealth Management in Denver, “that you should look at cost” when it comes to evaluating an investment.–James J. Green

Don Phillips

Don Phillips is managing director of Morningstar, responsible for the Chicago company’s corporate strategy, research, and investor communications. But for most advisors, Don Phillips is the public face and voice of Morningstar, a company that many advisors couldn’t practice without. Phillips, 41, helped develop Morningstar’s style box and star rating system, and eventually became CEO. But he is much more than just a numbers man. “Regardless of what Morningstar does in the future,” says Richard Sincere, president of Sincere & Co, “Don will always be known for objectivity and integrity.”–James J. Green

Todd Robinson

When Investment Advisor conducts its annual Broker/Dealer of the Year survey, we ask B/D reps to tell us what other broker/dealer they’d consider affiliating with instead of their own. LPL Financial Services always gets the most votes. In an industry filled with charismatic entrepreneurs who attract reps by force of reputation, 46-year-old Todd Robinson, chairman and CEO of LPL, stands out.

Robinson bought Linsco, a small brokerage, in 1985, and in 1989, he bought Private Ledger, another small broker. These days, LPL is not small: It has 4,600 reps and had 2002 revenue of $780 million. Robinson says that LPL and other B/Ds played a major role in helping shift registered reps from being considered “a sales outlet, a distribution channel, to being true advisors.”

As for the future, Robinson voices concern that the regulatory pendulum has swung too far and that reps will be burdened with bookkeeping and filing requirements that will make their difficult jobs even harder. “We need to have a work environment and a compensation scheme that will reward good people,” Robinson says.–James J. Green

Alfred West Jr.

If there’s one clear trend in the investment advisor business, it’s that advisors are looking to outsource everything from shredding services to money management while at the same time they feel the need to offer clients customized investing products and, increasingly, what you might call life planning services. That’s where SEI and its chairman and CEO, Alfred West, fits in. Co-founded in 1968 by West as a technology outsourcing partner to bank trust departments, SEI these days is a public company that serves some 8,500 advisors at more than 5,000 firms, providing a separate accounts platform and host of back-office and other outsourcing services. Its headquarters in suburban Philadelphia is unique: cavernous “barns” filled with modern art where employees (including West) congregate around desks that are wired to the ceiling to facilitate frequent rearranging. “Everything we’re doing is to foster creativity,” the 60-year-old West says, a mentality that helps SEI to serve advisors.

What does the future hold? “Those advisors who want to provide everything” on their own to clients will have a harder time succeeding, he says, and “those who succeed will have to partner.”–James J. Green

Mark Tibergien

What really pushes Mark Tibergien’s buttons these days is the way many advisors fail to make the best use of their time and talents. Tibergien, a principal of the Seattle-based accounting firm of Moss Adams, speaks from experience. A 30-year consulting veteran and the author of the FPA’s annual Financial Performance Study of Financial Advisory Practices, Tibergien, 51, stands out not only as an authority on the advisor business, but also as a ceaseless campaigner to make it better.

Tibergien (an Investment Advisor columnist) thinks too many advisors fail to leverage their practices properly in human terms. “So much of what an advisor does is dependent on himself or herself,” he says. As advisors grow their practices, many add support staff, but they continue to focus the business around themselves. “They need to become more effective, not more efficient.”

Tibergien is convinced that planning will remain an “unbelievably good business” for advisors looking to grow or merge with others. If Tibergien has it right, planning could turn out to be as lucrative as it is personally gratifying.–William Glasgall