Who are the people who will most affect the way you practice your profession in the years ahead? We humbly submit the 2004 IA 25, luminaries who by their personality, intellect, longevity, innovation, and outreach have made, and will make, your life easier and more difficult, more rewarding and more frustrating. These are the people who build and maintain the partners you rely on, who regulate, prod, and legislate on the companies and vehicles in which your clients invest, and who provide the intellectual and moral leadership that helps to pull together a profession that has many shared ideals but even more competing agendas.
In drawing up this year’s list, almost as notable as the honorees are the exclusions. Coming out of the bear market last year, we included several money managers; this year, just one made the cut. But we have included more regulatory and oversight folks, reflecting the higher profile of such individuals these days. Also, we included leaders of the custodial and clearing firms that have become a more important part of the independent advisor’s business model. The bear market forced RIAs and independent broker/dealers alike to become better business people, and being pretty decent business people themselves, the custodians and clearing firms started delivering products and services that made advisors more efficient and allowed them to compete better, and also brought them closer together.
As with all such subjective lists (chosen by the IA editorial staff with input from the magazine’s contributors and readers), the second edition of the IA 25 could easily have been expanded two- or threefold. To address that issue, this year we’ve included a sidebar (see page 58) listing several individuals who we think might very well come off the bubble in the years ahead.
Of course, to your clients, there’s only one person who matters in the world of financial planning–you. But without these folks whose profiles follow, it would be infinitely more difficult for you to serve those clients.–James J. Green
In the field of financial planning, there are some names that pop up again and again: in the media, among conference speakers, in the media, in the media…. Harold Evensky–along with his wife, planner Deena Katz, a leading light in her own right–has been a respected leader of the profession for years, and his opinions, particularly on investment management, carry significant weight.
As chairman of Evensky, Brown & Katz in Coral Gables, Florida, Evensky, 62, has an opportunity to work with clients and client investments every day. But he also works to develop financial planning as a profession through his prolific writings and frequent public appearances. Looking ahead, he sees two primary challenges for his peers: Moving the profession from a world of mom-and-pop practices to real-world businesses, and maintaining a high level of professionalism after making this shift.
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
It’s fashionable to say that someone needs no introduction, but in the world of financial planning, Deena Katz really doesn’t. Any time she speaks at an industry conference, chances are that most audience members have already read about her, previously attended one of her seminars, or perused one of her books on practice management. As president of Evensky, Brown & Katz, a high-profile planning firm in Coral Gables, Florida, Katz, 54, has plenty of opportunities to gather, refine, and ponder new material for her books and speeches. “Our future challenges lie in how well we adapt to nanosecond changes in our industry, how well we manage growth without sacrificing quality in our practices, and how effectively we harness technology to leverage our time,” she says. “If we can master these, the big issues, like how we get paid and who might be our competition, will just take care of themselves.”–Karen Hansen Weese
You’d be hard pressed to find an industry conference that didn’t list Lou Stanasolovich as one of its speakers. As president and CEO of Legend Financial Advisors in Pittsburgh, 47-year-old Stanasolovich takes pride in the quality of service that Legend offers its high-net-worth clientele. His firm will do “whatever it takes to make clients happy and address their needs,” he says, and that includes “picking up the phone in less than three rings.” Since 85% of his clients are older than age 50–and 35% of them are retirees–Stanasolovich’s priority is helping them make their money last. “Most people are trying to retire too early,” he says. “We try to create a game plan that evolves over time where they can have enough money to retire.” Part of that game plan includes investing clients’ money in mutual funds with hedge fund characteristics, because “the long-term market outlook for domestic equities and bonds” is dim. As for the industry, Stanasolovich says its biggest challenge is credibility. “The majority of financial advisors, or those who call themselves financial advisors, are truly not financial advisors,” he says.–Melanie Waddell
Ask Roy Diliberto about the assets in his Philadelphia-based fee-only practice, RTD Financial Advisors Inc., and he’ll change the subject, although the numbers are public record. This reflects the focus of the Financial Planning Association’s first president on “financial life planning.” Says Diliberto, 63: “Eventually, there will be a bifurcation between money management and financial planning. As a money manager, you’re managing money, not relationships. Your client is the money. The object of a good financial planner is to improve the clients’ lives.” But over his 41-year career, Diliberto has also devoted himself to improving the life of the planning profession itself. As an author and lecturer, he has argued that advisors must examine whether they are charging clients for asset management while essentially giving away their more valuable planning skills. Diliberto will expand on his philosophy in a forthcoming book, Financial Planning: The Next Step, to be published by the FPA. –William Glasgall
Which would you rather do? Spend your days wrestling other advisors over the tiny slice of the American population that counts its net worth in seven digits or more, or build a satisfying, profitable business serving the huge slice that is everybody else? For Sheryl Garrett, 41, founder of the Mission, Kansas-based Garrett Planning Network, serving the middle class is the answer. Over the past four years, she has built a network of more than 200 advisors dedicated to serving average folks with average bank accounts–and that’s 60 more advisors than only a year ago, by the way. She provides the coaching, templates, resources, and sample documents to get them started and keep them going. The advisors, in turn, set up practices modeled on a doctor-patient relationship: periodic checkups on an as-needed basis and payments based on an hourly rate. “I am extremely proud of helping to change the financial services industry by proving the viability of working with Middle America and do-it-yourselfers on a fee-only basis,” she says. “What was once deemed impossible is now the talk of the town at many industry conferences and with many financial journalists.”–Karen Hansen Weese
As head of one of the world’s largest clearing and custody firms, Joseph Velli is in a good position to view how Washington’s regulatory onslaught will affect the broker/dealers that comprise a large share of his clientele. Velli, CEO of Bank of New York Company’s BNY Securities Group unit, thinks tumultuous times lie ahead as B/Ds’ compliance costs mount. Over the next two to three years, Velli, 46, thinks “it is realistic to look at a consolidation of 20% to 25%” among the ranks of U.S. broker/dealers. But Velli, whose bank bought Pershing for $2 billion in 2003, sees opportunities emerging from turmoil. Pershing, which serves some 1,100 B/Ds, is offering new ways to help its clients meet government demands for better recordkeeping and retail disclosure. By summer, Velli also plans to boost the clearing unit’s research offerings. He also plans “a major thrust” in Pershing’s efforts to win more custodial assets. All told, Bank of New York has $8 trillion in custody, with $600 billion of that at Pershing.–William Glasgall
Alfred West, Jr.
Financial services companies treat the baby boomer generation like the weather: everybody talks about it, but nobody does anything about it. SEI Investments’ CEO Al West is an exception. West founded SEI in 1968 and built the company into an outsourcer nonpareil for, first, banks and trust companies, and then, advisors of all stripes. Now West, 61, is doing something about boomers, who “want their wealth to work for them.” The clients of most RIAs these days are not boomers, West notes, but they are the future. SEI is turning down some advisor assets if said advisor eschews a closer, more comprehensive relationship with SEI that revolves around West’s version of life planning, called “Life Wealth.” For those advisors who partner with SEI, the company will provide a “case management” team that will provide access to a range of expert services far beyond money management for an annual retainer fee, with a strong referral network to boot.–James J. Green
The CEO of a bro-ker/dealer serving financial planners, Joseph Deitch, of Commonwealth Financial Network, is a big proponent of planning for his Waltham, Massachusetts-based firm. This year, the 25-year-old B/D is focusing on staff development. But Deitch, 53, also has ambitious plans for Commonwealth’s 900 reps who, this year, are expected to produce $250 million in revenue. By year end, Deitch expects to roll out an online platform to help reps “increase their revenues and decrease their overhead” to counter “downward pressure on commissions and fees.” He also plans a Web-based “molecular map of wealth management” that will provide reps with information on complex planning issues and links to Commonwealth reps and industry authorities. “Commonwealth is not a secretive company,” explains Deitch. “We try to facilitate the sharing of expertise as much as possible.” One thing Deitch says he has no plan for is an IPO. “I have no need to go public,” he says. “I don’t need the cash. I have no need to be speaking to analysts all the time. I’d rather be speaking to my brokers.”–William Glasgall
Morningstar’s managing director, Don Phillips, sees himself as the man in the middle–the guy between the company and the investor community. “My role is to talk to the people in the trenches, the individual investors and financial planners who are right on the front lines making investment decisions,” he says. “Then I come back and talk to our research and design teams to come up with tools and approaches that can lead to better investment success.” These days Phillips is most excited about the work Morningstar is doing on “ownership zones,” where stock research, fund research, and portfolio assembly all come together. His goal is to create “a really holistic tool that can lead to better portfolio construction,” he explains, noting that many people seem to be able to find good investments in isolation but run into trouble constructing an entire portfolio. From his vantage point, Phillips, 42, says he has been impressed by the professional growth of the investment advisor community and the number of investment clients working with dedicated financial planners.–Robert F. Keane
In many ways, Marv Tuttle can be considered financial planning’s champion. A 20-year association veteran and advocate for the profession, the 49-year-old executive director and CEO of the Financial Planning Association enthuses, “I continue to have a passion for what we’re trying to create, this thing called a profession for financial planning.” That passion has been rewarded: As Tuttle points out, the certified financial planner movement is flourishing. “In the days when I started there were less than 6,000 [CFPs], and now we’re at nearly 45,000,” he notes. “I’m pleased to play a part in that.” For the coming years, Tuttle stresses the importance of continued advocacy of the profession and conveying to the public what financial planners have to offer. “In order for us to succeed as a profession, we need to have statutory regulation,” he says. Tuttle doesn’t care whether that happens on a state or federal level, or through private sector recognition. In his view, what’s more important is that the term “financial planner” means the same thing for everyone who uses one.–Robert F. Keane
“For the last 11 years, we’ve been focused on supporting advisors on their terms,” boasts Jay Lanigan, president of Fidelity Registered Investment Advisor Group. Lanigan, 48, says advisors these days still want service and “technology to make them more efficient,” he says. Fidelity over the past year introduced a range of other services to help advisors compete, including an open-architecture separate account offering, administrative trust services, and a series of regional best-practices conferences. In 2003, 2,100 affiliated advisors increased the assets under custody at FRIAG by almost $40 billion, or 65%, representing some $20 billion in net new asset flows, and bringing total custody assets to slightly more than $100 billion. In a sign of the value that Fidelity places on the advisor business, and its trust in Lanigan, early in 2003 FRIAG was elevated to the same level internally as Fidelity’s retail operation.–James J. Green