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Regulation and Compliance > State Regulation

The Side of the Angels

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Our cover story this month–the IA 25–is a fairly big undertaking for the relatively small Investment Advisor editorial staff. It takes months and much agita to get to the final product–soliciting nominations from our columnists and contributors (we get plenty of unsolicited offers of assistance, too, thank you very much); discussing preliminary lists in staff meetings; winnowing down the names to a manageable number; conducting some due diligence on the semifinalists; making the hard decisions necessary to finalize the list; procuring and testing recent photos of the winners; interviewing and then writing the vignettes for each person; editing the copy from at least four different staffers; then the final painstaking process, handled mostly by our whiz-kid of an art director, Scott Valenzano, of marrying words with the art and 25 head shots.

You can judge whether the finished product is worthwhile, though it’s clear that interest in the list has grown over the years from you and the companies that are your partners, or want to sell you something.

The reward for me, however, is getting a chance to speak with some of the smartest, most insightful people in and around the profession, and soliciting their comments on the state of the profession, the challenges that financial planners and investment advisors face, and the paths to success that exist now and will be forged in the years to come. Over all, our honorees are optimistic about the future of the profession, despite some of the clouds on the horizon and the intermittent showers of an inconsistent market and a consistently heavier compliance burden that dot the planning landscape. In discussing Chuck Schwab, an honoree again this year after a one-year absence, with Schwab Institutional president Deb McWhinney, for instance, McWhinney reminded me of Spectrem Group research showing a major switch over a three-year period in the percentage of higher-net-worth people getting their primary investment advice from an RIA rather than a stockbroker. Despite the banks’ and wirehouses’ deep marketing and advertising pockets, despite the piles of assets they can count in their coffers, folks are discovering that they prefer the independence and objectivity that they can get from you. Maybe, suggests first-time IA 25 member but long-time feisty observer of the industry Bob Clark, that’s because an advisor’s primary job is not to pick the right investments for clients, but rather to protect them from the financial services industry.

There’s plenty of protecting to do. The sickness of greed and corruption seems to be pandemic on Wall Street these days, from the executive suites and analysts’ lairs where a few years back stock recommendations somehow got mixed up with underwriting concerns, to the most recent allegations that specialists on the floor of the NYSE blatantly fixed prices over a period of years to line their pockets. It’s not just the wirehouses that are infected. Over the past year or so, some of the biggest and most respected members of the mutual fund and insurance businesses have been charged with, well, cheating.

By contrast, you, the independent advisor, have indicated clearly by your choice of profession that making money is not your primary goal. Yes, you want to live comfortably and provide for your families and be compensated in more than heartfelt gratitude for your years of work now and when you decide to move on. It’s also true that advisors are getting to be better businesspeople, spurred on first by the bear market, then by those new compliance regulations, and these days by a desire to make your practices into businesses. There are advisors who are not immune from the greed disease, as the CFP Board’s periodic censures show. In the end, though, your choice to serve your clients’ needs first puts you on the side of the angels. It’s a pleasure and honor to play some small part in helping you fly.



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