When trying to get a handle on a profession as diverse and unwieldy as the investment advisor/financial planner universe, it’s hard to find commonalities. There are advisors and planners and consultants, not to mention those qualifiers: “investment advisors,” “financial advisors,” “life planners,” and “financial consultants.” Its practitioners are compensated in various ways, use a range of partners to run their practices and provide services to clients, are regulated by different entities on the state and national level, and face competition from all over. We know that this business of providing independent, unbiased advice to individuals has been around for 35 years or so, and that like any new business it has gone through stages. It’s also true that this profession continues to evolve, and that we may be witnessing the next mutation even as we speak, as planners and advisors figure out the riddle of providing financial advice and other services to an aging population that expects a high level of service and demands they be treated as individuals with unique characteristics and goals. There are also millions of other people who are younger (and older) than the boomers who will have different needs and face an even more uncertain future.
Ron Roge has been there for much of the profession’s history, and he stands now comfortable and yet still evolving at the cusp of the next transformation. That’s why this year’s edition of the IA 25, the 25 most influential people in and around the profession, highlights Mr. Roge as emblematic of the profession’s journey and a model for how to transform a practice for the future.
Some know Roge as being famous for something he helped accomplish years ago at NAPFA: Establishing the term “fee only” firmly in the minds of the trade and consumer press. Roge , 59, has not been resting on his laurels, however, and an assessment of his thriving practice–R.W. Roge & Company Inc. in Bohemia, New York–and his approach to serving clients–embodied in the self-written piece that follows this story (see page 58)–encapsulates not only what an advisory firm needs to do to succeed now, but also lays out the structure and the process for succeeding in any environment. His practice, which “will never stop evolving,” he pledges, is going where nearly all advisory firms will need to go in the years ahead, focusing on compliance, due diligence of investments, and an aging clientele that will come to you, and stay, if you provide them with services that are not, strictly speaking, financial. When asked if he’s suggesting that what wealth managers do is provide clients with a broader range of services that goes beyond money management, Roge 1/2 agrees, but demurs that’s he not responsible for the insight. “Credit for that goes to Rosanne Grande, one of the CFPs here at our firm. We’d be reviewing client situations and Rosanne was the first one to recognize that ‘My God, these people are retiring and they’re still responsible for their parents who are still alive. That wasn’t factored into their planning 20 or 30 years ago.’”
There’s a side benefit to providing such services: “You get grandma in a nursing home, and you’ve got a client for life. You’ve taken a tremendous amount of stress off the family.” Roge 1/2 takes great care to show the same respect for his 10 employees–”We’re nothing without them”–as he does for clients. While his suggested minimum account is $1.2 million, he can accommodate younger, less flush clients as well. As for his clients, these days Roge 1/2 regularly projects out life expectancy to 100 in his plans, and expects those clients to be active during retirement, another challenge for advisors. “People don’t want to rust out,” he says, “they want to wear out.”–James J. Green
It was an uncertain world for advisors when Richard G. Averitt III earned his CFP in 1979. Now, as chairman and CEO of Raymond James Financial Services, Averitt says the greatest challenge for advisors is that while “navigating an appropriately increased regulatory presence and requirements,” they have to build a successful business in a time of falling margins. That environment “requires that they achieve efficiency and effectiveness, without losing the ability to show their clients the kind of personal attention that makes the business most successful.”
If Averitt, 61, could choose one thing to tell advisors, this is it: “There is absolutely no substitute for integrity–integrity is what you do when nobody is looking, and yet it comes through your pores. That’s a character thing, not necessarily a learned thing; temptation exists in all our lives. And yet the integrity of our advisors has to be unassailable, just as the firm’s does.”
In addition to “staying married for 39 years, and raising three absolutely wonderful children,” Averitt notes he is most proud to be able to “provide a strong, consistent leadership to our advisors.”–Kathleen M. McBride
“I’m just a farm kid from Kansas living the American dream,” says Stephen “Tony” Batman. The 50-year-old Dallas resident is chairman, president, and CEO of the broker/dealer 1st Global Inc. Filling those roles would be more than enough to keep most individuals busy. But that’s just his day job. After two years as chairman of the Financial Services Institute, Batman continues to serve on the B/D group’s executive committee.
Batman thinks that the biggest challenges for the advisory community are presented by the new rules and regulations enacted within the last four years that have had a series of unintended consequences. “They have piled on so much regulation that advisors can no longer serve average Americans,” says Batman. “That’s been a huge consequence and a hidden tax of regulation, at a time when Americans need to start taking care of their own retirement.”
Batman also notes that another unintended consequence of the regulations is to force advisors to move to “more of an RIA fiduciary model because the NASD has in essence deemed that registered reps of a broker/dealer are per se fiduciaries.”–Robert F. Keane
When Ben Bernanke replaced Alan Greenspan as the new chairman of the Federal Reserve Board on February 1, he had some big shoes to fill.
After only a few months on the job, how has Bernanke, 52, done? The consensus is that he’s doing quite well. “The good news is that the market has accepted him,” says Mark Balasa of Balasa Dinverno & Foltz in Schaumberg, Illinois. Bernanke is “going to be more transparent and informative than Greenspan, which I think the markets and investors like,” he says.
Gail Dudack of Dudack Research Group in New York says she’s most impressed with Bernanke’s first testimony to Congress as well as his public presentations. “I think he’s being very direct,” she says. Dudack expects Bernanke to stay in lockstep with Greenspan’s policies, she says. That includes raising interest rates. Bob Doll, president and CIO at Merrill Lynch, argued recently that Bernanke will raise rates again in May, but “that may well be the last increase of the current cycle.”
While Bernanke does make “statements that are clear, he’ll throw in something at the end to make it less than perfectly clear,” says Dudack. “That is the role of the Fed chairman.4 The chairman should never be 100% predictable.”–Melanie Waddell
When National Financial Partners was founded in 1998, its business model was greeted with a certain degree of skepticism. Acquiring firms in the life insurance and estate planning; corporate and executive benefits; and financial planning and investment advisory businesses isn’t really that difficult if you have enough money to spend, was the conventional wisdom. But taking well over 100 individual entities and helping them to grow within a new and supportive corporate culture while at the same time maintaining the entrepreneurial spirit that made each of them successful in the first place is quite another task.
Yet it’s a task at which NFP’s chairman, president, and CEO, Jessica Bibliowicz, 45, seems to be thriving.
Like most successful entrepreneurs, Bibliowicz is well aware that NFP’s accomplishments are not hers alone. She points to the management team she’s assembled as her greatest professional accomplishment, “but I always give the most credit to the firms that we’ve acquired or affiliated with. I think our ability to find these great companies and help them foster their continued growth is what makes NFP so special.”–Robert F. Keane
House Majority Leader John Boehner is at the forefront of addressing two crucial issues: taxes and retirement savings. The former chairman of the House Education and the Workforce Committee, who became majority leader on February 2, said in early April that lawmakers are close to finalizing a $70 million tax-cut package that would extend tax breaks on capital gains and dividends. The Ohio Republican, 56, is also one of the lead negotiators working to craft a compromise bill on pension reform.
That bill was originally expected to be completed by mid-April, but that date has been pushed back. The House version of that bill includes Boehner’s provision allowing advisors to give investment advice to 401(k) plan participants. The tax-cut package would extend the maximum 15% tax rate on capital gains and dividends beyond 2008, and would provide some relief on the Alternative Minimum Tax.
Boehner hails from a working-class family, and is one of 12 children. “Boehner has a number of qualities that will serve him well” as majority leader, says Scott Talbott of The Financial Services Roundtable in Washington, D.C. “He is a unifier and works on a bipartisan basis.” Another great quality: “He has an ability to grasp an issue quickly, and then put it in plain English so people can understand it.”–Melanie Waddell
As it turns out, knowledge really is power.
In the five years since founding CEG Worldwide, John Bowen and his team have surveyed 16,000 advisors in the U.S., U.K., Australia, and Canada so as to equip the firm’s advisor clients with the information they need to start profitable practices. “Everyone is always talking about helping clients get to the next level,” Bowen, 50, says. “At CEG, we focus on clients breaking through and skipping over a few levels to get to success faster.”
The CEG training program provides advisors with their own coach for a year plus access to all of CEG’s research. The cost is $19,500. “We identify seven strategies and 30 tactics of top advisors,” Bowen says.
Bowen says that one of the biggest mistakes advisors make is taking on too many clients.
“The average advisor making $75,000 a year has 201 clients. [An advisor making] $150,000-plus has 172 clients. But when you get to an advisor making more than $1 million, the number drops to 43 clients. This is where empirical data helps. We provide the framework so you can be successful on purpose.”–Ryan G. Murphy
For Tom Bradley, one of the most exciting things about the TD Ameritrade merger is the additional resources it makes available to accelerate the growth of the company’s advisor business. Also, “We intend to take our advocacy position on the broker/dealer exemption rule to the next level,” says the 43-year-old president of TD Ameritrade Institutional. “We took a significant stand on the rule on the side of investors and of fee-based advisors [and are] the only custodian that can say that.”
Increased competition from brokers is what Bradley sees as among the biggest challenges facing independent advisors. “Full-commission brokers still are able to operate almost in such a way that makes them appear as if they are investment advisors,” he notes, pointing out that many consumers remain confused.
To counter that confusion, Bradley says TD Ameritrade is working diligently to help advisors educate the investing public.–Robert F. Keane
When told that he would be on the IA 25 list again this year, Bob Clark responded first not by expressing surprise or excitement, but by firing out questions about the list itself: “Is it meant to be the 25 most influential people over the last year,” he demanded, “or the 25 most influential people in general?” When informed that while the 25 were being honored for their past achievements but also because we judged that they would continue to be influential in the future, he had a quick response: “Oh, so it’s sort of a rolling average!” The exchange was pure Bob Clark: Question the meaning of a concept most everyone else takes for granted, put his own stamp on it, then place the concept into a broader context.
That’s what Clark, 51, has done for decades as a journalist, consultant, and professional noodge. Clark has strong opinions that he’s never shy about sharing, but those opinions are based on a long understanding of the forces and personalities that have shaped the profession about which he cares so deeply. He cares, but not so deeply that he doesn’t see the flaws within the very organizations that exist to ease the way for advisors but instead sometimes get in their way. “I have a vision of financial planners being a true profession,” Clark says. “There’s such a huge demand for qualified, trained professionals to give personal financial advice–that you can’t help but think that financial planning as a profession will continue to progress and become a profession despite what people do in the short term.”–James J. Green
Mark Casady has worked on both sides of the financial services fence, and on both sides of the pond, a background that has prepared him well to be a leader in the independent broker/dealer world as chairman, president, and CEO of LPL Financial Services. Casady, 46, joined LPL in 2002, filled in as chief during founder Todd Robinson’s sabbatical in 2004-2005, and assumed his current position following the sale of a majority stake in LPL to two private equity firms–Hellman & Friedman and Texas Pacific Group.
Is it hard stepping in the shoes of the charismatic Robinson? Casady says that in his career he’s been in situations that were “very difficult,” when he thought to himself, “Boy, I must not be doing terribly well. But then I realized it was a lot about the circumstances. At the same time, things are going remarkably well here, and it’s a lot about the circumstances, it’s not 100% about my abilities.” Casady lays LPL’s success squarely at the firm’s corporate culture. “It’s all about our relationship with the advisors,” says Casady. As an example, he notes that at LPL’s top producers conference, “every one of us always thanks the advisors for their business.”
That support is important, because “advisors have one of the toughest jobs in America,” he argues. “They have to convince people, against billions of dollars of advertising, not to spend money.” LPL’s culture also comes from the fact that the home office must continually try to provide value to all advisors, because “everybody’s on a 30-day contract,” says Casady, and “we have never cut a special deal with anyone.” Any cost savings or new services go to every advisor, not just the latest one to sign up.
Will that rep-centric culture shift with the ownership change? Casady says that when he asked the 700 advisors at the March advisors’ conference if they’d noticed any change since the ownership transaction was completed, they simply said no. He calls the private equity investment “just a change of corporate financial structure. It had nothing to do with the way we wanted to run the business. It had everything to do with giving the business the financial footing it needs to go forward.” Casady points out that LPL is “a big business now–$1.4 billion in revenues last year,” and that it “didn’t work quite so well to have individual ownership.” He says Texas Pacific and Hellman & Friedman have been “very good owners so far,” and that “they have a nice long-term view.”
As for the future, he argues that, “Scale will be the defining force in the independent B/D space over the next few years.” That’s a competitive environment in which Casady and LPL seem happy to compete.–James J. Green
Since replacing Bill Donaldson as chairman of the SEC last August, former California Congressman Christopher Cox has “given the industry, deliberately or not, a much-needed respite from a spate of regulatory actions that have been very difficult for the industry to digest,” says David Tittsworth, executive director of the Investment Adviser Association in Washington, D.C.
In early March, Cox, 53, gave the go-ahead to an SEC study that will address investment advisor and broker/dealer regulation. In announcing the study, Cox alluded to the Merrill Lynch rule that the SEC finalized last April, and said that the SEC wished to pursue some of the industry complaints that were lodged when the rule was approved. Cox acknowledged that the “distinctions between investment advisors and broker/dealers have become increasingly blurred,” due to changes in the industry, the law, and the marketplace. The study will address how to better “harmonize” broker regulation under the Securities Exchange Act and advisor regulation under the Investment Advisers Act. Keep your eyes peeled on the progress of this study as Cox said the SEC will be seeking input from the industry.
Cox recently appointed Merrill Lynch’s Andrew “Buddy” Donahue as director, Division of Investment Management. Cox said Donahue “will work with others at the Commission to continue to improve the usability of disclosures by mutual funds, closed-end funds, UITs, ETFs, and other funds available to retail investors.”–Melanie Waddell
Joe Deitch, chairman and CEO of Commonwealth Financial Network, says that one challenge facing advisors stands out: “The future success of this industry as well as all other advice-based professions is a function of their ability to leverage their wisdom and counsel.” Whether a doctor or investment advisor, too much of a professional’s time is “spent on low-level administrative tasks,” says Deitch. “Our job as a broker/dealer is to lift as much of the administrative burden from advisors as possible,” so they can “maximize their time, and talent, and how many people they can help.” One way Commonwealth does that, he says, is its hosted technology solution for everything from e-mail to imaging to a CRM database, so that advisors can access everything, 24/7, from anywhere.
On a personal level, Deitch notes that his greatest achievement is being a good father. Professionally, it is “helping to create and nurture an environment that attracts quality people for Commonwealth. I am tremendously humbled by the caliber of the people.”–Kathleen M. McBride
When Francois Gadenne launched Retirement Engineering, Inc. in 2001, an R&D company that develops product designs and packaging solutions to address retirees’ income needs, his company garnered little attention. But within the last year, financial services firms and advisors have changed their tune. Last November, Gadenne, 50, helped create the Retirement Income Industry Association (RIIA), a not-for-profit trade group designed to be a think-tank where execs from all corners of the financial services world–including advisors–can brainstorm on new products for retirement income. The biggest challenge for advisors and financial services providers is “truly understanding” how the shift from a focus on asset allocation to risk management will affect their business models, he says.
The number of new income-generating products and services already being delivered by financial services companies is “stunning,” he says, adding that there will continue to be a “steady flow” of new products going forward.–Melanie Waddell
Sheryl Garrett’s financial planning philosophy is simple: “Hit ‘em where they ain’t, boys,” she says, quoting Susan Sarandon in Bull Durham. “I focused on a need where the competition wasn’t.”
Six years ago, Garrett, 43, created the Garrett Planning Network, a group of advisors (now 260 strong) who offer financial planning–not asset management–for an hourly rate that ranges from $150-$300. The network is designed to help people with middle incomes afford planning their finances. “No one should have to apologize for where they are in life,” Garrett says. “If they have $4.35 or $435 million, it shouldn’t matter. I charge by the hour or by the project. Everyone has questions about money and everyone has needs. You don’t go into the doctor and get charged more because you weigh more.”
Garrett stopped seeing clients in 2004 and now helps advisors tailor their practices to meet her model by using the templates, processes, and educational tools she provides.–Ryan G. Murphy
As president of Evensky & Katz Wealth Management in Coral Gables, Florida, Deena Katz is ready to start formulating an exit strategy for herself. As one of the trailblazers in the industry, however, Katz is far from finished.
This year, Katz, 56, started teaching at Texas Tech University to help close the generational gap between younger planners and older ones.
“I love that responsibility,” Katz says. “I’m a business owner and I understand the challenge of trying to find an exit strategy and handing off a business.”
Katz also coordinates the internships her students pursue, and lauds older planners who understand the importance of handing over the torch to the younger generation of planners.
Katz, who also does consulting work for Moss Adams and runs workshops around the country, says her desire to help the younger generation of planners stems from her passion for the industry and from the help she received throughout her career.
“We’re in the most sharing profession there is. “
In April, Katz published her seventh book, Retirement Income Redesigned, a project she edited with her husband and business partner, Harold Evensky.–Ryan G. Murphy
As president of Schwab Institutional, Deborah McWhinney holds a high-profile position, considering Schwab’s leading role as a business partner for RIAs–5,000 of whom custody $400 billion at Schwab. McWhinney notes, however, that “the hardest thing about being in a leadership position is that there’s no one to follow.” With 2,000 Schwab employees who contribute to Institutional and a seasoned management team, McWhinney, 51, is doing quite fine.
What drives that success, other than her staff? “We listen, we listen, we listen,” to their advisor clients, she says, because “our first thought is about how we can help advisors grow their top line and run their businesses more efficiently this year,” and in the years to come. Those conversations have changed over the past five years, McWhinney reports. “Advisors now have the wind at their back, but even the best–those on hypergrowth–are still worried about how they’re going to get through this quarter or the next, because they’re small businesses.” Yet Schwab’s advisors are growing at all levels, she says. “We’re seeing smaller firms getting into the business–we didn’t see that for three years.” Moreover, those smaller firms are starting out “with pretty darn good business plans.”–James J. Green
A talk by Olivia Mellan is never dull. Her presentations always include cartoon slides and sayings that spark knowing chuckles from her listeners, but it’s the endings that are unique–she gets her audience of reserved advisors to sing along with the main tenets of her “money psychology” discipline set to a Broadway tune.
The mood is jocular but the content is deadly serious: understanding what drives client behavior, especially couples’ behavior, when it comes to money, and how to help clients achieve “money harmony.” There’s no one else who brings together the insights Mellan has as a psychotherapist with the knowledge of the daily interpersonal issues advisors face with their clients. A long-time columnist with Investment Advisor, Mellan, 59, relates how a recent attendee of one of her teleclasses admitted that she was burned out, turning her, says Mellan, into “one of the most unempathetic listeners you could imagine.” But after taking her class, the advisor told Mellan that she had “transformed my practice. I’m so much more patient than I used to be. My clients are laughing with me now.” The story is a microcosm of how Mellan helps advisors grow.–James J. Green
By several measures, Dan Moisand deserves inclusion on the IA 25. His writings have garnered praise from his peers and won two Journal of Financial Planning awards. His descriptions of the process by which he merged his planning firm into Spraker, Fitzgerald, Tamayo & Moisand is seen by many as a road map to one practice transition solution. Then there’s his leadership position within the Financial Planning Association. Along with Elizabeth Jetton and Jim Barnash, Moisand has raised the FPA’s profile significantly through its suit over the broker/dealer exemption rule. As for his greatest professional accomplishment, however, Moisand, 38, answers that it’s the “very, very low turnover of my clients.” An unabashed proponent of financial planning, Moisand says planning is “a process and a discipline, not a product,” though he notes wryly, “there are many more people selling financial planning than delivering it.” Many of his clients came to his firm because they’ve been disappointed by their previous advisors, he says, from whom they failed to get the message that “you’re the client, not your money.”
As for the Merrill rule, he argues that the FPA has already achieved a notable victory: “The consumer media has been on our side.” Still, Moisand argues “it’s important that the brokerage firms and their representatives be able to participate” in planning. “We’re just insisting,” he states plainly, “that they meet the standards.”–James J. Green
Merrill Lynch Chairman, CEO, and President Stan O’Neal runs a company that has 54,600 employees, including more than 15,000 advisors, $1.76 trillion in total client assets, and $544 billion in assets under management, and he has a vast influence on how individuals–and institutions–invest. Later this year, when the proposed merger between Merrill Lynch Investment Management and BlackRock, Inc. becomes final, Merrill Lynch will control 49.9% of the new, independent firm, with about $1 trillion under management. O’Neal was reportedly instrumental in engineering that merger.
His perch atop Merrill Lynch provides O’Neal, 54, with a global overview of the financial and investment advisory and financial planning playing fields. “Capacity, competition, and commoditization,” are the greatest challenges facing the advisory and planning professions, O’Neal told IA via e-mail. “Increasingly in this business everyone can do everything, meaning a lot of people are chasing the same opportunities. This, combined with technology, has accelerated commoditization of products and services, putting relentless pressure on profit margins and business models.” But the key, it seems, is relationships: “The real difference becomes human capital, and the only sustainable competitive advantage lies in the quality of your relationships, the quality of your service, and the quality of your ideas.”
That means that advisors will have to continue to “become more sophisticated in their advice and offer more individualized, tailored solutions. The days of the stock jockey driving transaction-based commissions are clearly numbered,” O’Neal points out. Instead, he says, “a comprehensive approach that includes both sides of a client’s balance sheet and better aligns client and advisor interests is the only way to create long-term relationships that can survive economic cycles and the competitive landscape.”
Personally, it is family, hard work, and achievement that makes O’Neal tick. He says his greatest personal accomplishment has been “making my way from the graveyard shift in a General Motors assembly plant in Doraville, Georgia, to the chairmanship of Merrill Lynch.” Along the way he graduated from Kettering University and earned an MBA in Finance, with distinction, from Harvard University.
As for his greatest personal challenge, what means the most is much dearer than business, it’s “my 14-year-old twins. Come to think of it, they may also qualify in the greatest accomplishment category. Trying to be the best father I can be is infinitely challenging, exasperating, and rewarding.”–Kathleen M. McBride
As head of the SEC’s Office of Compliance, Inspections, and Examinations (OCIE), Lori Richards wields the ultimate power in crafting advisor exams, which she says are changing. “We [at OCIE] are implementing new approaches as the investment advisory industry changes, as risks in the investment advisory industry changes, and as the number of advisors registered increases,” she says.
Over the last year, the number of advisors registered with the SEC jumped 20%, to more than 10,000. With only 400 examiners, Richards says OCIE must “use our resources in the most effective way possible.” That’s going to be even more challenging now that OCIE has 2,267 hedge fund advisors to examine. Taking on hedge fund examinations “has meant a more disciplined approach to identifying the investment advisors that pose the greatest compliance risk, as well as the activities by advisors that pose the greatest compliance risk,” says the 46-year-old. “The most significant risk is fraud, because our mission is to protect investors.”
Good news for advisors is that the number of sweep exams will drop, and OCIE will now alert SEC commissioners before conducting a sweep. “Sweeps aren’t predictable, and that’s been off-putting for advisors,” Richards admits. “Sweep exams will comprise a less significant part of our program going forward because the other routine exams and random exams are likely to use up more of our resources.” Before conducting a sweep, OCIE will now provide SEC commissioners “on the front end” with a “summary of the compliance risk we’ve identified.”
OCIE is also attempting to consolidate exams of very large advisory firms, Richards says. “For very large investment advisory firms that may have many different registrants–10 or 20 separate RIAs under one umbrella, we, in the past, had examined those investment advisors separately and hadn’t coordinated internally within the SEC,” she says. “That was a burden for those firms,” she concedes. To rectify the situation, OCIE has implemented a pilot program to assess how it can provide oversight of these large firms on a consolidated basis.
A priority for OCIE is providing compliance assistance to advisors before they are examined through the chief compliance officer (CCO) outreach program. OCIE conducted about two dozen seminars last year for CCOs. The events allow SEC staff to “communicate with investment advisors about compliance issues in an informal way outside of exams,” she says.–Melanie Waddell
When Mary L. Schapiro takes the helm of the NASD in December as its new chairman and CEO, she will become responsible for the shape of the brokerage industry during one of the most significant periods in history: a highly regulated investment environment still recovering from multiple brokerage and fund scandals; more sophisticated types of investment products; and a sweeping change in consumer demographics that underscores a crucial need for righteous suitability as baby boomers retire–many without the corporate pension and health insurance safety nets that their parents’ generation called normal.
Schapiro, 50, says that of the many challenges facing advisors, enabling baby boomers to live comfortably in retirement tops the list. Advisors need “to give intelligent, careful advice to people who are facing the most uncertain time in their financial lives as they prepare to leave the workforce.” The industry must “create products that work for this population, [ensure] that they’re sold with superb disclosure, and that suitability analyses are done with great care.”–Kathleen M. McBride
John Simmers wears two hats. He is not only responsible for four broker/dealers and some 9,000 advisors as CEO of the ING Advisors Network, but he has just been elected to the NASD Board of Governors. As such, Simmers, 56, is uniquely positioned to address the challenges the profession faces as it moves forward. “Our industry is in the throes of major changes,” he says, “society is changing from accumulation to distribution; products are changing to adapt,” the business model is evolving, and the way regulators view the various professional roles is changing. That presents a “very confusing picture to everyone from Congress to the regulators to the investing public,” he says.
As for the NASD, Simmers believes “there is a knowledge gap in how we conduct our business in certain areas that are important for them to understand so that we come out with regulations that are fair and balanced.” To bridge the gap, advisors should get involved locally: join an industry group, talk to your Congressional representatives, “don’t sit back and let other people decide your future; take an active role.”–Kathleen M. McBride
As President of Legend Financial Advisors in Pittsburgh, Lou Stanasolovich knows how much the little things count in the pursuit of perfection.
“Our firm is always striving to take ourselves to the next level,” he says. “Everyone on our team contributes to the process of us trying to be the best in every single facet of the business. That doesn’t mean we’ve accomplished everything yet, but we’re striving to be better than anyone else.”
Over the past few years, Stanasolovich, 49, has placed a heavy emphasis on educating his staff of 40 people to ensure that customer care is given the highest level of importance. Currently the staff has been viewing short training videos, that touch upon just about everything that’s done in the firm.
“Some are as simple as how to answer the phone correctly, how a conference room is set up for a meeting, or how you would greet people at the door,” Stanasolovich says. “It’s that thinking outside the box that’s going to take us to higher levels.”–Ryan G. Murphy
If you sought a consensus within the industry to name the single individual who understands best what it takes to build and run and grow a successful practice, Mark Tibergien would be the hands-down choice. Combining the data-gathering and analytical skills of his colleagues at Moss Adams with the insights gained from his hands-on consulting work with advisory firms, not to mention the writing skills evident in his published work (especially in this magazine), the 54-year-old Tibergien speaks with wisdom and authority. It’s all part of his “30-year overnight success story,” as he jokingly puts it.
While he admits to seeing great improvement in the quality of firms over the years, he nevertheless worries that “solving the people issue” will remain the industry’s top challenge. “One of the downsides of a nascent industry is that the businesses are small, so there hasn’t been an investment” in the structures and processes by which a firm attracts and retains talented employees, he argues.
It’s telling, then, that Tibergien says he’s “most proud of the work my group does” at Moss Adams, which he attributes to “having hired some really bright people.”–James J. Green
The recent wave of business scandals has made Don Trone’s job a little easier. “When you examine every scandal from Enron up to the current investigation into the conduct of the public pension funds, in every case the common denominator was breach of fiduciary responsibility,” says the 52-year-old founder of the Center for Fiduciary Studies, and its offshoots, the Foundation for Fiduciary Studies and Fiduciary Analytics. All three entities are now grouped together under the sobriquet Fiduciary 360.
Since launching the Center in 1999, Trone estimates that the program has graduated more than 4,500 professionals. “More than half of those are using the designations Accredited Investment Fiduciary and Accredited Investment Fiduciary Auditor. The reason there’s not more people using the designations is that most of the major [brokerage firms] prohibit their brokers from using those designations,” explains Trone. Although the accreditation is recognized by the NASD, Trone says many broker/dealers are just plain afraid of the “F” word–fiduciary.
“We’re going to see dual registration as the norm rather than the exception,” he predicts. “That will be how the industry brings a proper resolution to this Merrill Lynch debate.” That way, he says, when a B/D client seeks “comprehensive and continuous advice,” it will only be provided by its RIA arm.
As the economy has globalized, so has the need for fiduciary responsibility, so in April the Center rolled out a global fiduciary standard that Trone says should be applicable in any developed nation. Using an analogy from his days as a Coast Guard long-range search-and-rescue helicopter pilot, Trone says of fiduciary legislation he’s seen in other countries, “At the 1,000-foot level they look very similar in that they require the fiduciary to prudently manage investments in the best interest of the client. Like U.S. law, the legislation doesn’t provide details of what that prudent process should look like.”
Although Trone is gratified to see that fiduciary practices are becoming standardized and are recognized as an area that warrants formal training, he knows that there’s still much work to be done. “In this country alone we have more than five million investment fiduciaries who are managing 80% of our nation’s liquid investable wealth and we still don’t have a single federal or state agency that’s providing education and training to that five million,” Trone says. “We brought that problem to light and we’re trying to do something about it.”–Robert F. Keane