As the Financial Services Institute prepares to celebrate its 10th anniversary, appropriately enough considering its advocacy efforts, by holding its FSI OneVoice annual conference in Washington, D.C., in January, Investment Advisor Editor Jamie Green caught up with FSI’s president and CEO, Dale Brown, to take a look back at its history, to assess FSI’s current state and to look ahead at where it will focus its efforts in the New Year.
Jamie Green: It’s been a busy year for FSI. You’ve added many new individual financial advisor members—750 over the past month from three different BDs—your inaugural FA Summit meeting was a success and you’ve launched a new website with a stronger focus on social media.
Dale Brown: The most important thing to remember is why we accomplished those tasks you referenced. Our members are looking to us to be their advocate—for close to 10 years now—to create a healthier regulatory environment.
From day one, our army of members has been active on the grassroots level, carrying that important message. Our membership growth is such an important part of our advocacy efforts. And our FA Summit deepened our engagement with advisors, partly by giving them tools to get them more committed.
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JG: At the recent Schwab IMPACT conference, former Senator Olympia Snowe spoke about the importance of Americans directly contacting their elected representatives to let them know what they care about. She said that during the government shutdown, polls showed that many Americans were unhappy with Congress, but she lamented the fact that too few Americans were actually contacting their congressmen to tell them that because that’s who members of Congress listen to.
DB: That’s the key to our long-term success: making sure that every member of Congress is hearing from independent financial advisors back in their districts, and to do so not on a one-off basis, but continually over time. When [members of Congress] go back to their districts, they’ll bump into these advisors in coffee shops, in churches—that’s how we’ll get significant influence on these issues.
JG: Speaking of influence, FSI has been very vocal on the Department of Labor’s proposed redefinition of fiduciary in retirement planning, and a recent survey of FSI members showed that advisors themselves were not in favor of such a redefinition. We’ve heard that Phyllis Borzi of DOL will present this redefinition by year’s end. Is that what you hear?
DB: The best information we have is that the DOL is on track to send the proposal to the Office of Management and Budget [OMB] by the end of this year. That [timing] could obviously change, but it will go to OMB first, which will have a minimum of 90 days to review [the reproposal] before it goes to the next step, which will essentially be a repeat of the public comment process that happened in 2010. We’ll get to see the reproposal in the second quarter of 2014.
JG: Any idea if the reproposal will answer FSI’s issues with the original proposal?
DB: We’ve had lots of good ongoing dialogue with the Department of Labor on the issues. That’s been a constructive process, but they’re keeping things close to the vest. Once it’s out, we’re prepared to act: First to read and understand it and analyze it, then we’ll be ready to take action.
JG: Going back to FSI itself, you recently announced some additions to your board of directors and leadership, including big names like Valerie Brown of Cetera, Scott Curtis of Raymond James and Amy Webber of Cambridge Investment Research. How do you get these highly accomplished people to serve?
DB: The power of FSI is that we bring together financial advisors and the executives of the firms that serve and license those advisors to get them to work together to achieve shared outcomes.
Our board reflects the diversity of our membership. The common denominator is the passionate support of the independent FA model in its various iterations. There are numerous firm sizes and ownership structures, but all in support of that key business model, which provides services to a broad cross-section of clients, especially middle American clients.
JG: Speaking of middle Americans, how important is it to FSI to monitor the performance of the stock market, the slow growth in the economy, the persistently high unemployment rate?
DB: It’s important that we understand all the external dynamics and factors, like the economy, unemployment, the markets. But think of it: 25 years ago we were talking about how critical it was to [help advisors’ clients] save for retirement, care for aging parents and do college funding planning. They’re all important for an advisor to understand, to keep her eye on all those things as well. Those fundamental dreams and desires and needs—such as honoring the generation that went before by taking care of them in their old age—haven’t changed.
JG: What about the demographics of financial advisors and their clients? We know the average advisor is in their 50s, and their clients are generally older as well. Where will the next generation of advisors come from? How will advisors attract the next generation of clients? Is your focus on social media part of where FSI fits in on these issues?
DB: The demographics of older financial advisors and clients is a hot topic with all our firms and financial advisors, as is social media. Who will be the next generation of advisors? Who will be the next generation of clients?