On one hand, the regulatory emphasis on controlling the actions of investment sales professionals shows a systemic distrust for these contributors to the economy. On the other hand, new regulations, such as the Labor Department’s fiduciary rule, ignore their very existence in the zeal to protect investors. The result is massive confusion and a lack of understanding of the critical role sales professionals play in capital formation, which is essential for economic growth. This confusion and lack of understanding have led to actions that threaten the existence of the investment sales professional.
How do investment sales professionals contribute to the economy?
The role of the investment sales professional is simply to find the capital that is essential to develop and sustain the economy. This capital ultimately comes from individuals, but there are a variety of paths taken to its deployment. There is the direct investor who a sales professional must find and persuade to take the risk of parting with money for a particular investment. There are also the myriad of indirect investors who must be found and persuaded to put money into a financial institution, with the promise of some potential benefit (investment returns, capital preservation, insurance, etc.). Then there are the sales professionals that must persuade financial institutions to invest directly or put money in other financial institutions.
In all cases, the ultimate beneficial owner is the individual investor.
The importance of the sales professional is best understood in the context of economic growth. It is well known that economic growth is the source of income, wealth and the funding of goods and services. Without growth, there is contraction, generally referred to as a recession, and if extended it is described as a depression.
This vital economic growth occurs when capital in various forms is used to produce more capital, which is then used to produce even more capital. Growth turns to contraction when capital is not used or when the expenditure of capital does not produce growth. This process of funding, rewarding and refunding is a continuous one.
Growth occurs because there are far more successes than the loudly criticized failures. Reinvestment of capital is necessary to replace the goods and services that become obsolete.
The deployment of capital to produce economic growth is the central role of the investment sales professional.
This role of capital deployment is the fuel for the economic growth that produces the benefits for the individual investor. Without new capital formation, obsolescence would erode the economy and the standard of living.
In spite of this critical role, there are no trade groups or other organizations dedicated to advancing the role of the investment sales professional. The lack of such a voice exacerbates the undervaluing of this role.
Self-recognition is the first step towards public recognition. If sales professionals are unclear about their contribution to the economy and the wealth of the nation, it is difficult to expect awareness by the casual observer. Much of the focus of the sales professional has been on the investments and products they bring to clients. While this is necessary, when that view is so myopic that it shuts out the sales professional’s worth, public acceptance suffers.
Sales professionals need a creed, in much the same way as other professions. The creed of the sales professional should be based on the value offered by the professional, in contrast with the value derived from investments and investment products. Sales professionals that claim to offer the services provided by others (investment managers and advisors, for example) serve only to deny the sales professional’s own value.
The profession also needs to adopt standards of conduct from within, and not rest idly by, waiting for regulators to write the rules of behavior. As with a professional creed, the standards must reflect the value provided by the professionals themselves. Such internal standards should exceed the externally imposed standards of conduct.
With the combination of a clearly articulated value, a creed that reflects those values and a set of high standards, sales professionals will gain public respect and become recognized as a cornerstone of the financial community.