Investment Advisor: What’s your thinking on industry trends, and which one most concerns you?
Lon Dolber, CEO, president and CIO of American Portfolios Financial Services: My biggest trend concern is private equity. I don’t get it. I don’t see the value of consolidation and private equity.
It does not speak to stakeholder value, it speaks only to shareholder value. I don’t see how it produces a better result for the investing public.
And the biggest problem with it is that it’s a bad message [to our advisors] because it says you have to be bigger to make it. … I don’t get this idea of consolidating and flipping, and consolidating and flipping. Certainly I don’t get the value it provides advisors. [PE-owned BDs] get paid more by getting flipped.
What am I enthusiastic about? Private companies can move the way they want to move forward — serving the advisor — but not just for profitability. We know we have to be profitable, but how profitable do you have to be?
If your goal is to serve the investing public through serving the advisor, there’s a balance — but there’s no balance with private equity. There’s only one thing they have to do — buy and sell. [And] there [always] has to be another transaction.
I don’t have to sell the company — and I’m not going to. To me, [PE companies] are all about creating profits for small group of people.
John Burmeister, Lion Street Financial president and CEO: I completely agree with you. When we’re recruiting advisors, that’s one of the things that we talk about. You want to be part of an organization where you have ownership within that organization.
And Ryan, based on what you said, a byproduct of this builds right into what Lon was saying: a byproduct of the regulation is consolidation. It is forcing that consolidation, which then gets gobbled up by some of the private equity. That’s definitely a trend that is very concerning within our industry.
On the positive side, we’ve hit on a lot of the silver lining. It’s got e-signature, that’s being ramped up. We’ve got diversity that is being explosive. We have challenged the industry to be so nimble to where we can work remotely.
And we’re going to save on travel expenses for who knows how long, because we’re always going to ask ourselves, do we have to go face-to-face for all instances?
Many times I think the industry has evolved because of all these negative things that have happened and it will continue to do so. And we just have to keep pushing it in the right direction.
Dolber: Amy, I love your statement. We’re not for sale. I saw that advertised it. I have it hanging in my office actually, because I went: Me too.
Amy Webber, CEO, Cambridge Investment Research: We talk about this every year I’ve been here. All four of us have been privately controlled, independently owned. Regulation and consolidation is concerning for the industry.
That said, it does create — to Lon’s point — a significant opportunity for those of us who can make the decisions we need to make when we need to make them [because we’re] not worrying about [PE issues and we can focus on] what’s in the best interest of the advisors and ultimately the investors.