Sean Walters has had a front row seat to many industry changes. He shares his thoughts with OWS Senior Editor Lorie Konish,ahead of OWS's 20th anniversary party set to take place at IMCA's annual conference in May.
1. In terms of IMCA and the industry in general, where are you seeing the biggest growth?
We’ve grown pretty well over the last three or four years. I think our growth over the last three years is closing in on 25, 30%. When I got here in 2007, we had 6,300 members and today we have 8,100 members. I would attribute that growth to three factors. One, IMCA, among independent advisors who serve in a consulting or an investment management role for their clients, have found us and started to come to our conferences. They have started to join IMCA.
They have started to enroll in our credentialing programs. Just looking at the profile of the members in 2006, 13% of our advisor members were independent advisors or independent broker-dealers. Just this past year in 2010, that number was 21%, so we have certainly seen that growth in the independent channel. We launched a certified private wealth advisor designation, the CPWA, in 2007.
That has really taken off this past year, so the second area where I would attribute growth is the CPWA designation program. We’ve seen a lot more bank trust members as a result of launching this new designation. We’ve seen advisors from the wirehouses and the regional broker-dealer firms, who are in different divisions of those firms, and we’ve seen independents all enroll in this new program. And then the third factor would just be our conferences right now are just fantastic. I’ve been working with financial services conferences for pretty much most of my career, about 13 years, and our evaluations are as high as they’ve ever been in our history.
The numbers are selling out our conferences almost every time we offer them. We’re seeing a growing percentage of people at our conferences who have heard about an IMCA conference experience and have decided to come and check it out, and they’re referring other people. So we’re just getting that nice thing you want in any business where word of mouth is helping grow interest.
2. In the future, do you see IMCA’s member population staying the same or changing?
Let’s imagine the pie. I think the pie will continue to grow as a whole. So I think we will continue to see growth among wirehouse, regional broker-dealer, advisors, consultants.
A portion of the pie is currently at about, if you look at our total membership, only about 51, 52% that are from those wirehouse firms. I think that may go down a little bit as a portion, because I think we are going to grow more quickly among independent advisors. From all sides, the RIA advisor, or the specialist in the RIA firm who is doing investment management who is going to go out there and get their CIMA certification. If they’re a RIA firm serving a high net worth family or individual, somebody in that firm is going to come to us to get their CPWA.
For the independent broker-dealer channel, I think a lot of those advisors who are in the business of charging a fee for the asset management services they offer are going to come to us to get their CIMA certification so they can fulfill those client expectations on the asset management side. So we’re going to see a lot more independent broker-dealer advisors coming to IMCA. And we’ve seen several regional and national banks really push this designation into their wealth management, push it towards their wealth management professionals. I think that will be another area of growth for us.
3. How do certifications help advisors stay compliant, especially in light of recent fraud cases?
There’s an experience requirement. We have two background checks as part of the initial certification process with CIMA. And you have to have three years minimum experience, so certification always should have an experience requirement. The education component is delivered by a top 25 business school. For the CIMA, it’s the Wharton School.
For CPWA, it’s the University of Chicago. And that’s a very high bar we try to set with the education requirement. The examination should be a statistically valid, objective examination. And it should test the topics that are required for competency in that field, in this case investment management for the CIMA and private wealth advice for the CPWA. But then the last one kind of gets more at the heart of your question, which is an ethics requirement, and really the ethics requirement is one of those ongoing recertification requirements.
Anyone who has a CIMA certificate must disclose an issue when it occurs. There’s a professional review process. So peers of the individual review the case, determine if there was an ethics violation. If there’s a sanction, we list public sanctions on the website. So CFP is the other certification program in our field that does this, and that’s the right way to do it. You have a rigorous, objective, fair, transparent process to monitor and enforce ethics violations.
4. Is the use of social media having an effect on the industry?
It’s emerging. I know there’s a lot of buzz right now among the independent advisors, particularly on how they can use it. I think the employee advisors are really having to do that at home at night on their private email address. Most of the firms are not supporting it. From my observation as just an industry person for the last 13 or 14 years, I think it’s all good.
I think communication is always good for the client, for the advisor and for the employer. More people can communicate with each other about how to do things more effectively. Everybody gains as an end result. But the rules of that communication have changed as a result of social media. And I think the firms or advisor affiliates are just figuring out how to manage the rules of that game.
4A. Is there specific advice you give to advisors using social media?
It would be more personal advice than organizational advice, but I would advise advisors to try it out. And if you have to try it out at home, I would try it out with each other before you try it out with clients. I would start to learn the systems with each other. Advisors should share ideas with other advisors. If you’re a product or service provider, you should be talking with advisors or other product or service providers. That all, I think, is pretty fair play. It’s when you start to use it with clients that the rules become a little more challenging.
5. What is the number one issue facing your membership now?
I would have to say that it’s staying in the leading edge of knowledge, and I can’t even modify that with in investments or in wealth management or in the regulatory changes. It’s really staying on the forefront of knowledge. I think our members are very committed to life-long learning and, with all the changes happening around them, they’re just not going to let themselves get behind. Even with what’s happened in the last two or three years, they’re going to keep pushing themselves and their team to stay in front of the knowledge curve. Now if IMCA can stay there with them, if we can keep our spot as a place where they can get that, then we’ll continue to grow. If we can’t, they’ll find someone else who can keep them on the leading edge to that curve.