To answer some of these questions—or least look them in the eye—we've examined 10 people likely to make an impact on the industry this year: our power players.
As more boomer advisors head into the retirement sunset, everyone agrees the question is how to bring in the next generation. For some, like Michael Schroeder at Baird, the answer is to catch them earlier, in college and business schools, where often the flashier careers like investment banking get all the attention. Others, like Raymond James executive Chet Helck, head of the Securities Industry and Financial Markets Association, say the industry needs to provide much better training. He notes that the industry group has an impressive continuing education program for rising professionals, but admits it has not yet tackled education at the younger end of the spectrum.
All agree the industry must make inroads with women and minorities, both as new practitioners and clients. Helck has had his own frustrating experience here, noting his firm's inability to develop Hispanic advisors—despite the company's Florida headquarters. He suggests a lack of tradition as one explanation for the industry's lack of traction with these groups. He remembers his days as an advisor, and recalls female clients who did not want a female advisor because they disapproved of women working. "Women didn't typically follow their mothers into a career in those days," Helck says. Of course, that generational problem is fading, but many of today's minorities are in a similar boat with respect to the financial services industry. "We've got to create momentum and get a pathway that others would follow," Helck says.
Regulatory concerns also loom on the horizon this year as Elisse Walter takes the helm of the Securities and Exchange Commission, Elizabeth Warren assumes a new role as U.S. Senator and industry groups like the Public Investors Arbitration Bar Association and SIFMA also see new leadership. The mission of all of these figures: to hold the industry to higher standards of accountability.
For those leaders, that means emphasizing risk management and transparency as regulators put forth new rules for the industry. For some, it also means making advisors more accountable when they are taken to task in arbitration.
Here is our look at 10 people (in alphabetical order) poised to craft new industry traditions and paths for the next generation of financial advisors.
1. Chet Helck
Incoming chair of SIFMA; Raymond James
When taking the reins at the Securities Industry and Financial Markets Association last fall, Chet Helck, Raymond James executive vice president and chief executive of the firm's Global Private Client Group, did an exhaustive self-assessment of the group's leadership. He asked board members, former board members and committee chairs to identify the major issue facing the industry. Their answer was unanimous. "We believe earning the public's trust and confidence is job number one," Helck says.
Trust must be restored not only in Wall Street firms and advisors, Helck says, but also in the regulatory structure, the governmental process, economy and markets. "Everything that goes to having people believe there's a brighter day ahead and they can invest with confidence, knowing the outcomes will be predicted by the performance of companies, theories, strategies, and things will work as they are supposed to work."
Helck has three prescriptions: thoughtful risk management, transparency and responsible regulation. These form the framework of his agenda at SIFMA for 2013.
Risk can't be avoided, Helck notes, but can be balanced and managed so it does not cause disproportionate damage. What then remains for the industry is figuring out "where the pain points and remedies are" in the regulatory structure. This was the intent of the Dodd-Frank law, he says, and all the studies and hearings that preceded it. "It was well intended, but not completely successful as measured by the public's trust and confidence," Helck says.
The industry must also figure out a way to let clients know in a clear, straightforward manner about costs and risks. The challenge is operational, Helck says, as the reams of required disclosures has not led to clarity.
That leads to responsible regulation. Most of the laws governing the industry were passed in the aftermath of the stock market crash of 1929. They worked well for 75 years, Helck says, but are outdated. And the necessary modernization has been accelerated by a series of financial crises. That means it is vulnerable to decisions made from panic. "It's not just damage control to keep us from another mortgage meltdown. It's creating a framework to work with more expansive investment choices, rapidly changing technology," Helck explains. "We're just playing at a higher level today."