All Articles Finance Helping Financial Advisors Prepare for the Future

Helping Financial Advisors Prepare for the Future

5 min read


Dale Brown, President & CEO

This post is sponsored by First Clearing.

Dale E. Brown, CAE, is the founding President & CEO of the Financial Services Institute (FSI). Established in 2004, FSI is the only organization advocating on behalf of independent financial services firms and independent financial advisors. FSI’s mission is to create a healthier regulatory environment for their members through aggressive and effective advocacy, education and public awareness. FSI represents 100 independent firms and 37,000 independent financial advisors, reaching more than 15 million households. We spoke with Dale about the state of the industry and where he sees opportunities for 2015.

Question: Do you think more advisors are finally getting serious about succession planning?

Dale Brown: If you look at all the advisors in the country, most surveys will say the answer is no. However, when it comes to independent financial advisors, we do see a trend in our FSI advisor members taking succession planning seriously. While some surveys show less than 20% of all financial advisors have a succession plan in place, our latest poll shows more than 40% of our advisor members have completed a plan.  While 40% is certainly not acceptable, our challenge and opportunity is to keep it moving up.  For example, at our Financial Advisor Summit in September, we unveiled our first-ever Succession Planning Track, which was so well attended we were forced to move it out of a breakout room and into the general session room. So this is an issue we know it gaining awareness within our membership – and we will continue to offer our members tool and education on this critical issue in 2015.

Q: Will the pace of mergers in the independent advisory industry continue to gather steam?

DB: That all depends on who you ask. From mid-July until this summer it was occurring at breakneck speed, but it appears to have slowed down. In my more than 25 years in the industry I have seen this happen more than once. Firms of all sizes and ownership structures serve independent financial advisors and their clients. We believe in the viability and importance of small firms and will do everything we can to represent them and lower their regulatory burden so they can thrive.

Q: Do you think the recent market volatility presents an opportunity for advisors?

DB: I believe whatever the market is doing presents an opportunity for advisors. What advisors do for clients is to take their worry out of the day-to-day happenings of the market and get them on a long-term plan. When clients work with our advisors, they are better equipped to plan for retirement, pay for their children’s education and care for aging parents. If you are working with an advisor for the long run, you don’t need to worry about volatility.

Q: Will the regulatory climate for financial advisors change meaningfully in 2015?

DB: I enjoy playing pundit when it comes to politics, but only as a hobby. My responsibility is to ensure that we are as effective as possible in getting the results our members need and expect. That requires us to understand and leverage the shifting political landscape. Conventional wisdom would say that a Republican Congress will be sensitive to the concerns of the business community, and focus on regulation that works for investors and the regulated. So we do see an opportunity to work with this new Congress to create a healthier regulatory environment where all investors are protected and have access to affordable, objective financial advice. However, this is not going to happen overnight. Change in Washington is most often incremental, unless it is an overreaction to a crisis. Our members must remain engaged and redouble their efforts to become true citizen lobbyists and look at this as a long-term effort.

Q: What are the top initiatives that the FSI will focus on in the short-term?

DB: On the legislative and regulatory front, the Department of Labor (DOL) pending rule to redefine the term “fiduciary” and possibly hinder small investor access to IRA advice may be coming back in January. That will be a major focus for us as we fight to protect the small investor’s access to quality, affordable financial advice. The FINRA Comprehensive Automated Risk Data System (CARDS) proposal is now and will remain another major focus for us. Implemented effectively, CARDS could enhance FINRA’s ability to protect investors. It also has the potential to increase costs and raises concerns related to data privacy and security. We are constructively engaged on both of these very important proposals.

And in the states, we are seeing a real move towards state-run retirement plans, which would disrupt the existing healthy and competitive private market for retirement savings plans. They will also unfairly compete with independent financial advisors who are already providing quality, individually tailored financial and retirement advice to small investors. So we will be working with the states considering these plans to educate them on what our members do and why investors must have access to their expertise.