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SIFMA panel addresses how financial firms can serve individual investors better

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Modern Money

Research firm Cerulli Associates forecasts that more than 25,000 financial advisers will retire or leave the industry by 2017. How the industry copes with that lost was a hot topic of a breakout session about individual investor advice Tuesday at the SIFMA Annual Meeting.

“I don’t think we’re doing nearly enough as an industry to address this problem,” said John Taft, CEO of RBC Wealth Management-U.S. Taft said that RBC has changed the compensation of its advisers to incentivize them to build succession plans and bring on younger team members. He notes that even clients are asking advisers about their succession planing.

Kent Christian of Wells Fargo Advisors said the company is focused on its training program to attract and retain new advisers, pairing them with experienced hands. “Teaming is the best way to give young advisers a shot at success,” he said.

The fate of a fiduciary standard for financial advisers will have a dramatic effect on the advice market for individual investors. “A fiduciary standard written properly will be transformational for our industry,” Taft said. He called the Department of Labor’s proposed fiduciary standard “awful” and said if implemented it would reduce the advice provided to investors with small accounts. Taft favors SIFMA’s position on a fiduciary standard. He hopes the Securities and Exchange Commission with engage with the Labor Department to improve the rule.

How financial firms navigate regulatory complexity can help them stand out from their rivals, Taft noted. “Administrative tasks are eating up more of our advisers’ time,” he said. His company is working to prevent regulation from destroying adviser productivity.

Technology is key to enhancing adviser productivity, but there is a disconnect. Lisa Kidd Hunt, executive vice president of international services and special business development at Charles Schwab & Co., pointed out that a recent survey found that 87% of affluent investors use social media, but only 4% interact with their advisers on social media. “The industry is behind,” she said, and should work with regulators to clarify rules to allow more financial advisers to engage with clients on social media.