With Laurence Barton of The American College

Mar 6, 2006 @ 12:01 am

By Charles Paikert

In addition to his position as president and chief executive of The American College in Bryn Mawr, Pa., and a number of other high-profile academic posts, Laurence Barton's eclectic career has included a stint in corporate communications, writing three books, a Fulbright scholarship and an international reputation as a specialist in risk and crisis management.

So what drew him to financial services?

When he taught a management communications course at Harvard Business School in 1987, Mr. Barton noticed that during the market's crash, a number of his students who were Wall Street executives "remained remarkably stoic, even philosophical, reflecting that Wall Street would rebound and investors would return. Of course, they were right."

That impressed Mr. Barton, 49, so much that he began researching how executive teams, especially in the financial services industry, responded to a wide variety of crises.

In fact, while at Motorola Inc., he set up a crisis management template that was used successfully on Sept. 11, 2001, according to Pat Wiggenhorn, a former public relations executive at the Schaumburg, Ill.-based company. She now is a senior consultant at The Leader's Edge, a Philadelphia-based executive coaching and communication firm.

"It was his legacy in action that helped us deal with that crisis," Ms. Wiggenhorn said.

After accepting the job at The American College, Mr. Barton said, he found the financial sector filled with "incredibly diligent, focused and ethical folks" who see themselves in a noble profession.

"The fact that most of them are adult students seeking to grow even further in their career is about as satisfying a reward as an educator can find," he said.

Financial executives were quick to return the


"Larry has been a charismatic leader with a dynamic vision for the future of our industry," said Louis DiCerbo, chairman and chief executive of New York-based PCP Benefit Plans Ltd. "He has created a citadel of education and training at the college," added Mr. DiCerbo, a former trustee there.

Q. What are your priorities for the college this year?

A. We're trying to build brand awareness for our flagship designations, notably the [chartered life underwriter] and the [chartered financial consultant], and, concurrently, growing our market share for the [certified financial planner]. This year, 29% of all the students who complete the CFP will study through The American College, and we hope to grow that market share even further.

We will also be hiring a number of new faculty members in the areas of wealth management and retirement planning, given the tremendous surge of interest and study in retirement planning because of the baby boomers.

And we will be looking at some of the resources for the college and how we might leverage some of our assets, such as our real estate.

Q. Are there any new designations in the works?

A. I don't see any new designations this year. We have introduced two in the past three years. The first is the chartered adviser for senior living, which has been doing very well in terms of marketplace acceptance.

The other is the financial services specialist for those that are in the introductory phase of their career. In 80 years, we have only introduced nine designations. And we need to really now grow and promote the ones we have without adding [any] unless there's a compelling market need.

Q. You have said that the growing number of unregulated designations is a dangerous situation and that, as a result, the industry is heading toward class actions. What is the danger, and what needs to be done?

A. Well, two years ago, I began to speak out against these designations that can be received after just one to three days in a hotel. I think they are not only dangerous to the adviser, who is ill-prepared to deal with very complex financial models and business needs, but I think they're dangerous to the consumer, because the consumer is unable, in most cases, to differentiate from the 102 designations that we currently count in the industry.

My concern is that what I said two years ago is happening. The secretary of state in Massachusetts has already begun an investigation into one of those designations, and there are others that are very much under way.

And the regulators are doing what we thought would happen. They are asking questions about content, testing, how you assess what an individual has learned, who is accrediting these groups, and whether or not any of the courses can be transferred for college credit into a legitimate college or university.

So the industry, any industry that reimburses these questionable programs, is giving tacit approval to what the advisers are studying. And I would urge all of us to have a civil, thoughtful discussion, because there's a place for wonderful designations from a number of institutions.

But, we have to have chief executives and industry association heads on one page. They must agree that we will not reimburse or support designations that are going to confuse the public and, ultimately, lead to a disenfranchised consumer.

Q. Who are the worst offenders?

A. I'm concerned about for-profit companies that are creating these designations, some of which can be completed simply by sending in your registration fee and buying some books. I would be concerned about any cardiologist that was operating without board certification. I wouldn't want my wife to see a neurologist who did not have training in a university teaching hospital.

So I think the motivation for many of these designations is a fast buck and the expedient route, and the industry's going to pay the price. And we have to be very cautious about this.

Q. What about the so-called Merrill Lynch rule? Do you agree with the Financial Planning Association that brokers should have the same fiduciary obligations as planners, without exception?

A. Well, I feel that the industry needs to talk it out. And the challenge we face is that there are multiple interpretations of the rule from many different perspectives. And I believe the industry this year is going to have to come to consensus, because right now, we have brokers and broker-dealers who have very different interpretations of what they've been told.

And even some of the compliance officers have different interpretations. So the lack of uniformity and clarity has to be resolved this year. And I'd like to reserve judgment myself until we actually see some definitive agreement among companies.

Q. Should there be some sort of federal regulation of the insurance industry, as opposed to 50 states with 50 sets of rules?

A. Well, the challenge is that the complexity of managing an insurance enterprise with 50 state insurance commissioners is not only enormously costly but it's draining to the individual agent.

And at a time when the industry is already consolidating, but when we know that margins for insurance can be extraordinary, the industry, I think, needs to at least ask the very good question you're asking. It may be that a move toward some type of federal charter or federal review might be appropriate.

Q. What kind of growth do you see in financial planning over the next several years? Will large firms become increasingly prominent?

A. I don't think the industry is talking enough, writing enough or analyzing enough the consolidation of the business. When millions, we're talking tens of millions of Americans, have multiple individual retirement accounts, SEP-IRAs, and face the impact of the consolidation business, there will be a huge desire from people to have one statement, one picture at a glance. Which means there's going to be a mammoth test of loyalty in the next 10 years, based on whether or not you are treating me as well as my bank, as well as my investment house.

And whoever wins the game on simplicity and consolidation and financial modeling, I think, can win the war.

Q. So do you think there's room for the small shop as we know it?

A. I do, because there are a number of people who believe that the large companies cannot ever give me the kind of personal service that I can get from my local office of Edward Jones. And those companies, if they train their folks well and educate them well, have a phenomenal opportunity.

There is a space for every current segment of the market. But there will be casualties; there will be consolidation.


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