Innovation is the lifeblood of any industry. An industry where innovators are few and new ideas die before seeing the light of day is an industry that will wither. That is why
InvestmentNews is recognizing icons and innovators in this issue.
Their examples should encourage others in the financial advice industry to try new ideas, to not be afraid of shaking up the status quo in their sections of the industry — or of failure. More is learned from failure than from success, so even failure can ultimately lead to improvements.
The icons and innovators recognized in this issue sought to make their areas of the financial advice profession better for their peers and their clients by improving insights as to how people invest or should invest, improving information flows for advisers and their clients, cutting costs for investors or providing new
investment vehicles or technology.
Our two icons, Jack Bogle and
Charles Schwab, reduced costs for investors, and were not very popular with their competitors for doing so. They ignored the nay-saying and proceeded full charge.
Innovators George Kinder and Joe Duran have both helped bring the insights of behavioral finance and financial psychology into the financial advice industry. A key insight is that emotions surrounding financial decisions often lead to poor decisions. Recognizing this emotional context helps advisers and their clients better align their financial goals and life goals with their investment strategies by identifying their hidden biases and fears that often get in the way of success. Both encountered resistance to their ideas at first, but persevered.
Joe Mansueto, as a young stock analyst, recognized that mutual fund investors did not have access to the kind of research on mutual funds that stock investors had on stocks. Realizing that the information gap did a disservice to individual investors, and even to the financial advisers who served them, he started Morningstar Inc., which has become an indispensable resource for investors.
(What: What the 2016 Icons and Innovators has to say)
Twenty-five years ago the idea of socially responsible investing was beginning to appear in the investment policy statements for some institutional investors, notably college endowments and charitable foundations. But it had met resistance from many others, such as pension fund executives and managers, and even financial advisers and brokers, who argued it would reduce long-term returns.
Thanks to the persistent work of Geeta Aiyer of Boston Common Asset Management, among others, most of the resistance has fallen by the wayside. Considering social responsibility and environmental issues has been established as a normal part of investing for many clients.
No doubt there are many innovators working in the financial advice industry who are seeking to develop ideas they believe will improve outcomes for clients. The ultimate success of the icons and innovators profiled by
InvestmentNews — many having faced hardships, setbacks and scorn — should encourage you to continue to develop those ideas in the face of opposition.
