The 'new normal' and 'living in beta'
The attendees at the National Association of Professional Financial Advisors are getting used to living in the “new normal.”
The term, popularized by investment guru Bill Gross, founder of Pacific Investment Management Company LLC, the world’s largest bond fund, refers to the new economic and investment reality after the big market crash of 2008. Keynote speaker David Gergen, former adviser to four U.S. presidents, spelled out his view of what the next few years will look like: lackadaisical economic growth in what he described as a “saucer-shaped recovery,” a long period of bumping along before the slightest upturn, in contrast to the more typical v-shaped or u-shaped recovery.
For financial advisers that means boning up on a broad range of products, new markets, and management strategies to take advantage of the opportunities that could arise from stricter regulation and from investors who are demanding a more sophisticated investment discipline and advisers who hold to a strict fiduciary standard of care with their clients. Napfa chair Susan John called it the “power of
trust” that advisers can build with their clients. And while Keynote speaker Tom Bradley of TD Ameritrade said that some regulations were too restrictive, the audience seemed interested in leveraging their fiduciary standing into new markets.
An overflow crowd gathered to hear Gary Allen of Prudent Investor Advisors LLC, tell his story of how he built a profitable business advising employer-sponsored retirement plans. At the end of 2010, he estimated that defined contribution retirement plan assets totaled about $4.5 trillion, and only about 5,000 advisers specialize in serving that market, about half of them registered investment advisers. The rest are a mix of wirehouse representatives and insurance broker-dealers. As regulations tighten up for these plans, registered investment advisers stand to gain much more of that market, he said.
At a pre-conference session, adviser Cheryl Holland described the atmosphere for advisers as “living in beta,” a time of change and opportunity.
Two sessions that attracted large groups, a session on finding a niche and another on serving gay, lesbian and other non-traditional families suggested that advisers are interested in building their markets, though in a between-session interview, niche specialist and session leader Tracey Beckes said her message that advisers need to specialize is still a tough sell.
At the session on serving non-traditional families conducted by adviser Sharon Rich, several advisers said they didn’t have a large non-traditional clientele, but wanted to learn more about potential issues just in case.
Jennifer Lazarus, one adviser who attended the session, said she always comes to Napfa conferences with “an enquiring mind.” -- Lavonne Kuykendall
New NAPFA campaign
A year-long program to help members of the National Association of Personal Financial Advisors market and promote themselves was launched today at the group's national conference.
Called Fee-Only: 24/7, it consists of seven educational modules: public and media relations (available as of today), marketing, leveraging the NAPFA brand, social media and blogs, branding and graphics, communications and multimedia.
Each of the modules, which will be rolled out over the next 12 months, will be presented on NAPFA's website and include a tool kit to help advisers implement each topic. -- Robert Hordt
NAPFA sees tower of power in 'Power of Trust'
The National Association of Personal Financial Advisors is launching a "Power of Trust" branding campaign that will highlight its members' strict professional standards, dedication to objectivity and commitment to investors.
The new marketing strategy is the outgrowth of a two-day meeting in San Diego in February where 40 former and present leaders of the association of advisers gathered to consider the long-term vision for the 28-year-old group. Details of the campaign will be presented to members in Salt Lake City this afternoon at NAPFA's annual meeting, said Susan John, chairwoman of the association.
"This is the brand message for the next decade, looking out to 2020," said Ben Lewis, spokesman for the group, which has about 2,400 members. "We looked at where we've been and where we believe the organization can go."
Like the sizable marketing campaign launched in April by the Certified Financial Planner Board of Standards Inc., NAPFA's branding efforts come in the wake of an economic downturn that damaged the image of financial advisers who struggled to keep client portfolios above water.
Additionally, the Securities and Exchange Commission is considering whether to write a regulation that would impose a universal fiduciary duty on anyone offering retail investment advice, a requirement that investment advisers already meet. Broker-dealers are held to a less onerous suitability standard.
At the opening of the NAPFA meeting this morning, Ms. John called on members to sign a Financial Planning Coalition petition posted online last week that supports uniform standards of conduct for financial advisers. The FPC, which includes the CFP Board, the Financial Planning Association and NAPFA, already has about 3,300 signatories to its petition.-- Liz Skinner
Panel backs N.Y. rule forcing disclosure of insurance commissions
New rules that require life insurance agents in New York state to disclose information about their compensation when selling a policy is a step in the right direction, according to members of a panel at the National Association of Personal Financial Advisors' national conference Wednesday.
Regulation 194, which went into effect in New York in January, requires agents to tell clients that they are compensated by the insurance company whose policy they are selling and that the commissission can vary depending on the type of product, the volume of their sales with that company and other factors.
New York is a leader in insurance regulation and some observers believe other states may adopt similare measures in the future.
Scott Witt, founder of Witt Actuarial Services, said the disclosure rule was a "move in the right direction," but he worried that too much emphasis might be placed on an agent's commission when deciding which policy to buy. "Financial planners have a no-load mentality," he said, cautioning that other factors should be consider when buying life insurance.-- Rorbert Hordt
