For
Thomas James, the chairman emeritus of
Raymond James Financial, innovation didn't come from quiet contemplation on a mountain top. It was born from necessity, such as his appointment as the company's chief executive, at the age of 27, just before the
bear market of 1973 saw the Dow Jones Industrial Average drop 45%.
"The first innovation I had was in the early 70s, when we couldn't sell anybody any stocks," Mr. James said at
InvestmentNews' second annual
Icons and Innovators awards luncheon, where he was one of 20 people honored for their impact on the financial advice industry.
Mr. James turned the company toward investment banking, and when the market recovered he pioneered an independent contractor model that allowed the firm to grow when it didn't have money to spend on new adviser offices.
"A lot of times, innovation isn't all just about not plagiarizing," he said. "We had proven that there was demand from financial advisers to go into business on their own."
(More: Get to know the 2017 Icons and Innovators)
This year, the awards luncheon was preceded by an Innovation Summit featuring 2016 and 2017 award winners discussing their vision of the future of the financial advice and how they are preparing for it.
Pershing Advisor Solutions CEO Mark Tibergien said it's become less of finance business and more a consumer behavior business. He believes that planning and advice firms will start to attract people who traditionally would have gone into fields like social work and psychology, and this will have a transformative effect.
He also talked about the effect technology has had on the industry.
"Up until now, we've been technology-enabled people. The future will be the reverse of that," Mr. Tibergien said.
Ken Fisher, chairman of
Fisher Investments, disagreed with many of the other innovators that advisers need to be disruptors. Mr. Fisher said advisers face bigger threats than a technology giant like
Amazon entering the market.
"I don't believe that in 10 years from now, the '40 Act will exist," he said, referring to the 1940 Investment Adviser Act. Mr. Fisher argued that the broker-dealers will continue to use their lobbying power to legislate financial planners out of the business.
Instead, Mr. Fisher thinks advisers need to improve the basics — listening to clients, focusing on helping them live comfortably, while
incrementally testing new ways to improve outcomes.
"The biggest challenge is always us," Mr. Fisher said, referring to the business leaders in the room. "The opportunities are out there, the problems are in here."
A frequent topic was the changing role of financial planners. With investment management increasingly commoditized and automated, advisers need to provide value in other fields, like health care planning.
If advisers can adapt, they'll be able to survive whatever technology disruption comes along.
"I think the advice model is going to continue to survive. I don't care if we've got robo-brokers," Mr. James said.
Advisers will have to think of new ways to earn their keep, but the challenges will present new opportunities for future innovators. Mr. James said he wishes he was 35 again, if only so he could tackle the next generation of challenges facing advisers.
He left the luncheon with two pieces of advice. First, use teams that feature younger people who can relate to the next generation of investors.
Second, make sure every adviser in the practice is doing absolutely the best thing for the client, every time.
"If you do that, you're going to be able to ride through almost anything," Mr. James said.
