Recap: 2017 MMI Annual Conference

If you missed the 20th anniversary edition of MMI’s Annual Conference, you missed what many attendees are reporting as “the best MMI conference ever” – different, bigger, and with broad appeal. 520 attendees – a record number – gathered at the Swissôtel in Chicago October 2-4 for three days of candid conversations on the hottest topics in the investment advisory solutions space, with 28 sessions and more than 90 expert speakers.

A highlight of the event was the gala MMI/Barron’s Industry Awards Dinner, where the winners of our annual industry leadership awards were announced, and Matt Witkos was honored as MMI’s 2017 Advisory Solutions Pioneer. The dinner raised a record amount of funds to support MMI’s Gateway to Leadership Foundation and its growing slate of programs to offer career awareness, industry education, internships, and full-time, entry-level placements for aspiring college students from diverse backgrounds.

The conference theme, The Future of Advice: The World Turned Upside Down?, set the tone for a very forward-looking program that examined what investment advice delivery will look like over the next decade from various perspectives. Co-Chairs Estee Jimerson, Managing Director, Head of Asset Manager Distribution & Engagement, Envestnet and David Lindenbaum, Vice President, Managed Accounts & Alternative Investments, Charles Schwab, and their planning committee constructed an agenda that featured top-level speakers and topics at the forefront of discussions across the advisory solutions industry.

Among the keynote speakers were: Morningstar CEO Kunal Kapoor; Stephen Young, Senior Partner of Insight Education Systems; Tim Pawlenty, CEO of the Financial Services Roundtable; and Greg Valliere, Chief Global Strategist of Horizon Investments.

The varied program included general sessions on the technology tailwind changing the face of advisory solutions, managing unconscious bias, funding the next wave of financial services innovation, the “ultimate test of mental toughness,” and a detailed update by MMI President & CEO Craig Pfeiffer on new and ongoing MMI initiatives to expand member benefits and services in exciting ways.

With the extra time afforded by a third day – a format that was very well received by attendees – the agenda also included five sessions on current and future hot topics in four specific subject areas – sales & marketing, regulatory & compliance, technology & operations, and product development. The host of subjects explored in the 20 specialty sessions included the “new” evolution of active management, a look at the 2027 advisory product shelf, the future of distribution, cyber security, sales analytics, the life cycle of asset managers, why digital matters, process automation, the growing generational divide, the ebb and flow of advisor discretion, the truth about sustainable investing, operating in a post-DOL world, trading operations best practices, and the post-robo world powered by digitally-enhanced advice.

To give you a flavor of the broad range of topics addressed, here’s a quick recap of some of the meeting highlights in the form of 20 quotes from our 20th anniversary Annual Conference:

Craig Pfeiffer

“When you go to college to study accounting and you graduate, you can actually do accounting. But when you go to college and study accounting, finance, marketing, psychology or biology, you can’t do advisory solutions, you can’t do wealth management. We as an industry have the responsibility to accelerate our productivity through people coming into our business and growing in our industry, and I think MMI will be very much a part of that.” Craig Pfeiffer, President & CEO, MMI

“I am very honored to be Chairperson on this 20th anniversary of MMI’s founding – I have been involved with and have loved the MMI for many years, and it is very exciting for me to be able to do this.” Roger Paradiso, MMI Chairman, Head of Alternative Distribution Strategies, Legg Mason

“In the next three to five years, I believe the trend toward outsourcing will continue with more and more advisors moving investment management to third-parties, and increasingly the advisor will morph into what I consider to be a life coach.” Kunal Kapoor, CEO, Morningstar

“From my point of view, blockchain is the most fundamentally disruptive idea of our era. If you think about Sweden considering blockchain currency, you won’t need banks any more...As I read more about blockchain – and I am no expert – I’m seeing that this is a really huge idea.” Robert Stanich, Global Wealth Offering Manager, IBM Watson Financial Services

“Advisors are dealing with regulatory reform, the challenge of helping people save for retirement and spend wisely in that retirement, a smaller shelf, and a smaller number of asset managers and vehicles. One of the helpful experiences in all of this is that you quickly become vehicle-agnostic...It’s less about the vehicle. It’s about how can you deliver your investment management capabilities to the advisor and the client at the lowest possible cost.” Kevin Clifford, Chairman & CEO, American Funds Distributors

“The institutionalization of all of the businesses across distribution gives me great optimism. It has focused us on understanding the repeatable disciplined investment process and understanding in what type of markets our strategies will perform or underperform. I do think the level by which we are partnering with firms and advisors and becoming more specialized, more customized and tailored...It allows us to be more focused rather than bringing any product to everyone across all market channels. Those partnerships are important.” Lisa Jones, President & CEO, Amundi Pioneer Asset Management 

“The issues we are dealing with today are similar to those we have been dealing with for the last 25 or so years. But it feels like the pace of change has picked up, and it is likely that what we will see ten years from now in terms of the industry dynamic will be quite a bit different…What investors are looking for in terms of outcomes, good advice, reasonable solutions – that hasn’t changed. But the landscape – in terms of how we get there and how we work together as an industry to help advisors achieve those goals – is on the cusp of something quite significant in terms of the future being different from the past.” Tom Faust, Chairman, President & CEO, Eaton Vance

“We don’t tend to think much about the power of unspoken ‘micromessages’ in the daily essence of what gets understood. More important than anything, neither the sender nor the receiver can be actively, thoughtfully conscious of what is being sent or received. But micromessages do get sent. They do get processed and acted on and can influence how people perform.” Stephen Young, Senior Partner, Insight Education Systems.

“I’m a very big believer in trusted relationships. I’m also a very big believer that technology is something that enhances that trusted relationship. Today, quotes on a website are totally commoditized, trading on a website totally commoditized, portfolio construction totally commoditized. The thing that has not been totally commoditized is that trusted relationship, and that is where there is going to have to be a focus.” Vinnie Ferrari, Principal & Chief Information Officer, Edward Jones

“As we look ahead, I know a lot of people think the business is under pressure, and it is. There are many challenges ahead – regulatory, demographic. From my perspective, turn that around, and look at the opportunities, and I think there are a ton of them. We just have to be creative and do things like asking the tough questions and challenging ourselves to find the value we can derive for our clients.” John Moninger, Managing Director, Retail Sales, Eaton Vance

“For breached organizations, you should come to a point where you move past the breach and build into your organization some level of cyber resiliency. OK, we had a breach, how do we keep moving forward and be able to quarantine that incident off?” Danyetta Fleming Magana, CEO, Covenant Security Systems

“You don’t really have to be an expert at technology or cybersecurity. Just know that every day there will be something – a massive breach, hacking incidents, new vulnerabilities. It’s escalating, and in the last few years the trend has been quicker and faster.” Joe Pedone, Managing Director, JP Morgan Asset Management

“There is a benefit today to scale. If you do your technology right, your HR right, your cyber security right along with legal, compliance, payroll, and all the other elements, that enables people to just focus on investments. Investment excellence drives everything, and if you don’t have it, you won’t be successful.” Carl Katerndahl, Executive Vice President, Nuveen

“Facebook, Amazon, Apple, and Google are the firms we see having the ability to change the game. Microsoft might also argue it should be in that conversation. I don’t think any of them are getting into wealth management in the near term with different reasons for each of them. The one that really could if it wanted to is Google – it has tremendous assets, relationships with all of us, data and even credibility in terms of the intellectual capital they bring to the table…But it is easier for them to make money in all of our businesses by being the gateway to customers’ intent rather than by harvesting that intent themselves.” Matthew Harris, Managing Director, Bain Capital Ventures

“There is an interesting article from a professor at Stern NYU on the 2% phenomenon. Everything in financial services costs 2%. You owe money, it costs 2%. You manage money, it costs 2%...The question for us as an industry is – with all the gains from efficiency, from technology – whether we are going to crack that 2%, and whether it will be done from the outside or the inside.” Atul Kamra, Managing Partner, SixThirty

“The good news is that, on the regulatory front, a lot is about to happen. From an industry standpoint, it is going to be very active and very positive. Soon there will be a new director of the Corporation for Enterprise Development. There are already new teams at the SEC and the CFTC. There are certain to be three new Fed governors and probably a new chair within the next nine months. President Trump has placed in these positions – or is about to place – people who are deep practitioners of financial services or are business line leaders, lawyers, consultants, and operators who know the financial services space as well as anyone in this room.” Tim Pawlenty, President & CEO, Financial Services Roundtable

“The whole aperture of the sustainability lens has widened immensely over the last several years, and all of that ‘stuff’ is important to some stakeholders. That’s at the mouth of the funnel, but at the neck of the funnel are the handful of metrics – really informed and industry-specific to future returns. Those are the kind of signals we are trying to get at and fuse together with our quantitative investment processes.” Chris McKnett, Managing Director, Head of ESG, State Street Global Advisors

“I do know there is not just one way of judging sustainability, but that doesn’t mean it’s fluffy. Similarly, there’s not just one way of finding value…We are used to dealing with a certain amount of ‘wiggle room’ in finance. The fact that there is wiggle room in judging sustainability should surprise no one...It’s a matter of getting more familiar with what is out there and what you are comfortable with and what the client is comfortable with. I don’t think there is a silver bullet.” Julie Gorte, SVP for Sustainable Investing, Portfolio Manager, Pax World Investments

“Some people have learned to focus on solutions rather than problems…You have the ability to choose your thoughts and choosing the right thoughts for performance is, in essence, the definition of mental toughness.” Dr. Jason Selk, Performance Coach & Best-Selling Author

“In all my years of doing this, I have rarely seen the fundamentals look as good collectively as they look right now. Not great, but everywhere you look – the labor market, GDP, inflation, corporate profits – things are positive. I think the fundamentals are what we should focus on and tell our clients to focus on rather than the next Tweet from Donald Trump.” Greg Valliere, Chief Global Strategist, Horizon Investments

As post-conference feedback tells us, it was an exciting and jam-packed three days. If you joined us in Chicago, we hope you left the conference feeling on top of what lies ahead for investment advisory solutions and confident about the invaluable role our industry plays in meeting the needs of investors – today and in the future.

If you were not able to attend, please contact us with questions on any of the topics or resources discussed in this report.

Please also check the MMI calendar of upcoming events, which includes the 2018 Sales & Marketing Leadership Summit, March 20-21 in Tampa and the 2018 Annual Conference, October 15-17 in Dallas.