Recap: 2018 Sales & Marketing Leadership Summit


More than 245 industry executives attended the MMI Sales & Marketing Leadership Summit in Tampa March 20-21. Widely recognized as a “must-attend” event for the investment advisory solutions industry’s most senior sales and marketing executives, the theme of this year’s Summit was Embracing the Advisor of the Future: The Shifting Landscape of Advisory Distribution. The agenda featured an exceptional line-up of speakers and sessions on a range of key distribution topics – the blurring lines between the institutional and retail marketplaces, the future of advisor product usage, the new realities of wholesaling, the gatekeeper effect on advisory distribution, and the impact of fintech, to name a few.


To give you a flavor for the Summit experience, here is a quick summary of highlights:

Golfing for a Good Cause
A day before the official kickoff of the Summit, 26 golfers participated in the inaugural Gateway to Leadership Golf Outing, playing TPC Tampa Bay to raise funds for MMI’s Gateway workplace diversity program. Special thanks to MMI Governor Kevin Osborn of Envestnet, who served as honorary chairman of the event, and our intrepid golfers. A good time was had by all while benefiting a great cause!

Welcome and Opening Remarks  
MMI’s Arlen Oransky opened the meeting with special thanks and congratulations to the Summit Co-Chairs, Kimberly LaPointe of PGIM Investments and Roddy Marino of Brinker Capital, for their hard work and the robust agenda they developed for the conference. Next, MMI President & CEO President Craig Pfeiffer took the stage to welcome the attendees and acknowledge 2018 MMI Titanium Partner BNY Mellon, Platinum Partner Fiserv, and Summit Gold Sponsor Discovery Data for their generous support of the event and MMI’s programs. Mr. Pfeiffer then introduced MMI Board Chairman Roger Paradiso, who noted the efforts of the MMI team, the expanding suite of MMI member benefits and services, and the continued strength of the membership base.

Lessons in Leadership
John Moninger & Retired Vice Admiral Sean PybusIn introducing the opening keynote presentation, John Moninger of Eaton Vance stressed that, in a period of transition and great uncertainty, it is tremendously important to look for strategic insights from leaders of change both within and outside the financial services industry. He then welcomed Retired Vice Admiral Sean Pybus, USN to share leadership lessons from his distinguished and award-winning career in naval special warfare in U.S. Special Operations and, specifically, the U.S. Navy SEALS.

Admiral Pybus framed his comments about leadership through the lens of teamwork, using compelling illustrations from the history of modern special operations. He emphasized four points that are critical to successfully leading teams: having the right people; developing a teamwork quotient; intelligence (defined not as IQ, but as understanding your customer, your adversary and even your peers and what they are doing); and execution.

Concluded the Vice Admiral, “The bottom line is the more you know, the better it will go. Don’t get paralysis through analysis. You’ve got to take some risks, but you should win before you go in.” More anecdotes and a lively Q&A led by Mr. Moninger rounded out the session.

Greetings from the Co-Chairs
Kimberly LaPointe & Roddy MarinoAfter thanking Admiral Pybus for his comments and his service to the nation, Co-Chair Roddy Marino noted that the planning committee’s guiding principle in shaping the conference agenda was to look at industry challenges and opportunities from the advisor’s perspective. Citing a recent research report by FUSE Research, he noted that advisors’ perceptions of themselves are changing and they are looking for help as they seek to pursue wealth management from a more holistic viewpoint. Five years ago, 32% of advisors viewed themselves as wealth managers whose core goal was to help clients reach their objectives through an advisory relationship, and 24% saw themselves as financial planners. Today, those numbers are 58% and 25%, respectively. In five years they are projected to reach 61% and 31%, leaving just under 3% who see themselves as brokers. Before introducing the next session, Co-Chair Kimberly LaPointe offered perspective on how the agenda was developed and the specific learning objectives for each session.

Executive Spotlight: The Industry Seen through the Consultant's Lens
Craig Pfeiffer, David Hyman & Arjun SaxenaIn opening the latest in a series of Executive Spotlights, Craig Pfeiffer commented, “We really want this session to bring an outsider’s lens and an outsider’s thinking to our industry. This is important because we sometimes tend to get trapped by our own inside-the-industry thinking.” Mr. Pfeiffer then moderated a discussion with panelists David Hyman of Mercer and Arjun Saxena of PwC that focused on industry economics, the increasing pace of change driven by technology, and the evolving roles of the wholesaler, the financial advisor, and the entire chain of intermediaries between the manufacturer and the ultimate client.

Some of the key points included:

“Going forward, when you think about the future of the industry, there will be fewer advisors. Today, the average advisor is 54 to 55 years old and there is a lack of a younger generation coming up through the advisor network. Simultaneously, there is an increased flow of assets going to IRA rollovers. So, assets are going to an area where there will be fewer people to advise those assets.”  

“If you look at the track record of the industry, it has had a way of reinventing its business models and work streams over time. If you look at a metric like ROA over the last 15 or even 20 years, it has largely stayed the same for the full-service brokerage business. The mix has obviously evolved and changed quite a bit as the industry has moved away from transactional products toward fee-based. Firms now have a much, much higher share of income that comes from lending products, be they mortgages or securities-based lending. Going forward, it will be harder to tweak certain aspects, but I certainly believe in the industry’s ability to add new revenue streams, add value to clients, and continually reinvent itself.”

“Technology costs will continue to rise because of the demand for process enhancements that enable efficiency and scaling and satisfy the demands of a more tech savvy generation of investors. Increasing regulatory pressure will continue to drive compliance costs higher, something that will hurt smaller firms unable to achieve the benefits of scale. Lastly, marketing costs – not a large cost component now – are likely to rise as reaching prospects becomes more digital.”

“Firms of all sizes should focus on three issues: enhancing returns for clients, controlling costs for both the firm and its clients, and, more importantly, mitigating risk. This means finding ways to become more competitive with peers, developing more centralized investment policies and portfolios, and streamlining manager lists. With the continuing decline in the ranks of rep as portfolio manager, there will be more reliance on the home office model, making being involved with the home office model critical.”

The Gatekeeper Effect
Moderated by Phil Casparius of John Hancock Investments, this panel homed in on “things we think about as managers every day.” How do we remain relevant to gatekeepers and advisors? If we don’t have shelf space, how do we continue to compete? How do we do a better job of preparing ourselves for getting into models? If we have very little model representation, how do we succeed as an asset management firm?

Phil Casparius

Important takeaways included:

“There will be a huge transfer of assets over the next ten years – not just from Baby Boomers to the next generation, but from financial advisor to financial advisor. The strength of the client relationship with advisors will be key in keeping and growing advisory business going forward.”

“The DOL rule gave firms an impetus to make some hard decisions when comparing home office model performance and advisor-created portfolios. It is going to be interesting to see over the next several years how many advisors are still running portfolios themselves autonomously as compared to those taking home office models and making input to them or accepting them in their entirety.”

“The rep as portfolio manager tide will begin to ebb. It’s not a sustainable value proposition for a financial advisor. With the markets sitting where they are today, if we get a 10% or 15% correction, there’s exposure and the whole risk lens changes dramatically. FAs are going to have to think about what drives their value proposition.”

“It’s no longer about a product. It’s about helping the advisor take his or her business to the next level. That’s the critical conversation, and I think FAs make decisions about who can help them with their practices, and the product becomes secondary in the conversation.”


The Future of Advisor Product Usage: Who Will Shape the Solutions Mindset?
'The Future of Advisor Product Usage' PanelThis session, led by Jeff Strange of Strategic Insight, kicked off with a promise to look at current trends through more of a product lens – how can asset managers do more to influence product placement within changing platform and asset allocation environments? The conversation began with a review of platform trends, how advisor service models have evolved, and the changing role of discretion. That provided a foundation for understanding how product will be used in the future as platforms dictate how asset managers plug into solutions. Finally, the group discussed portfolio construction and asset allocation as well as the development of new products and creating a support mechanism for them.

Solving the ESG Conundrum
Moderated by Laura Gregg of FlexShares Exchange Traded Funds, this session began by asking whether client demand for ESG investing has been overstated. With money on the sidelines waiting to be invested, clients who increasingly want to align their investments with their values, and a growing shelf of ESG products, where are the flows?

Among the expert panel’s observations:

“I think the demand is real, and I think there is an awareness and recognition on the part of financial intermediaries that there is demand – and it’s something they should take seriously. We have all seen those surveys that show a lot of interest from the investor, but not as much from the advisor, and I think this is true in the institutional market as well. The average financial advisor has the misperception that you have to sacrifice performance, that you can’t build a diversified portfolio.”

“Our numbers show that there is real demand and growth – it’s just starting from a smaller base. The large wirehouses are getting prepared for inflows from Millennials and expect that ESG investing will become mainstream. As a result, they are adding a good deal of ESG product to their platforms.”

“Managers must work with home offices on understanding and engaging with ESG products. It’s also critical to convey to investors how their portfolios have effected positive change and to market the governance aspect of ESG.”

President's Report: The Pillars of MMI Membership
Co-Chair Kimberly LaPointe kicked off Day 2 with a succinct recap of some of the key takeaways from the first day of the Summit and a preview of the morning’s agenda. She then introduced Craig Pfeiffer, who reviewed the five key pillars of MMI membership – membership experience, data and analytics, education and professional development, next generation initiatives, and industry developments and advocacy – and outlined major initiatives and programs now under way that align with each. In particular, he discussed the upcoming launch of the Center for Distribution Excellence, the range of new educational offerings available in the Continuous Learning Center, the evolution of the MMI OnDemand interactive data platform, and the new Gateway to Leadership Foundation model.


Keynote Presentation: The Evolution of the Distributor/Manager Dynamic
Tom JamesAfter a brief review of the important junctures in his long and distinguished career, Tom James, Chairman Emeritus of Raymond James Financial, went on to share perspective from his more than 40 years at the helm of the firm. He recalled that his father started the company as a financial planner, but quickly became expert in everything necessary to serve clients in the full sense of the word. “What he brought was sort of a new point of view which in today’s business speak you would call ‘needs-driven management.’ We needed to be able to serve the client in all possible ways from a financial standpoint to improve their lives and enable them to reach their financial objectives. We were not a sales organization built on selling an individual product and, in that sense, our business hasn’t changed much.”

Explaining that he is not “retired at home with nothing to do,” he described a seven-day work week and the very active role he continues to play at Raymond James. “I am the representative of our clients in almost every discussion at the firm. I find that when you get in business discussions, people focus on their own issues, and they don’t focus enough on the client.”

Mr. James went on to discuss proposed changes in regulations and the rollback occurring after ten years, the importance of M&A in driving the capital markets, and the future of the industry. He challenged industry groups to sit down with regulators to address issues and “serve our clients the way they deserve to be served.”

Advisor Panel: The Practitioner's View of the Advisor of the Future
In his opening remarks, moderator Sterling Shea of Dow Jones observed, “At a time of huge change in the business, we see it as being a ‘more-gets-more’ paradigm where fewer advisors who are best positioned to add deeper value for their clients are going to have an incredible opportunity to grow their businesses going forward. Advisors who are less capable of adaptation, driving deeper value and shifting their thinking as the capital markets backdrop changes are going to struggle, and that will expose mediocrity and put a lot of money in motion.”

Among the comments from the financial advisor panelists:

“If you are not growing, you are dying. You must be constantly marketing, and client referrals are a big part of our business. To generate referrals, you must constantly ask. In the high-net-worth arena, the referral wants to meet you first in a low-pressure environment, wants to check you out, and get to know you.”

“Meeting clients’ broader needs requires a broader range of expertise. To deliver full-service and holistic advice, it is critical to adopt a team approach. As an individual, there is no way you can marshal the power to get the job done.”

Other topics covered: The intensification of competition for assets, the importance of the digital footprint, developing succession plans for team members, the importance of knowing and serving all phases of a client’s life cycle, and migrating to a more outcome-oriented model.

'The Practitioner's View of the Advisor of the Future' Panel

Asset Manager Spotlight: The New Realities of Wholesaling Support 
Wendy StruttModerated by Wendy Strutt of PGIM Investments, this panel tackled a broad range of issues confronting wholesalers – how advisors are changing and how distribution professionals must respond to remain relevant, the composition of field sales teams by roles and skill sets, changing the focus of FA conversations, and the importance of advanced designations like CFA and CIMA.

“We are constantly wrestling with how we should square off with FAs,” one panelist explained. “It’s a changing dynamic. If you can’t bring something different and new, it’s difficult to get access.”

“Over time,” said another member of the panel, “the true differentiator for us is that we want to become indispensable partners to the advisors we work with. What that means to me is that we need to ask more questions, we need to listen more intently and understand that – when they recount for us the issues they are facing – we need to come back to the table with solutions that will help them. If we do that really well and consistently, they will come to us before others the next time they need help.”

The bottom line: “Lots of change, but some things never change – and one of them is the importance of great sales management.”


Washington Update
Jeff Bush of The Washington Update closed the Summit with a tour de force presentation on the political and legislative affairs environment in D.C. and the implications for the investment advisory solutions industry. His fact-filled and compelling remarks focused on three areas: The Tax Cuts and Jobs Act, what’s happening in 2018, and the fiscal realities facing our country.

Among the points he highlighted:

Jeff Bush

  • the importance of advisors understanding the impact of changes in the tax code and using that knowledge to develop fiscal and investment strategies for clients,
  • the winners and losers under the new tax laws,
  • the plight of high-income earners in high-tax states,
  • the steadily widening U.S. annual deficit,
  • the 70% of the annual budget allocated to interest on the national debt, Medicare, Medicaid, and Social Security,
  • and the prospect of a Treasury auction sometime in the future where the buyers sit on their hands.

In Conclusion
It was a jam-packed two days. If you were able to join us, we hope you left the 2018 Summit feeling energized and optimistic about the opportunities presented by The Shifting Landscape of Advisory Distribution. If you couldn’t attend, please contact us with questions on any of the topics or resources discussed in this recap.

In either case, check the MMI calendar for upcoming events – and make plans now to join us for the 2018 MMI Annual Conference in Dallas on October 15-17. We will be reprising the well-received specialized tracks that debuted in 2017, and the MMI/Barron’s Industry Awards gala will be another highlight. We expect to top last year’s record-setting attendance with another sellout.

Mark your calendar now for the advisory solutions industry’s most important event of the year. Registration opens soon – we’ll see you in Texas!

MMI extends a special thank you to our 2018 MMI Partners and Summit Sponsors for making this event possible.


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