Events set to unfold in 2018 will remake the wealth management business. The fiduciary issue is still looming over the landscape, so the big regulators are prominent in our list of 18 people to watch. But industry players are making a difference, too. Big firms are pulling out of the Broker Protocol and prompting recruiting sprees, not to mention lawsuits, which could help reshape the industry for years to come.
Meanwhile, new technology will continue to disrupt the industry, and M&A will remain a major story line as several war chests are being accumulated.
Advisors can prepare themselves by checking out our cheat sheet of key industry players to watch in the coming year. (Spoiler alert: one of our picks bears a striking resemblance to a famous actor.)
Written and edited by Sean Allocca, Lee Conrad, Ken Corbin, Margarida Correia, Suleman Din, Ann Marsh, Toby Salinger and Andrew Welsch.
18. Tobin McDaniel
He bears a resemblance to Benedict Cumberbatch, but Tobin McDaniel’s efforts to sleuth a path ahead for Schwab’s digital offerings is no feat of magic. Schwab is methodically building up its digital-only, institutional and hybrid offerings, and in short period is now second only to Vanguard in the digital AUM race. McDaniel staunchly believes the model will only benefit advisors, introducing the concept of financial advice to more clients. Looking ahead, he sees work being done to personalize digital messaging between clients and advisors.
17. U.S. Rep. Sam Johnson (R-Texas)
Rep. Sam Johnson says he will ramp up his crusade next year to get a commissioner appointed to the Social Security Administration — a seat that has been vacant since 2013. The 87-year-old, a member of the House Ways and Means committee, will continue to put pressure on the administration before he retires at the end of next year. He most recently delivered remarks on the House Floor on Dec. 13 urging the president to make this move. Johnson said in a statement he will fight for the program “until my final day in office.”
16. Rianka Dosainvil
Rianka Dorsainvil runs a virtual fee-only planning firm, Your Greatest Contribution, geared to millennials still in the early stages of building wealth. Based on her advocacy, the FPA chose her as the 2017 chair of its NextGen program, which seeks to engage and bolster the careers of younger planners. Raised in a low-income household in Norfolk, Virginia, Dorsainvil urges her clients, wherever they are starting, to plan strategically for their futures. Look for Dorsainvil to continue to inspire young planners and savers. "It's important for millennials to set a strong financial foundation," she says.
15. Marty Bicknell
If 2018 is shaping up to be a big year in mergers and acquisitions — and the signs strongly suggest that it is — expect Marty Bicknell and Mariner Wealth Advisors to be right in the thick of things. Mariner is expecting its holding company’s sale of Tortoise Investments to close in February, leaving it with a war chest estimated at more than $1 billion, which Bicknell has indicated he plans to use on an “aggressive” M&A campaign. So what will that look like? Bicknell has said that he is looking to purchase seven to 10 RIAs next year, setting his sights on shops with between $250 million and $1 billion in AUM. That will position Mariner right in the middle of a competitive market in which private equity firms, RIA aggregators and large advisor firms are expected to vie for acquisition targets in 2018.
14 Tim Killgoar
Tim Killgoar, the relatively new leader of Raymond James' Financial Institutions Division, oversees one of the leading third-party broker-dealers to banks and credit unions. The division's 756 advisors produced an average of $382,000 in 2016, making them one of the most productive among the 10 TPMs, according to research and consulting firm Kehrer-Bielan Research & Consulting. Tim Killgoar was named head of the bank and credit union business in April, replacing John Houston who stepped down to lead the unit in the eastern region. Killgoar rose fairly quickly through the ranks since joining Raymond James in 2008 as assistant to then-chairman and CEO, Tom James. He moved to the Financial Institutions Division in May 2015, working alongside Houston as director of strategy and consulting.
The wealth management executive that’s got a lock on millennial investors is a former DJ for Jennifer Lopez and also spent a year as WeWork’s chief strategy and marketing officer. Acorns CEO Noah Kerner's resume speaks volumes about the cred and youth culture insight needed to appeal to the next generation. Acorns has over 3 million clients and has been aggressively expanding to widen its reach and cement its relationships with clients. One of its biggest deals this year brought aboard PayPal as a partner, ushering in the first Silicon Valley tech giant into wealth advice.
12. Chris Harvey
Under Chris Harvey's leadership, J.P. Morgan Securities has scored significant wins in advisor recruiting. He moved quickly to take advantage of recruiting opportunities that emerged in the wake of Morgan Stanley and UBS exiting the Broker Protocol. The firm was a top beneficiary of the advisor exodus from Morgan Stanley, grabbing more than $3 billion of the $9 billion in client assets that walked out the door. It also scooped up a $1.2 billion six-member team from UBS. Harvey was named CEO of the firm in March, replacing Greg Quental who retired. The 33-year industry insider previously oversaw the firm's Latin America Private Bank and served as senior country officer for J.P. Morgan in Japan. J.P. Morgan Securities names 33-year veteran insider as CEO Ahead of UBS protocol exit, $1.2B team jumps to J.P. Morgan Securities
11. Jerry Lombard
Janney Montgomery Scott has been on a recruiting tear so far this year. While other regional firms have also enjoyed recruiting success, Janney has put up especially strong numbers: More than 65 advisors managing over $5 billion in assets have joined the Philadelphia-based brokerage firm, according to hiring announcements. Jerry Lombard has served as president of the firm's private client group since 2004, and been with the company since 1983.
Valerie Brown reemerged earlier this year as chairwoman of the Advisor Group after an abrupt exit as Cetera’s CEO in 2014 amid a sale to RSC Capital headed by Nicholas Schorsch — she exited just before his downfall. Now, she’s tackling new problems: Three out of her firm’s four broker-dealers generated less revenue last year, and her 5,000-strong advisor force spent “untold numbers of hours and dollars” on compliance. Whether or not the regulations stick, Brown says, firms are now “operating in the fiduciary era.”
8. Lisa Dolly
Pershing CEO Lisa Dolly’s firm has emerged as a major player in the custodial tech arms race and a key factor in the recruiting fight following LPL’s acquisition of National Planning Holdings’ assets. Pershing in June announced the launch of a suite of tech enhancements known as the Integrated Wealth Experience and a no-transaction fee ETF platform. After LPL unveiled its purchase months later, rivals have peeled off NPH advisors from LPL’s incoming crop in part due to their relationships with Pershing. The new year will bring a new wave of recruiting announcements, with LPL planning to complete the movement of NPH’s assets onto its platform in February. Pershing, which has been building its stable of integrations for years, will also be working to tap business from its B2B digital advice offerings.
7. Elliot Weissbluth
HighTower Advisors is ending the year in a very different position than some analysts and observers had expected. Instead of conceding to a sale of the business, CEO Elliot Weissbluthsecured a major infusion of capital in the form of a $100 million investment from Thomas H. Lee Partners, and the firm is now poised to go on an acquisition spree. Weissbluth has said that he is looking ahead to gobbling up smaller RIA firms that could benefit from HighTower’s scale. Moreover, as large wirehouses have pulled out of the broker protocol, Weissbluth has suggested that he will be presiding over a pivot away from HighTower’s historic strategy of recruiting breakaway brokers in favor of absorbing pure-play RIA shops for HighTower’s next wave of expansion. Weissbluth also indicated that HighTower is looking to expand its service model and may begin offering tax services “as part of a manifold offering.”
6. Henry Kerner
The fates of several bank whistleblowers, including advisors, who alerted federal authorities to the fake accounts fraud at Wells Fargo and fiduciary breaches at JPMorgan Chase may rest with a new Trump appointee Henry Kerner. In October, the Senate confirmed the former prosecutor from California as the new head of the independent federal watchdog, the Office of Special Counsel, which hears whistleblower cases brought by federal employees. Kerner will now preside over a case that could help determine if whistleblowers end up receiving protections in the form of back pay or reinstatement, purportedly provided to them under federal law.
5. Tom Naratil
Since taking over as president of UBS Wealth Management Americas in 2016, Tom Naratil has been overseeing a wholesale transformation of the roughly 6,900-advisor firm. The compensation plan has been simplified, and will remain the same in 2018 (unusual for wirehouses which typically alter the plans annually). The company also says it's moved decision-making powers back to the branch level and to remove layers of red tape. And most recently, UBS exited the Broker Protocol, following Morgan Stanley's lead. Naratil's stated goal is to make UBS the preferred home for high-net-worth advisors. The company's headcount has ticked down slowly in recent quarters, but productivity per FA remains the highest in the industry.
4. Tim Buckley
Vanguard will start the year with a new man on top, as Mortimer "Tim" Buckley is set to succeed outgoing CEO William McNabb, who presided over a dramatic expansion of the firm's assets under management. Now Buckley, along with Larry Fink of BlackRock, the only asset manager larger than Vanguard, will attempt to continue the remarkable growth that has attended the low-cost, indexed investing revolution that Vanguard began more than four decades ago. One challenge Buckley will face will be the continued competition in the fund space as rivals slash fees and offer clients a rapidly expanding array of lower-cost products. TD Ameritrade sent a jolt through the RIA industry in October when it announced a dramatic expansion of its fund offerings from managers like State Street and BlackRock, a move that many saw as the latest push in the race to zero for ETF fees. Buckley has welcomed the competition, pledging that he will continue to slash the prices of Vanguard funds, "and we're going to do it across every product." Buckley also will oversee what figures to be a closely watched experiment, as it intends to adopt blockchain technology — the distributed ledger system that supports cryptocurrencies such as Bitcoin — to update the index data for its funds. If successful, that initiative could reduce human involvement in the indexing process, potentially improving fund stability and further driving down costs.
3. Alexander Acosta
It didn't take long for the Trump administration to start laying the groundwork for what could be a rollback of the contentious Obama-era fiduciary rule. Secretary Alexander Acosta has taken up that effort, initiating a review of the regulation and then announcing a delay of the effective date for the rule's second phase until July 1, 2019. But that doesn't mean the issue is dead. In the coming year, Acosta's department will be working with the SEC as that agency considers an update to its own fiduciary standards. But the first phase of the DoL rule, requiring advisors to act in their clients' best interest, is already on the books, and Acosta has indicated that he is prepared to bring enforcement actions against "willful violations" of the best interest standard. Acosta also has said he wants to work with advisors in a "compliance assistance mode" to help them digest the rule. Regardless of the ultimate fate of the rule, however, some observers have noted that its impact has already been felt, with more firms coming to embrace fiduciary responsibilities and move toward a holistic financial planning service model.
2. David Kowach
David Kowach has his work cut out for him. As president of Wells Fargo Advisors, he's tasked with overseeing a unit that has suffered from advisor attrition over the past year. The firm stemmed that exodus of talent in the third quarter, but advisor headcount, at 14,564, was still down 3% from the year-ago period. That's a net loss of more than 400 brokers. Some of that can be shrugged off as the result of long-standing industry trends, but scandals at the bank have hurt Wells Fargo's image, according to recruiters. Kowach, who took command in late 2016, will have to steer his firm through these and other turbulent waters, which including a critical decision as to whether to remain in the Broker Protocol. Rivals UBS and Morgan Stanley have already dropped out of the industry accord, spurring some industry insiders to see the policy shift as an attempt to keep brokers from leaving.
1. Jay Clayton
Heading into the new year, all eyes will be on the head of the SEC as the agency mulls a number of initiatives that will bear heavily on advisors. Foremost is the potential development of a uniform standard of conduct for advisors and brokers, an effort Jay Clayton began early in his tenure at the commission. Clayton has pledged to coordinate his agency's work with the Department of Labor, which has promoted — then postponed — its own fiduciary regulation. Additionally, Clayton has talked frequently about the need for stronger protections for retail investors, suggesting that enforcement actions could be on the rise as a new task force studies the issue. Cybersecurity practices, suitability of investment recommendations and elder abuse are all on his radar as well.