Good morning. I’m Ken Bentsen, president and CEO of SIFMA.

Thank you for joining us at SIFMA’s 38th annual Private Client Conference. Through its long history, this has become the marquee event for financial professionals who service the individual investor.

We appreciate all of the work our members and staff do to prepare for and make this event a success year after year.. I particularly want to commend SIFMA’s Board and Private Client Group Committee leadership led by Jerry Lombard of Janney Montgomery, Sue Wilson-Perez of Ameriprise, Roger Ochs of HD Vest, John Vacarro of Westport Resources, and Kent Christian of Wells Fargo, each of whom chair one of the several private client committees, for the work they have put in over the last year to build out this robust agenda. I’d also like to thank Roger and John for their service on SIFMA’s Board, as well as Kent’s service as a former member of the SIFMA Board. I also want to thank SIFMA’s Private Client team, led by John Maurello and Tracy Eichler and SIFMA’s Conference team for making this event possible. I also want to thank our sponsors, and of course all of you for participating.

Our Private Client Group is a network of nearly 700 senior professionals representing the entire spectrum of the wealth management community. We include global, regional, and small firms, and cover the employee and independent contractor distribution models, as well as online, self-directed brokerage. Our members range from firms with thousands of financial advisors to those with less than 20. Some serve clients in large cities like New York or Chicago or Houston, while others serve smaller towns and rural communities. Regardless of the firm’s size or location, it remains that SIFMA’s Private Client Group community represents the face of the industry, with a commitment to helping individuals, families and business throughout America plan for the future.

To put the industry in perspective, today, there are over 3,900 registered broker-dealers with approximately 377,000 financial advisors in 161,000 branch offices, serving clients with over $20 trillion in assets. SIFMA’s member firms account for roughly 70% or 265,000, of all financial advisors, 20,000 of which are located in the City of New York, but most of which work and reside in cities and towns across all fifty states. Many of these are individuals who when not serving their clients are active Rotarians or the like, little league coaches and community leaders. In fact, many participate both through the SIFMA Foundation or their own firms in providing critical financial literacy training in thousands of schools across the country.

Our members’ clients are similarly diverse – ranging from newly-wed millennial couples building their nest egg to seasoned investors needing private banking relationships. They represent the face of America, relying on you to work with them to meet their savings goals and plan for a secure financial future.

In his recent State of the Union address, the President said that there should be no mistake that the American economy is the strongest and most durable in the world. I believe that is true, and a major contributing factor is that the US has the deepest, most liquid capital markets in the world, with a broad investor base, both retail and institutional, which underscores the resiliency of our nation’s economy to rebound more rapidly than other jurisdictions. And it is the primary reason that leaders Asia and Europe increasingly look to the US financial market model with envy and desire.

SIFMA’s members play a key role in the U.S. economy by providing much needed financing to users of capital—in 2015, $6.7 trillion was raised in US capital markets. The markets fund business formation, innovation and growth, capital plant and equipment, provide funding for our nation’s critical infrastructure, and help hard working Americans save for long term goals such as education and retirement. The industry also serves as a significant employer.

In fact, the industry as a whole:
o Raised over $2.5 trillion in 2015 for businesses and municipalities in the U.S.;
o Helped 166 companies raise $32.3 billion through IPOs;
o Served individual clients with a combined over $20 trillion in assets;
o Manages more than $67 trillion in assets for individual and institutional clients, including mutual funds and retirement plans; and
o Employs nearly one million individuals in the U.S.

Well-functioning capital markets recognize and drive capital to the best ideas and enterprises, and this efficient allocation of capital provides meaningful benefits to individuals, companies and society-at-large. Over the course of many decades, the US has developed the most efficient, competitive and little “d” democratic retail investor market place that has resulted in lower costs, more choices, and more means for investors to maximize their goals. At the same time, it has allowed the individual investor to share in the growth the nation’s economy by fueling that growth through capital formation. Again, when I speak with my counterparts in other jurisdictions, they
point to the US retail market structure, its breadth, participation and diversification as a system worth having.

Certainly, our financial market system is vastly safer and more resilient than it was at the onset of the financial crisis. But to be clear, notwithstanding the our rebound from the recession, US economic growth remains subpar as compared to previous post recessionary periods, and one must consider that the balance between seeking financial stability and economic growth may well be, and I believe is, out of balance. Excessive regulation in search of de-risking a world based on risk and reward may well be tamping down capital formation and growth.

As an industry, we have a role to play in ensuring that this balance is maintained and the Private Client Group is essential to this task. Our five active Committees and 21 Roundtables provide an outlet for meaningful dialogue on a range of key issues facing wealth managers and individual investors, which helps us to lead by putting forth best practices and recommendations. Through this group and on your own, many of you have engaged lawmakers on new rules and regulations that will impact your ability to effectively serve your clients. This constant dialogue between industry, regulators and policy makers is essential in order to collaborate and create rules that effectively minimize risk while protecting the vitality of our markets.

The laws and regulations governing our industry are ever-changing and evolving, impacting how we do business and serve our clients. At SIFMA, we are following these issues closely, working with our members and policy makers, and advocating on your behalf.

DOL Fiduciary

Before getting on with our program, I would like to take a moment to address three important priorities for SIFMA and its members. The most obvious of course is the now final Department of Labor “conflict of interest” rule amending ERISA that was released yesterday.

It goes without saying that this is a massive rule making that will have dramatic intended and unintended consequences for investors and the firms that serve them. It was a complex proposal that was subject to thousands of substantive comments including those from SIFMA and many of our members. Given the complexity and volume of the final rule text, a text where virtually every word matters and is subject to analysis and interpretation, it is too early to make a definitive statement on the final rule’s actual effects and impact to all of you and your clients. While the Department apparently did make some changes in the text, and in other cases did not, it will take some time to review to determine the impact of those changes.

Our concern has always been and remains that the rule could result in raising costs and reducing choice for investors. Further, we remain concerned that the original premise for the rule lacked empirical basis. What I find most concerning is the nature by which the government advocated for the rule. Quite frankly, it is one thing to surgically and substantively address a systematic market failure based on sound evidence, it is altogether a different matter to malign an entire sector of the economy and by extension every professional employed in it with statements from the official sector suggesting that the brokerage industry’s business model “rests on bilking ” their clients or basing such policy on supposed economic rationale that asserts, without basis, that every mutual
fund in every IRA in America is excessively charged, when the facts say otherwise. I might add, it is a long road to “walk back” such statements with the perfunctory ‘that’s not to say every advisor is bad’ after you’ve just said the opposite. The industry has long agreed that there should be a higher standard of care when providing personalized investment advice, and actively supported and continues to support the congressionally authorized approach of the SEC taking such action. There is no denying that. As with all policy development, reasonable people will disagree on how to accomplish the actual policy, but such disagreement should not give license to malign an entire sector of the national economy and labor force that has played such a constructive role in developing the world’s most dynamic, efficient, competitive and democratic retail investor market place which not only drives capital formation and the American economy, making it the envy of the world, but also provides the means by which hundreds of millions of Americans have the ability to share in the growth the national economy.

Policy with such far reaching implications, no matter how meritorious the intent, should not be developed by innuendo or character assassination, particularly when the proponents lack the empirical data to support their policy position.

That being said, the text is final and our focus has been and will turn to understanding exactly what the rule provides and moving toward the monumental task of implementing and operationalizing the provisions. As we have for several months, we will continue to work with our members on this task.

To help our members and the industry better understand the rule, we plan to hold a one-day conference on May 11 where we will seek to convene expert counsel, consultants and in particularly the Department and other regulators such as the SEC and FINRA.

SIFMA and its members will continue to be an active participant in this process every step along the way and we will continue to work closely with all of you to address the challenges created by the rule and identify workable solutions.

Senior Investors

Another priority for SIFMA is the emerging issues involving senior investors including cognitive dissonance and financial exploitation. According to a recent MetLife study, seniors lose at least $2.9 billion annually to financial exploitation. Furthermore, it has been estimated that about 1 in 5 Americans aged 65 or older have been victimized by financial fraud. Beyond exploitation, with our aging population and increased life expectancy, so to increases the risk of mental impairment. As a result, SIFMA’s  members have undertaken several work streams to better understand the risks,
potential policies and procedures, and possible regulation and legislation to address this
emerging issue.

We are working collaboratively with policymakers, academic experts, psychologists, and other key stakeholders to better understand the risks to senior investors, and the role that firms and advisers can and should play.. Some of you here today participate in our Senior Investors Working Group, which allows us to share scenarios and practices, as well as identify problems and develop workable solutions. We have been collaborating closely with FINRA and will be co-hosting a conference with them this fall in Washington, DC on this very issue.

We continue to push for updated laws and regulations to get ahead of this emerging threat and better protect our senior clients, including laws that would provide advisors with a reporting pathway to governmental agencies and the ability to temporarily hold transactions to permit those agencies to investigate.

We have advocated for both state and federal legislation, such as the Senior Safe Act, to help strike the right regulatory balance that allows financial professionals to have the tools they need to protect senior clients without violating current laws and regulations. This issue is too important for the industry not to engage given the role of financial advisers.

Cybersecurity

Finally, cybersecurity remains a top priority in our industry, and one to which we are all dedicating tremendous resources. SIFMA and our members have been focused on a variety of initiatives aimed at enhancing the financial services sector’s readiness to protect against and detect attacks, and when necessary respond and recover. Over the past 18 months we have developed cyber defense principles for the brokerage and asset management sectors, developed and enhanced our incident recovery protocols and enhanced industry wide information sharing. Recent legislation signed into law will allow us to more easily share information and we remain engaged with government officials and regulators tasked with creating a cyber information sharing network with the U.S. and with other nations. And, we are working closely with our regulators and policy makers so both we and they understand our defensive and recovery capabilities. This is an issue which at its core is investor protection, with the potential of systemic ramifications and will remain a priority.

These are just a few of SIFMA’s priorities, in an industry faced with constantly evolving market trends and demographic dynamics and ever-changing rules and regulations. I want to once again thank all of you for your participation in today’s conference and throughout the year as members of our committees and working groups, as attendees at events, and as advocates on behalf of your profession and the clients you serve.

It is now with great pleasure that I introduce Kevin Alm to give us an overview of today’s conference and introduce our featured speaker. Kevin currently serves at Edward Jones as a Principal of the Client Strategies Group – Solutions. He is also a member of SIFMA’s Private Client Services Committee.

Ladies and gentleman, please join me in welcoming Kevin Alm.