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Setting the Stage with Stifel CEO and SIFMA Chair-Elect Ron Kruszewski

Opening Remarks for SIFMA’s 2025 Annual Meeting

It is an honor to be here and to serve as the incoming Chair of SIFMA’s Board of Directors. It is great to see so many friends, colleagues, and competitors together in one room. That alone says a lot about the strength and collegiality of our industry.

I want to thank all of you for joining us today and for everything you do to strengthen our markets and serve investors.

Before I begin, I should make one thing clear. While I will be talking about SIFMA’s priorities and our new investor survey, the views I express are my own and do not necessarily reflect those of SIFMA. Although, for the record, they did approve my remarks.

I also want to thank Laura Chepucavage for her leadership as Chair this past year, particularly on Treasury clearing implementation and Basel III Endgame. I look forward to continuing to work with Laura, Chair-Elect David Lefkowitz, and Vice Chair Larry Martinez as we continue the important work ahead.

So with that helpful legal disclosure out of the way, let’s talk about where we are, what lies ahead, and why I am optimistic about the future of our industry.

Before we get started, let me give you a quick roadmap for my remarks this morning. I’ll begin with a Market Perspective — where we stand today and some of the signals worth watching.

Then I’ll turn to policy — the key priorities shaping SIFMA’s agenda and how they impact our industry.

And finally, I’ll share some observations from the VISTA Investor Survey — what investors are telling us about trust, confidence, and behavior in today’s markets.

It has been quite a year for the markets. The S&P 500 is around 6,700, up about 14 percent this year and more than a third from where it stood on April 8, which followed the Liberation Day tariffs. That kind of move speaks to something we should celebrate: confidence, resilience, and the strength of American enterprise.

The U.S. economy continues to defy expectations. Consumers are still spending, unemployment remains low, and corporate balance sheets are strong. For all the noise, this has been one of the most impressive demonstrations of economic durability we have ever seen.

But it’s also a moment to pause and take stock. Valuation only really matters at extremes, and valuations now appear historically high.

In nominal terms, the equity risk premium – the difference between the implied earnings yield of the S&P 500 and the 10-year Treasury – is essentially zero. Investors may be taking equity risk without being fully compensated for it.

Stocks, gold, and even Bitcoin are all rising together – an unusual pattern. Gold is over $4,300, up roughly 65 percent this year. Silver has surged more than 80 percent. Those aren’t just statistics; they’re signals. Gold, in particular, is flashing a warning light by outperforming the S&P 500, the Magnificent Seven, and even Bitcoin.

In the great productivity-led bull markets of the past – the 1920s, the 1950s and 1960s, and again in the 1980s and 1990s – the S&P 500 vastly outperformed gold as productivity surged.

So what’s driving this? While I wouldn’t pretend to have all the answers, I think it comes down to one thing: there’s simply too much money chasing too few ideas. The system appears awash in liquidity – not just reserves at the Fed, but in the broader sense of credit extended through private funds, repo markets, and synthetic leverage.

The International Monetary Fund estimates that European and American banks have lent more than $4.5 trillion to hedge funds, private equity, private credit, and other alternative asset managers – firms that rely on leverage to deliver returns. That’s leverage on leverage.

As Jamie Dimon recently quipped, there are now more private-equity firms than McDonalds. That’s a lot of leverage trying to generate returns from the same pool of opportunities.

Post-crisis regulation made banks safer but pushed risk outside them. It didn’t remove the market’s appetite for yield. That risk has migrated – from bank balance sheets to hedge funds, private-credit funds, and other nonbanks.

The irony is that, by pushing debt out of the banking system, we’ve made it harder to see how much leverage actually exists. The balance sheets we regulate may be stronger, but the system we depend on is harder to measure.

The abundance of capital is pushing up both ends of the spectrum – gold and equities rising together – a sign not just of optimism, but of excess. It may also reflect something deeper: a gradual erosion of confidence in fiat currencies themselves. When investors seek assets that feel tangible or scarce, it’s often less about greed than about doubt – a quiet hedge against the value of money itself.

I don’t necessarily see danger lights flashing, but I do see a lot worth watching. In many ways, the banking system has never been stronger. Capital, liquidity, and leverage standards are far tougher than they were a decade ago. But the overall economy may be more leveraged than ever. None of this is a prediction of crisis. It’s simply a reminder that systemic risk doesn’t disappear; it changes shape. History doesn’t repeat, but it does rhyme. Our job is to understand the rhyme before it becomes the verse.

And that’s what gives me confidence. The fact that we can see these shifts, debate them openly, and adjust before they become problems is exactly what makes our markets so resilient. We have strong institutions, creative minds, and an economy that continues to adapt to every challenge. That’s why, even with all this complexity, I remain optimistic about the future.

So as we think about these forces shaping the market – liquidity, leverage, and resilience – it’s a good time to look at the policies that underpin confidence in our system. Because strong markets require smart rules, and that’s where SIFMA’s work comes in.

After fifteen years of pushing back against the Department of Labor’s efforts to expand who is considered a fiduciary, this remains one of SIFMA’s longest-running priorities. The Department’s latest rule is stayed pending litigation, and we continue to support a legislative fix.

SIFMA’s objective is simple: preserve investor choice and access to advice without overlapping or conflicting regulation. We support clarifying that IRAs and other individual retirement accounts should not fall under ERISA or DOL jurisdiction, and that financial professionals providing retirement advice should continue to be regulated by the SEC and FINRA.

The goal is clear – maintain investor choice, protect access to advice, and establish one consistent, transparent standard of care across the marketplace.

As we continue our advocacy on the DOL fiduciary rule, we also need to modernize how we communicate. That brings me to recordkeeping and modern communications.

For years, the discussion has centered on off-channel communications. Rules written for paper and email don’t fit a world of texts, chats, and social media. Artificial intelligence and better data tools can now help document both the investment process and the agreed-upon approach between clients and advisors. But early conversations should guide decisions, not become exhibits in hindsight.

SIFMA has proposed practical updates: eliminate outdated provisions like Rule 17a-4(i), create a safe harbor for firms with reasonable policies, and harmonize recordkeeping standards for broker-dealers and investment advisers. These changes would reduce burden while maintaining strong oversight.

The goal is simple — modernize recordkeeping to match how people actually communicate today, with clarity, consistency, and common sense.

The SEC’s new Treasury clearing mandate aims to reduce systemic risk, but implementation is complex. This rule touches the deepest and most liquid market in the world – the U.S. Treasury market – which underpins global confidence in our financial system.

SIFMA has worked closely with members and regulators to make the rule practical, developing standardized documentation and aligning accounting treatment with FICC’s agent-clearing service. We continue to urge clarity on key issues such as inter-affiliate exemptions and margin treatment, so the rule strengthens liquidity rather than straining it.

The goal is straightforward – enhance stability and transparency while preserving the efficiency and liquidity that make the Treasury market the foundation of global finance.

The SEC’s delivery rules haven’t been updated in a quarter century. They were written for a world of envelopes and postage meters, not smartphones and secure apps. Investors today expect digital access to every part of their financial lives.

SIFMA has proposed a simple modernization: make electronic delivery the default, remove redundant consent requirements, and keep investor choice front and center. Paper will always remain an option, but by request, not by default. Updating these rules will reduce costs, enhance security, and improve the investor experience.

The goal is clear – bring delivery standards into the digital age, creating a system that’s secure, efficient, and environmentally responsible.

More companies are staying private for longer, concentrating innovation and growth outside public markets. Much of the value creation that once occurred after an IPO now happens earlier, before most investors have access.

SIFMA supports expanding that access responsibly. Everyday investors, especially through 401(k)s and retirement plans, should have the opportunity to participate in private-market growth – but never at the expense of investor protection. Transparency, valuation discipline, and liquidity management must remain essential.

SIFMA is working with regulators and plan sponsors to develop frameworks that balance opportunity with oversight. The goal is to broaden access while maintaining the standards that protect investors and confidence in the markets.

The Consolidated Audit Trail began with a good idea – giving regulators a clearer view of market activity. But over time, it has expanded in scope and cost. Today, it collects too much personal data at enormous expense, with governance that hasn’t kept pace with technology or privacy expectations.

The central concern is its collection of personally identifiable information, even when stored under alternate identifiers such as Customer and Counterparty IDs. While that may make surveillance or investigations easier, it still exposes investors to unnecessary privacy risks. SIFMA supports strong oversight but believes privacy must come first. Oversight should never come at the expense of investor trust or market efficiency.

Privacy is not partisan; it is constitutional. Law enforcement cannot search every home without probable cause, and regulators should not have open access to every investor’s personal data. The right balance gives regulators what they need without creating a centralized database of Americans’ financial lives.

The goal is to ensure effective market surveillance while protecting investor privacy, data security, and confidence in the system.

The Basel III Endgame will shape the next phase of U.S. capital regulation. Capital and liquidity standards are far stronger than before the financial crisis, but calibration matters. If requirements are set too high or applied too broadly, they could limit lending, reduce liquidity, and slow economic growth.

SIFMA supports well-capitalized, resilient banks but continues to advocate for rules that reflect the strength of U.S. capital markets and the diverse roles financial institutions play. Capital should safeguard stability without discouraging the activity that fuels innovation and investment.

The goal is simple – keep capital strong and risk-sensitive, protecting confidence in the banking system while ensuring markets continue to drive growth.

Vibrant public markets are the lifeblood of economic growth. They connect innovation with investment, allowing entrepreneurs to raise capital and investors to share in success. Yet it has become too hard and too costly for companies to go public. Disclosure requirements have ballooned, and outdated research-settlement rules have reduced coverage for smaller firms. The result is fewer IPOs, thinner research, and less opportunity for investors.

SIFMA supports modernizing disclosure and retiring the two-decade-old research settlement so analysts can again provide independent, high-quality coverage of emerging companies. Strong disclosure should remain the standard, but process should not become the obstacle.

The goal is clear – restore healthy, accessible public markets that encourage growth, reward innovation, and give investors a fair chance to share in the success of American enterprise.

Arbitration has long provided a fair and efficient way to resolve disputes, but our markets have evolved. Complex, high-value cases now require more flexibility, stronger arbitrator standards, and modern procedures.

SIFMA supports keeping arbitration as the preferred forum for most disputes while advocating reforms that allow larger or more sophisticated cases to use an alternative forum when appropriate. We also support enhanced arbitrator training, better electronic discovery management, and greater transparency.

The goal is to preserve arbitration’s efficiency while improving fairness – keeping it fast and final but better suited to today’s more complex marketplace.

Digital finance is evolving fast. Not long ago, payment stablecoins and tokenization were niche ideas. Today they sit at the center of policy, promising to reshape how money moves and how ownership is recorded. If stablecoins represent the digitization of cash, tokenization represents the digitization of everything else.

Payment stablecoins, backed by U.S. Treasuries, can make payments faster, cheaper, and truly cross-border – connecting “on-chain” transactions with traditional finance. Done right, they can improve settlement, enhance transparency, and reduce friction across markets. But they must be built on trust. Segregation of customer funds must be non-negotiable, with reserves fully disclosed, independently audited, and immediately redeemable.

The same principle applies to tokenization. It’s one of those terms that sounds complicated but really isn’t. If you asked an eight-year-old, they might say, “That’s when you turn things into tokens so you can trade them online.” Tokenization can make markets faster, safer, and more inclusive by placing proof of ownership – of a bond, a building, or a fund – on a secure digital ledger that can’t be lost or forged. But technology can’t replace the fundamentals. Innovation should make finance better, not riskier, and investor protection must remain central.

The goal is to support innovation with integrity – building digital systems that move money and assets faster and more efficiently, but always anchored in the principles that sustain our markets: supervision, segregation, transparency, and trust.

This morning, SIFMA released the results of our new Voice of Investor Satisfaction, Trust, and Advocacy Survey, conducted independently by KPMG. We asked more than two thousand investors about their confidence, trust, and satisfaction with the firms and advisors who serve them.

The results are encouraging. Eight in ten investors say they’re satisfied with the industry, and nearly seven in ten believe we act in their best interests. Confidence is high – but when you look closer, you see a clear generational divide.

Younger investors – the first digital-native generation – are engaging with markets in a completely different way. Nearly three-quarters of Baby Boomers say performance matters most. Only about a third of Gen Z says the same. They want immediacy, transparency, and control. They like the speed and access, and many prefer to invest on their own.

None of that is bad – it’s the world we built. Technology has opened the doors of finance wider than ever before. But it has also brought the impulses of gambling into the world of investing. The art of investing is beginning to share space with the dopamine rush of speculation.

Today, the line between investing and gambling is blurring. Prediction markets let people wager on elections or the weather. Zero-day options trade like games. Leverage is available to anyone with an app. Investing is becoming entertainment – fast, frictionless, and exciting.

But investing was never meant to be entertainment. Access without understanding isn’t empowerment – it’s exposure. When markets start to feel like games, the purpose of investing – to create lasting financial security – gets lost in the noise.

The rules of wealth building haven’t changed. Investing still rewards time, discipline, and understanding. Compounding, not consumption, remains the foundation of success. That truth has never required an algorithm to prove it.

Even as technology reshapes how people invest, trust must remain the product. That means building systems that illuminate risk instead of hiding it, and making education part of every experience.

Confidence in our industry is high, but the work of earning it never ends. And it will matter most with the next generation – investors who are set to inherit more than a hundred trillion dollars in the next two decades.

We need to remind them – and ourselves – that investing and gambling are not the same thing. One builds. The other burns.

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Ronald J. Kruszewski is Chairman of the Board and Chief Executive Officer, Stifel Financial Corp.

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