The Impact of Investing in America

 The world of capital markets is changing.

At SIFMA’s Annual Meeting, a group of the world’s most influential thinkers in the financial services industry came together to discuss the progress made to date, and identify the challenges that lie ahead.

“There is a need for constant evolution of processes and goals,” said Kenneth E. Bentsen, Jr., SIFMA President and CEO.

SIFMA’s membership represents 80 percent of broker-dealer clients’ assets under management, nearly 75 percent of U.S. financial advisors, and 50 percent of RIA assets under management.

“That’s a sizeable footprint,” Bentsen said. “This broad collaboration across the membership enables SIFMA to speak authoritatively on a wide range of issues affecting retail and institutional capital markets.”

Critical contributions to economic recovery 

The American economy has recovered, and is significantly larger than it was in 2007, outpacing other economies around the world.

“America has pioneered a different and better path to prosperity than much of the rest of the world, because of our stock and bond markets,” explained Jim Rosenthal, the COO of Morgan Stanley and the outgoing SIFMA Chair.

In the United States, this financial recovery has relied on banks and security firms, which lend companies money, take them public, and continually fund their growth. Stock and bond markets allow these companies to go from garages to global enterprises. Financial services companies of all sizes and locales – local, regional, and national – help such growth to continue. That economic growth, made possible by capital markets, drives job growth and financial health for individual Americans and their families.

Accomplishments that matter 

Rosenthal highlighted three spaces where SIFMA has excelled in 2014: cybersecurity, equity market structure, and an investor’s right to choose.

In order to improve cybersecurity readiness and preparedness, SIFMA established a decision-making committee of industry leaders to determine market-wide actions to take when confronted with threats. SIFMA also took steps to improve information sharing by deepening integration with government agencies like the Department of Homeland Security, as well as participating in the Financial Services-Information Sharing and Analysis Center (FS-ISAC).

Finally, SIFMA mobilized its financial advisors to preserve their investors’ rights to choose how their IRAs are managed. The grassroots effort held back a Department of Labor proposal from issuance this summer that would have limited investor choice.

The most important challenge ahead 

“It is essential to make our voice effectively heard to help shape reasonable regulation that gives confidence to investors, while at the same time, protecting and preserving well-functioning capital markets,” Rosenthal said.

SIFMA’s key issues to focus on in 2015 include the return of the Department of Labor’s proposed IRA rule, a FINRA proposal that requires securities firms to disclose sensitive client data, and continued partnership with the government to improve cybersecurity efforts.

With 537 member firms and over 270,000 financial advisors, SIFMA advises almost half of all investable assets in America, or approximately 40 million American household savings – and with it, can command sizable influence.

“We have the potential to mobilize membership and be effective partners to government,” Rosenthal said.

For example, in early 2015, the U.S. Department of Labor is expected to re-propose a regulation to change the definition of fiduciary under the Employee Retirement Income Security Act, which would effectively limit retirement advice for many 401(k) and IRA investors.

“Starting in 2015, we can for the first time effectively mobilize financial advisors and clients and begin to become the truly effective advocate for reasonable regulation that we need to be,” Rosenthal said.

Assessing all that has been accomplished, Bentsen said that the state of the association is strong and well positioned for the future.

“As we come to the end of the year, I think it is fair to say that SIFMA’s members have made a positive impact on the well-being of our nation’s financial markets, and the millions of American consumers, investors, businesses, nonprofits and government who depend on their stability and resiliency every day.”

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Randy Snook

Executive Vice President of Business Policies & Practices

SIFMA

Conference co-chairs, Cory Anger of GC Securities and Sasson Posner of Deutsche Bank Securities, introduce the 2015 IRLS Conference: Looking Ahead – The Future of the ILS Market.

The opening panel, The Next 20 Years in the ILS Market, debate a number of factors impacting the trajectory of the ILS market and what it means for the (Re)insurance sector.

Keynote speaker, Karen Clark, President and CEO of Karen Clark & Company, asserts that complexity in hurricane modeling is not equal to accuracy, and makes the case for ILS to embrace new technology as the industry continues to evolve.

Moderated by Aurora Swithenbank of Goldman, Sachs & Co., the The Next Frontier panel closes the day. Panelist, Michael Millette: One of the key factors in the industry’s evolution is investment-oriented reinsurance.