- The challenge is always “Compliance. Compliance. Compliance”. Regulations continue to be more stringent while the cost of compliance becomes more expensive
- The large players are leaving the business, or reducing their involvement. This creates both new opportunities for smaller firms and problems for the industry
- More use of digital and the emergence of Robo Advisors; and a gender and a generational shift are arriving
With FIBA’s annual Wealth Management Forum in Miami just a few days away, we interview David Schwartz, CEO, FIBA, about the industry landscape.
What are the biggest challenges facing the industry in 2016?
The challenge is always “Compliance. Compliance. Compliance”. Regulations continue to be more stringent while the cost of compliance becomes more expensive. This year, however, the theme of FIBA’s forum is "Transformation and Opportunities: The Consolidation Conundrum.” The challenges for 2016 relate to factors that are driving transformation of the industry. The large players are leaving the business, or reducing their involvement. This creates both new opportunities for smaller firms and problems for the industry. We are seeing, and will continue to see, growth in small family-owned wealth management companies. At the same time, we are also seeing more use of digital and the emergence of Robo Advisors. At the same time, the industry is undergoing a gender shift. Over the next few years, half of the world’s wealth will be owned by women. There is also a generational shift as the Millennials acquire their wealth. The industry has to adjust to all of these changes, while remaining compliant.
Addressing one issue at a time, why are the bigger players exiting the industry?
Compliance. There is a lot of due diligence required, and lots of risk involved if you don’t dig deeply enough to uncover the true owner of an asset. The Panama Papers show just how complex it is to see who really owns what. Tax transparency laws have big players questioning just how far they have to go in order to meet compliancy regulations.
Is compliance easier for smaller, family firms?
Smaller firms do not need all the infrastructure required by larger wealth management firms. They have the luxury of being able to concentrate more directly on their clients.
How is the industry responding to the trend towards Robo Advising?
The industry is embracing Robo Advising in two different ways. Some firms are creating their own robo management service in-house, and others are acquiring small, FinTech companies and bringing these in house. Still others are partnering with Robo Advisers. An excellent example is BlackRock, one of the largest global investment firms. BlackRock acquired FutureAdvisor, a small robo firm, and now RBC and BBVA., are partnering with BlackRock’s FutureAdvisor and integrating the service to digitally augment the advice given by their financial advisors.
That clearly demonstrates how digital is transforming the industry, and how quickly these changes can occur. How do industry professionals keep pace?
The goal and the mission of FIBA is to educate our members on the latest trends. We’ve established various groups to study the issues and present them to our members via webinars, conferences, workshops, seminars, forums and other channels. For example, we recently held a webinar on the Panama Papers, and although the advance notice was short, over a thousand members participated.
Can you elaborate on some of the educational programs you provide?
We provide a comprehensive program of learning opportunities, and professional certifications throughout the year. Our Anti-Money Laundering or AML conferences are the largest in the U.S., attracting on average 1,400 attendees from 40 countries around the globe. Our AML certification courses, which are available both online and in the classroom, are among the most respected in the country. To date, FIBA has certified more than 6,000 individuals in compliance and thousands more in technology, bank security, trade finance and related specialty areas. We also hold regular conferences and instruction on technology innovation, bank security, trade finance, and other areas critical to our industry.
Money laundering is an ever-present threat, and compliance a continuous challenge, do you work closely with the regulators?
To stay on top of developments, FIBA frequently meets with regulators in Washington. Our primary focus is on educating our members and helping them comply with new or changing regulations. As advocates for our members, we also work to influence policy. We submit comment letters and position papers to legislators and regulators, and are respected voice for the industry. In running so many varied programs, we invite the regulators to participate and share best practice ideas. As an example, Robert Villanueva of the US Secret Service will be one of the presenters at FIBA’s Wealth Management Forum in May. His topic, “How the Criminal Underground is Targeting the Financial Sector and our Brokerage and Retirement Accounts,” will help wealth planners understand and recognize cyber threats, and how to respond, the regulators have a job to do, and by collaborating we can all stay ahead of the criminal element.
In addition to the Wealth Management Forum, FIBA is hosting several other international conferences in May---plus AML certification courses and other programs, including a Women’s Leadership Program. How do you plan and execute so many events, and remain on top of new developments around the globe?
In keeping our members informed, we stay agile and flexible---and busy. Yes, this month FIBA is hosting our 32nd CLACE conference on Foreign Trade May 22-24. From May 24-2, we will present our 19th annual FIBA ATFA conference on Trade Finance and Forfaiting. We begin our planning about six months in advance, and revise topics as changes occur or new trends emerge. We stay flexible and adapt to the hot buttons. As mentioned earlier, we responded to the Panama Papers immediately with an informative webinar.
There are a lot of hot buttons for the industry right now. How did you land in the “hot seat” as CEO of FIBA?
I am a banker by experience, with more than 30 years as a senior banking professional within the international banking arena. And I am a lawyer by training. When the first and only CEO of FIBA stepped down, it seemed like a perfect fit for me to step into the position. And it has been exciting.
What is the composition of FIBA’s membership base?
We have about equal numbers international financial institutions, our core membership, and non-financial professionals who support or provide services to our industry in some way, including legal professionals, technology solution providers, consultants and others. We are always open to new members.