Face the Membership with CNBC’s Tyler Mathisen

NICSA members kicked off the second day of the NICSA’s 2019 Strategic Leadership Forum with an appearance from CNBC’s own Tyler Mathisen. Mathisen, “Power Lunch” Co-Anchor & Vice President of Events Strategy at CNBC, used his vast experience in financial journalism to lead a group of C-suite executives through a discussion around the latest business trends and challenges.

“We had a pre-session breakfast this morning where I thought we would talk about the matter of fee compression and working with lower margins, but our conversation pivoted to the attraction of talent and the retention of talent,” Mathisen said.

During that earlier session, Renee LaRoche-Morris, Chief Operating Officer at BNY Mellon Investment Management, said that the business of financial services and banking has been under attack for the past decade or so, making it essential to “convince young talent that banking is still cool.”

“I think there are opportunities to reach out to young folks in high school and college to get them acquainted with financial services again,” LaRoche-Morris said. “Secondly, there are really ‘cool’ roles for young people that involve technology, that involve interacting with people, and involve bringing financial services into the future. We need young, talented, technically-oriented people to fill those roles.”

COMPETITION IN THE TECH ERA

Mathisen broached a similar topic with Amrit Kanwal, Executive Vice President and Chief Financial Officer at MFS Investment Management.

“You’re out there competing for young talent. There’s Google, there’s Facebook, there’s Amazon — they’re going on campus, just as you are, and they’re hiring 10,000 graduates at a clip,” Mathisen said. “They’re also willing to pay very flush salaries because they make a lot of money. You’re in a business where costs are being compressed. How do you convince that grad to come and work for you, and not go to Google?”

According to Kanwal, there’s a mismatch between the supply of asset management talent and demand for it.

“It’s a little tougher now to get the best accounting graduates, technology graduates, and ops folks because what used to be a premium that was paid within the asset management industry is very quickly shrinking,” Kanwal said. “And there are too many of us. We’ll reach some sense of equilibrium, and we’ll be able to get the best again. In the meantime, you rent the talent. That suits the talent today because they can come in on a surgical strike, fix the problem, and move on to the next one.”

Kevin Mahn, President and Chief Investment Officer at Hennion & Walsh, Inc., said distribution channels are vastly different from those of just ten years ago.

“It’s a much more collaborative approach than it was in the past when you were just selling product — now, we’re trying to marry solution to need,” Mahn said. “Looking ahead, you could almost see that B2B becoming direct to consumer; the advisor gets taken out of the equation. If we don’t start working on that, we’re going to miss out on the wealth transfer that is going to take place in the next ten years.”

FUELING BUSINESS GROWTH

In an industry grappling with the burdens of margin pressure, Mathisen questioned how the panelists are attempting to generate growth within their businesses. For Mahn, the key is including complementary services to justify fees and zeroing in on FinTech.

“It’s much more of a financial-planning driven industry now than it is just an investment selection industry — they’re now packaging insurance services onto the practice,” he said. “I also think becoming more efficient goes back to technology, and the bridge to getting that next generation interested in Wall Street is FinTech. We’ve seen numerous examples of FinTech bringing new assets and fresh minds into the industry.”

Kanwal said active fees are dropping, but passive fees are dropping at twice the rate. There may be a secular shift toward passive, but within that secular shift, Kanwal believes we’re in a cyclical low point.

“As interest rates ultimately do rise, as the U.S. dollar weakens, maybe there’s a market correction. I think a lot of people today are buying passive because it’s cheaper — and they are right — but they also believe it’s safer, and they’re wrong about that. I think active will see its day again.”

LaRoche-Morris said the social media era demands a more technically savvy approach to distribution. Today, online communities are essential for younger generations, who seek feedback on just about everything.

“In terms of how we allow people to interact in a community in a technical way, I think it will have to come through some sort of platform that is going to have to be in their pockets,” she said.

 

Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the NICSA panel, they do not necessarily reflect the views of NICSA or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.



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