Dale E. Brown, CAE is the founding President & CEO of the Financial Services Institute. FSI was formed in January 2004 as the advocacy voice for independent brokerdealers and their affiliated independent financial advisors. Since its launch, FSI has grown to 119 Broker-Dealer members who serve more than 178,000 independent financial advisors. FSI also includes over 14,700 Financial Advisor members.
Dale brings more than twenty-two years of association management experience to FSI and broad leadership in government relations and constituent advocacy. He leads FSI’s advocacy strategy, interacting frequently with regulators and policymakers in Washington. Prior to joining FSI at its launch, Dale led the government relations, corporate and broker-dealer programs for the Financial Planning Association (FPA) and the International Association for Financial Planning (IAFP). Dale led the successful fight in the mid-1990s against the IRS’s attempts to force broker-dealers to re-classify independent contractor representatives as statutory employees.
Dale was named a Certified Association Executive (CAE) in 1995. He is a Past President of the Georgia Society of Association Executives (GSAE), and a recipient of GSAE’s President’s Award in 1995 and 2001. In May 2002, Dale received GSAE’s highest honor, the Clifford M. Clarke Award, given annually to an association executive who has demonstrated exemplary personal leadership and service to his or her own association, the association community and the general community.
Dale has been recognized by Registered Rep magazine as one of “Ten to Watch” in 2005; including in Boomer Market Advisor’s “Forward Thinking Five” in 2006; and was named in 2007 and 2008 as one of Investment Advisor magazine’s 25 most influential individuals in and around the planning profession.
He attended the University of Georgia and graduated from Georgia State University witha bachelor’s degree in political science. Dale, his wife and four children relocated in early 2010 to the Washington, DC area.
Q. Why don’t you start by telling us the value proposition of the FSI, and how it’s different now than it was even a short time ago, if at all.
A. Well after almost seven years in existence, the need for FSI is greater than ever before. The regulatory environment, incredibly, has gotten worse for Independent Broker-Dealers and Independent Financial Advisors. Our industry, while not completely immune from problems, for the most part ends up paying for the sins of others. So once again we’re in a situation where Congress and regulators are reacting, and overreacting, to the crimes of others like Bernie Madoff, Allen Stanford, and Wall Street. It is our members whose regulatory costs go up, and it’s ultimately the small investor who loses out, because that’s who we’re able to serve more effectively than any of our competitors. The value proposition today is FSI is the organization in the industry that is speaking with effectiveness and clarity to Capitol Hill and to the key regulators in the midst of this regulatory swirl.
Q. I’m going to wave my magic wand and put you in charge of the SEC. How would you regulate the Independent Broker-Dealer organizations?
A. The easy, knee-jerk answer is to leave us alone, but that’s not realistic. Some level of regulation is needed and healthy for the industry because of the nature of the work that our members do, helping people make financial decisions, and in many cases, we’re handling those decisions for them. So there’s got to be some independent accountability and verification because at the end of the day our members’ business is based on trust, not transactions. One of the important elements of that trust is appropriate and effective regulation. So Dan, I answer your questions pivoting off of that word ‘effective.’ If I were Chairman of the SEC for a day, I would establish tests both in terms of existing regulation and certainly anything new that’s proposed simply by asking: “How is this effective? What is the cost that’s going to be associated with complying with this and what are the unintended consequences of those costs on the small investors in our country?” Wealthy, or high net worth investors as they’re known, have the resources, the wear-with-all and often the motivation to get professional help and advice. It’s the small investor, whose sum total of their retirement hopes and dreams are in a 401K, or (used to be) in their house, they need help with those decisions. So I think measuring the effectiveness of adding additional protection for investors against those who would do them harm, who would rip them off, is in order. Transparency is a key component of effectiveness. Are the disclosures we’re requiring provide valuable information that the investor needs and can digest and understand in order to make a well informed decision? I’d focus on those issues.
Q. Who in the Senate or Congress who serves on committees that you interface with has impressed you with their intelligence, their fairness, their ability to listen?
A. That is a loaded question. I’m sure if I gave you a straight answer, that person would be defeated next week! I’ll give you a couple answers. Two people on the Senate Banking Committee we worked with throughout the Dodd-Frank process come to mind and both of them will around for the next few years. One is Senator Tim Johnson from South Dakota. If the Democrats hold on to the Senate, he is in line to be the next Chairman of the Senate Banking Committee. We found Senator Johnson and his staff very attentive to the unintended consequences of legislation. Similarly, his Republican counterpart on the Senate Banking Committee, Senator Mike Crapo from Idaho, if lightening strikes and the Republicans take control of the Senate he would be potentially either Chair or the number two on the Senate Banking Committee, depends on some other Republican caucus politics there. Those are two that come to mind. On the House side, there are Democrats & Republicans we’ve cultivated good working relationships with: Joe Crowley from New York and Jeb Hensarling from the Dallas area, those are folks that come to mind that would fit that bill, really thoughtful; Peter Roskam from Illinois is another person who has a really thoughtful approach to the issues, not a knee-jerk, ideological reaction to anything.
Q. Insofar as you are the leader of the association group that looks out for the better good of the Independent Advisor, you’ve observed Independent Advisors, and you’ve had some really successful ones serve on your Boards and Committees. What behavioral characteristics do the absolute best and most successful Financial Advisors have in common in your estimation?
A. Keep in mind that my experience with them is in the association context, in their capacity as a volunteer. I really don’t get to see firsthand an advisor working in their practice with their clients. I would say in those that I’ve worked with in a volunteer capacity, probably the most effective are the ones that are really able to step above the day-to-day issues that they deal with in their practice; even the largest advisors are really running a small business, and need to be able to lift their head up and look at the industry-wide issues.
Q. Looking back on your career, you’ve been in a management and leadership role for quite some time. Everybody has a philosophy, whether it’s the Head Coach of a football team, the President of the United States, someone who runs General Motors, or someone who runs an association group. What are the tenants of your management philosophy and how do you get the best results out of your people?
A. A couple of things come to mind. I know it sounds like a truism, probably overused, but it comes from the Bible: “do unto others as you’d have them do unto you;” I think it’s a very simple, but profoundly effective approach. One of the buzz words in leadership circles is “servant leadership.” At the end of the day, my role as the leader of this organization is to serve the best interests of the association by helping it advance toward our key initiatives. For me, the most effective way to do that is to make sure that I’ve got the best people in the right positions on the team and then doing all I can do to make sure that they’ve got everything they need to succeed in their specific roles. Sometimes that’s resources; sometimes that’s freedom, latitude to work in their area of strength and creativity and innovation. Sometimes depending on where they may be in their career, and their own growth and maturity curve, what they may need to succeed is some type of boundaries and some closer day to day supervision. My role as a leader is I’ve got to adapt; a one size fits all approach will not work. I’ve got to be able to know and understand my colleagues and what they’re dealing with, what their strengths are, where their areas of weakness are, and then partner with them to create an environment where they can succeed and where we’re all working together towards the same big objectives.
Q. Looking back on your professional career, who have been your mentors in a business context?
A. I’ve been very blessed along the way to know and work with some really great people who were willing to invest in me. I’ll go back and recall some names that I doubt anybody reading this article will really know. Coming out of college, I had an opportunity to work in a gubernatorial campaign in Georgia and then, while I was still finishing my undergraduate degree, work in the governor’s office with his chief aide, Tom Purdue. He gave me an opportunity, gave me enough rope to hang myself, thankfully I didn’t completely. He coached and mentored me along the way. Once I entered the association management field, I had the good fortune in 1991 to work for Janet McCallen, Executive Director of IAFP. She was an outstanding mentor and coach, and I learned a great deal from her. And then a couple of other names come to mind in terms of volunteer leaders that have been very helpful: Tony Batman, who helped me found FSI seven years ago. This organization would not have happened without his energy, passion, vision and his willingness to work with me to get it launched and started.
Q. You’ve been around the game for a couple of years – do you think the future of the financial services industry is as bright as it was 15 or 20 years ago? Would you recommend your children get in the business?
A. There’s a yes and no answer to that, but at the end of the day, absolutely. Because I don’t believe America will ever reach a point where people don’t need professional advice and help. Where they don’t need sound savings and investment vehicles to help them achieve their important financial goals: retirement, pay for kids’ college, the issue my generation deals with a lot these days, taking care of aging parents. These needs will never go away. Those Main Street goals and the need for help will never go away. I remember Peter Lynch speaking at one of our conferences 15 plus years ago, and one of the things that struck me, just invest in what you know. Don’t invest in something you can’t explain to your children. You can explain toothpaste and soap, people will always need to brush their teeth, always need to bathe. And people will always need financial advice and help, and they’ll always need investment products that will help them tap into the power of the market to do that. I’m hugely optimistic about the future of the industry. The other reason I would say, Dan, are the headlines from several years ago. They have been dominated by scandals: by greed, combined with some amazing ignorance. But those are the very, very, very small minority of the people in this industry. I’m biased, but people in the Independent Broker-Dealer and the Independent Financial Advisor community are entrepreneurial, innovative, and creative, most of them view what they do as a calling. I’ve described it before, that this is a helping profession. The most successful advisors out there, or the most successful Broker-Dealer executives out there, understand that if they work to help their clients succeed whether their client is an investor, or from a Broker-Dealer CEO context, their client is a Financial Advisor, they create a win-win. They help them succeed, they’re going to reap the rewards as well. That just gives me great confidence about the future of this industry.
Q. Other than all the issues that you have to deal with, financial regulatory reform and the compliance curve and all those sorts of things, and protecting the interests of the Independent Broker-Dealers the FSI represents, is there any overriding issue or current issue or systemic issue that keeps you up at night concerning your role in steering the FSI?
A. One of the things that I think about frequently, and I know a lot of other people in the industry think about, but nobody’s developed the right solution yet is where is our next generation of advisor coming from? There are some promising anecdotes here and there, but I don’t see where our segment of the industry has created a system or methodology that makes it easier for younger professionals to enter this business. The economics of the Independent business model are such that virtually all of the new entrants are coming from a prior career either on Wall Street, the Insurance industry, or they’re in a second career. But the pathway for the young college graduate is not that easy, and our membership is aging by the day. I’m concerned about that. There’s going to have to be both an Advisor by Advisor solution to that, a Broker-Dealer to Broker-Dealer solution to that, and I think there’s going to have to be an industry-wide meeting of the minds on how to solve those problems.
Q. If the FSI were to be an automobile, what make and model would it be?
A. I’ll tell you what pops in my head – we’d probably be a Ford. I say that because we’re uniquely American-made; it resonates with me that Ford, of the major American auto-makers, didn’t line-up at the government payment office and take substantial government money in the form of a bail-out. The results speak for themselves in that they just recently posted a whopping quarterly profit. So I like Ford from that standpoint. You know, we’ve got a lot of work to do, got a lot of hills to climb, it’s probably going to be a Ford F150 pickup. It can stand to get in the mud, mud on the tires and fenders, crack a headlight here and there, and still get the job done!