A lot has changed over the last two decades, but there's been one constant at the Investment Management Consultants Association: Evelyn Brust.
Brust, executive director of the Denver-based association since its founding in 1985, has seen small investors flock to the stock market and to full-service financial advisors in unprecedented numbers. Meanwhile, advanced investment consulting, once the near-exclusive province of large institutions, has made its way to the retail level, boosting IMCA's membership along the way. IMCA now counts over 3,300 Certified Investment Management Associate (CIMA) designates.
Through it all Brust has been there, but not for much longer. In July she will retire after 19 years at her post. Registered Rep. senior editor David Gaffen spoke to Brust about her tenure and about her views on the direction of the financial advice industry.
Registered Rep.: How has this industry changed over the last two decades?
Brust: I've seen the application of the investment consulting process that used to be provided to institutions move to individual clients and then to endowments and foundations. It's been a major sea change, and what it has also meant is, there are more consultants and they're seeking IMCA's education and certification.
The other major change is that investment consulting has become a profession. You know it's a profession when it has stringent certification, and establishes standards, and a code of professional responsibility.
RR: What can advisors do in terms of taking ethical standards to a higher level?
EB: IMCA members, first, are required to have continuing education credits. We have ethics panels at every conference — ethics writers have written in the IMCA Journal, and all of our certified members have to comply with our code of ethics. The good news is that even though we have these very high standards, we're filling our classes. We're booked through to 2005.
RR: But some kind of ethics seemed to be missing from the industry for a while, correct?
EB: I think you're seeing now a flight to quality — you're seeing investment advisors who want to do it right and who want standards and who want ethics training. The vast majority of consultants are doing what's right for their clients, and that's a message we need to get out. The way to differentiate yourself is to say, “I'm a member of an organization, and I have a code of ethics and standards I comply with.” The investor wants that.
RR: What direction do you expect the industry to take in the next few years?
EB: Because of the crisis of trust in the last couple of years, there will be a re-examination of the investment consulting processes and standards that investment advisors are providing. The clients have to know what the professionals are doing.
A term I hear a lot now is “lifelong learning.” We're going to have new programs, like certificate courses on alternative investments.
RR: Has the investing public reached a new level of sophistication in the last few years?
EB: What's interesting to us is that our members tell us clients are seeking more education all the time. They take reprints from our publications to send to clients. I don't know if it's generational, but probably what has caused it is the bear market. Clients say, “I have to understand what's going on here.” We're developing a client Web site so the members can send it to clients. It's called investmenthelp.org, and we're going to launch it this fall.
RR: Are you concerned that despite the increased sophistication of the client, investors will end up chasing the hot dot if we get another bull run?
EB: I think the general public will do that. That's human nature. But I don't think the clients of a well-educated investment advisor will do that, because this bear market was so recent. I'm a typical client — I come bouncing in to my advisor and say, “Act on this idea!' and he says, “No!” That's the best thing he does. The importance of the advisor is to keep the client on track.
Although, I sure wouldn't mind another good bull run.