Specifically, the group tackled the question of trust in financial services and what businesses can do to earn the trust of consumers. Also discussed were ongoing topics of interest such as DEI and the rise of ESG investing.

Read the Full 2022 Forum Report

There’s no easy answer to the quandary we find ourselves in. But one thing that could help is a good, healthy dose of ethics. That’s where the American College Cary M. Maguire Center for Ethics in Financial Services’ team is stepping in to help. As the only ethics center within an academic institution focusing exclusively on the financial services industry, the Center stands alone not only because of its singular nature, but because of the passion and dedication of those running it to change the industry, and society at large, for the better. And you might be surprised to learn that those fixes actually start small.

“If there’s one thing I’ve learned, it’s that regulation isn’t the answer to every problem,” says Azish Filabi, JD, MA, executive director of the Center for Ethics in Financial Services. She’s a lawyer by training, and had her first glimpse of the importance of ethics in financial services during the 2008 financial crisis while working at the NY Fed. “We’ve all seen the evidence of rising inequality, financial and otherwise, and how unfettered some parties have become with taking advantage of people and hurting the environment despite all the laws on the books. Investors and the general public aren’t happy, and the problem has become so bad it needs to be addressed. Because of this, decisions at the individual and the firm level have become extremely important.”

Trust in the financial services industry has been famously low since 2008, with an oft-cited Edelman survey ranking it one of the least-trusted business sectors among most Americans. However, there have been encouraging signs of progress, including data from the Center for Ethics in Financial Services’ own in-depth study on the topic. Full results from the study will be published soon, and findings have been rolling out over the past year, including takeaways from interviews with corporate leaders on the importance of trust to their business models and an exclusive webcast discussing those findings.

“We’re optimistic,” says Domarina Oshana, PhD, the Center’s director of research and operations, and the driving force behind the study. “There’s been some improvement over the past few years, to the point where our data shows financial services ranking in the middle, not the bottom, of trust among service industries.” A social scientist with roots in psychology, Oshana is no stranger to issues of trust herself. “Among scientists, we have a code of ethical conduct when doing research…so, ethics has always been part of my work,” she says.

As this duo runs the Center for Ethics in Financial Services’ day-to-day operations, they’re constantly inspired by the mission of The College to spread knowledge and education and benefit society. “I was excited to join The College because ethics is fundamental for the institution and our leaders, both professionally and personally,” Filabi says. “You’d be surprised how many business schools don’t put a heavy focus on ethics in their curriculum, and I think The College has the chance to be a guiding light in business education because of it.”

Trust as a concept is fundamental to human existence, especially when it comes to other humans: if we didn’t have a basic expectation that our fellow drivers would obey the rules of the road, for example, we’d never be able to drive well ourselves. This means ethics, as the foundation of building trust, must be equally fundamental. “When we interview people, we often hear them say they used to be more trusting, but now they’re not, and they’re sad about it,” Oshana says. “It’s elemental to want to have more trust because we need trust to survive, and that goes for organizations and people. Hearing they’re sad about losing it makes me hopeful they’ll want to rebuild it.”

Phase one of the Center for Ethics in Financial Services’ study focused specifically on financial services leadership, and phase two looks specifically at consumers. Through a combination of a nationally representative survey, focus groups, and one-on-one interviews with a mix of people across gender identities, race and ethnicity, and income levels, the Center determined that a sense of trust and an authentic personal connection between companies and advisors and those they serve is of critical importance. “Among consumers, we’ve seen they don’t always differentiate between brands and corporations in financial services,” Filabi says. “They see the industry as monolithic, and there’s a disconnect between their understanding of how it works; if companies are doing well, they must be taking advantage of consumers, and therefore, consumers can’t be doing well.”

Oshana says change on this front needs to start with CEOs and business leaders recognizing the trust problem in their own backyards. “Often in our interviews, we hear people at the top acknowledging that trust is an important issue, but the problem isn’t their company—it’s someone else’s,” she says. “They need to realize it can happen even within their business.” She also notes that people often hold financial services companies to a higher standard of behavior than other businesses. “We’re dealing with people’s investments, retirement, mortgages, and lives,” she says. “Having friendly employees and treating all people fairly is a start, but that doesn’t build trust alone. Building clients’ wealth, keeping promises to them, and delivering results while maintaining ethical standards is the key to progress.”

Much of these principles of trust can be seen in the upcoming phase three of the Center for Ethics in Financial Services’ trust study: stakeholder mapping. Filabi says an exploration of the term “stakeholder” and how it accompanies and parallels the more familiar concept of “shareholders” in business culture is at the heart of the Center’s work. “In the old days, the economy was all about shareholder capitalism and maximizing profit,” she says. “A company’s goal was usually to create a product and sell as much of that product as possible without an emphasis on innovation. Now, consumers are becoming more discerning, and they expect change and evolution in their products and services to stay relevant and useful. They want a voice in the decision-making process. We’re seeing that focusing just on pleasing shareholders is shortsighted, and it doesn’t benefit the company or society in the long run. Companies, including those in the financial services industry, need to start thinking about taking their consumers—the other stakeholders—into account to build trust and affect real change.”

That trust, says Filabi, starts on the individual level, with advisors, senior leadership, and other financial professionals agreeing to abide by their own codes of ethics, and companies policing themselves more effectively. “Consumers are seeing the connection between how companies treat their employees and their clients,” she says. “How companies react to their employees speaking up about concerns within the organization matters.”

Oshana says the Center for Ethics in Financial Services’ research links competence, authenticity, and credibility as important ingredients of building trust in financial services. “Of course, it’s important to consumers to be treated well by people working for the companies where they put their money, but they also don’t want that treatment to be based on high fees or excess compensation,” she says. “Capability and integrity need to go hand in hand, and most people we’ve spoken with agree that compensation should be based on performance.”

In this way, Filabi and Oshana see their work with the Center for Ethics in Financial Services to be vital in supporting discussions about ethics and building trust in the financial services industry, and spreading the word about The College as a champion of business ethics and a trusted name among professionals and consumers alike. “The COVID-19 era has seen decreases in trust across all kinds of institutions, and advisors and clients often seek an external trusted resource, where they can get information and acquire knowledge,” Filabi says. “The College is an ideal third party to collect, vet, and share that information with everyone so that all can benefit from it.”

As they work to raise the profile of The College and its culture of ethics both inside and outside of the financial services industry, the leaders of the Center for Ethics in Financial Services see opportunities everywhere, despite the challenging landscape of today—and their strong, close-knit bonds as a team, built on mutual understanding, respect, and trust, make it easy to see why.

“People often think there’s no reliable way to demonstrate ethics, but actually there is,” says Oshana. “For example, the accreditation The College has as an educator is just one of those ways, and it shows we have the best interest of our students in mind as they go through our programs.”

Filabi adds, “We have the opportunity to make a nebulous concept like ethics more tangible for consumers, individual advisors, and business leaders to speak about it more effectively and make society as a whole better. I can’t imagine a mission of greater import than that.”

The Center for Ethics in Financial Services works to expand its reach through leadership workshops with companies and by word about how financial services businesses, leaders, and advisors can put the principles of ethics and trust into practice for the benefit of themselves, their clients, and society.

Receive the latest information on timely topics and trends, as well as updates from the Center on its upcoming research and programs. Let us be your trusted resource of expert knowledge on all things ethics in financial services.

To learn more, sign up for the EthicAlly newsletter at Ethics.TheAmericanCollege.edu or email Ethics@TheAmericanCollege.edu and become a part of our growing community.

In our lifetime, many historical events are shifting America's perspective. We've witnessed the first African American president elected, the first African American and Asian American woman elected vice president, and the first Black woman appointed to the Supreme Court. We've also seen the murder of Black people by police and the social unrest to follow, opening America's conscience to racial and economic inequality.

We are now at the beginning of the end of economic inequality. While economic equality will not occur in two years, five, or maybe even ten, our hope is that it is progressing, ensuring the day is coming when all Americans, regardless of race and gender, will have equal economic opportunity. The College will be part of this legacy.

In two short years, the American College Center for Economic Empowerment and Equality, under the leadership of Karim Hill and Dr. Pamela Jolly, has introduced Know Yourself, Grow Your Wealth, the Black Women, Trust, and the Financial Services Industry research study, which Wealthmanagement.com has recognized as a 2022 Wealthies finalist for Industry Research, and the Black Executive Leadership Program, also recognized as a 2022 Wealthies finalist for Industry Disruptor.

Our work is awakening the financial services industry, and I'm proud to announce The College has also been named a finalist in ALL FOUR categories of this year's ThinkAdvisor LUMINARIES.

I hope Juneteenth is a day of celebration for you, celebrating our freedom and the ability to unite and transform for the better. 

The Growth Puzzle

For emerging RIAs, finding the right growth strategy can be difficult. Large RIAs tend to capture the lion’s share of market growth, and plotting a path to success can be hard for smaller firms.

One proven answer to the growth puzzle is specialization (see Figure 1).

Charles Schwab. 2021 RIA Benchmarking Study. 2022.

8 Benefits of Specialization

By focusing on specific areas of expertise, RIAs can set themselves apart from their competition, enhance their service offerings, build a strong reputation, and establish long-term relationships with clients.

Specialization—and particularly building a team offering a range of specialized services—offers many benefits, including:

1. Faster Growth: By targeting specific fast-growing niches such as pre-retirement Baby Boomers or retirement income planning services, RIAs can boost their growth.
    
2. Greater Sustainability: Diversifying across different client demographics helps RIAs build a more sustainable and resilient business.
    
3. Better Client Service: By specializing, RIAs can develop a comprehensive suite of tailored services, which can help them meet the diverse needs of their clients (see Figure 2).    
    
4. More Lucrative Clients: High-net-worth clients demand an array of specialized financial planning services, and RIAs that do not offer them will not attract these highly desirable clients.
    
5. Diverse fee structure options: Offering a range of specialized services enables RIAs to diversify their fee structures – they can potentially capture both fees-for-service and AUM fees, or even introduce tiered subscription models.
    
6. Greater Client Retention and Referrals: Specialized services help RIAs deliver better results for clients, and this can lead to increased “stickiness” – it enhances the probability that clients will look to you first when requiring (or recommending) specialized advice.
    
7. Easier Recruiting, Better Retention: Experienced advisors with specialized knowledge may view specialized RIAs as an opportunity for partnership, while promising young advisors may look at your firm as an ideal place to gain experience, develop a specialization, and stay for years. 
    
8. Better Ability to Differentiate: In a crowded marketplace, specializing allows RIAs to stand out from the competition.

Spectrem Group. Wealthy Investor Series: Wealth Management Redefined. 7/2021

Perhaps even more importantly, specialization can help RIAs meet client expectations for excellence, deep knowledge, and detailed, actionable strategic insights.

To learn more about how specialization can boost RIA profitability and growth, visit our RIA Resource Center now.

More From The College:

Get specialized retirement planning knowledge with our RICP® Program.

Learn more about our ChFC® Program.

See our CFP® Certification Education Program.

Get the details of our WMCP® Program.

Look inside our CLU® Program.

Assembling the Team

An ensemble team can support your RIA’s growth and success by enabling you to deliver the specialized services that clients demand. But building an ensemble team can be a complex process.

Fortunately, these step-by-step guidelines can help.

1. Determine the areas of specialization you want to target with your current client base, as well as which areas you might want to target in the future. 
2. Conduct an audit to see which areas of specialization can be handled internally by expanding the expertise of a current employee and which need to be recruited into the firm.
3. Locate the required specialists either through your professional network or educational resources such as The American College of Financial Services, which has more than 180,000 alumni.
4. Build your team with minimal specialization overlap—but keep in mind that, if there is significant demand in one area, you may need multiple people with specialization in that area.
5. Emphasize characteristics in your candidates that are ideal for team chemistry, such as professionalism, communication skills, ethics, accountability, and a commitment to ongoing education.
6. Clearly outline the role of each team member, provide a sound management structure, and explicitly define all financial arrangements.

To learn more about how specialization can support your RIA’s growth and success, visit our RIA Resource Center now.

Designing A Winning Team

Once you have decided to strategically grow in specialization, new questions come to mind–such as, “How do I expand my practice to deliver these services while achieving scale?” Answering this question involves evaluating your current firm structure.

As a sole practitioner, it is challenging to grow in specialization. Options include recruiting or forming alliances with advisors who already have specialized expertise or developing a long-term roadmap for expertise expansion that includes the development of new hires, such as a junior advisor.

RIAs with multiple advisors need to evaluate if their current team structure is conducive to delivering a wide array of specialized services. There are two primary RIA team structures. While they share some characteristics, you will notice they differ in many important aspects. (see Figure 1).

Building an ensemble team can be a long-term process. But for advisors, partnering with peers whose specializations complement their own can yield significant benefits.

To discover how you can build a true ensemble team and lay the groundwork for a more profitable, sustainable, and effective RIA, visit our RIA Resource Center now.

More From The College:

Get specialized retirement planning knowledge with our RICP® Program.

See our CFP® Certification Education Program.

Gain philanthropic and legacy planning knowledge with our CAP® Program.

Get the details of our WMCP® Program.

Look inside our CLU® Program.

Learn more about our ChFC® Program.

Peter was a long-time leadership volunteer, loyal donor, and consummate champion for The American College of Financial Services. He served on The College's Board of Trustees and was a past chairman of The College's Foundation Board. He was currently serving on the President's Roundtable and actively working to deepen the partnership between The College and Ameritas that he tirelessly cultivated during his career with Union Central, which then merged into Ameritas Life. Peter's passion for The College and Union Central is best exemplified through his leadership to help establish the Union Central Larry R. Pike Chair in Insurance and Investments at The College in 2002.

Through the personal philanthropy he and his wife of almost 60 years, Mibb, bestowed to The College and the corporate philanthropy he inspired, Peter received The College's President's Award in 2010. Because of his transformational impact, Peter was also awarded the Solomon S. Huebner Gold Medal in 2013, The College's highest honor. Peter was a member of The College's Loyalty Society and Legacy Society.

Peter was a past NAIFA National treasurer, president of NAIFA-NY, and president of GAMA. Serving for over 60 years in the life insurance industry, Peter was honored with countless industry awards and recognition, including the 2015 John Newton Russell Memorial Award—the highest honor bestowed upon a living member of the insurance and financial planning industry.

Peter has left a lasting mark on the profession, and his legacy lives on at The College. CJ and I would like to extend our condolences and offer our prayers on behalf of The College's faculty and staff to Peter's daughters, Beth and Heather, and his grandchildren.