Seeking To Transform Retirement Advice, RIIA Could Have Great Influence On The Financial Advice Profession In The Years Ahead Hot
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After interviewing Gadenne several times about RIIA, the organization he founded in 2006 to license the RMA designation, I believe this group will earn the trust of consumers and financial advice professionals. But it won’t be easy.
Leading thinkers in the financial advice profession — A4A readers — are, as usual, showing a healthy skepticism. Like me, their initial reaction is that RIIA’s ties to product manufacturers leave the group susceptible to control by Wall Street giants that have for decades invested and sold bad solutions to invetsors.
For example, an A4A member Wednesday posted a comment about RIIA saying, ”A cursory look at their website leads me to believe this is just another designation mill--possibly designed to sell product. The training appears to pale in comparison to the CFP® designation.”
I asked RIIA’s founder and executive director, Francois Gadenne to respond, and here is what he said:
Eric's comment shows commendable passion and I certainly agree with him if he were describing:- a group representing a specific industry silo,- a group lobbying for a specific product type,- a group with an legacy list of designations of various value,- a group showing up into this area as a Johnny-come-lately, me-too player, etc.On the other hand, RIIA was purpose-built to be:- cross-advisor, cross-profession, and cross-industry silos ("The View Across The Silos")- non-lobbying (all constituencies are represented in the membership, allowing for the smaller voices to be heard as well),- think-tank (with a de-novo, open-minded approach to the topic), and- first mover in the retirement income planning space.Our mission is to- explore,- define,- educate, and- benchmark the emerging specialty of retirement income planning.We work to establish high quality, product neutral specializations within the financial advice profession.We identify, validate and document evidence-based strategies that go further than the more general courses of study that we have reviewed while maintaining their level of rigor and high standards.RIIA's RMA brings the following to the specialty of retirement income planning:- Depth because it is based on science,- Breadth because it is built by the "View Across the Silos",- Range because it makes the science practical across the full range of distribution channels,- Objectivity because we do not lobby or represent a specific position, and- Adaptability because we are not tied to legacy processes that slow down the recognition and adaptation to changes in the environment.We fill a void in the industry and we seek to cooperate with all silo-focused players that want to extend their offering in this space.
Gadenne is our guest speaker today at our weekly webinar today. Please register.
Gadenne, who grew up in a rural French province near the Belgian border, impresses me as someone who is incapable of obfuscation. After interviewing him for two hours, he is a rare breed of subject—a compulsive truth teller.
Gadenne says he was raised by Jesuits from age four to 18, when despite his poor financial station in life he was able to break through French society’s “caste system” because he had excellent grades and tested well. He was accepted to one of France’s “great schools,” a college outside the main framework of the French university system that traditionally produces France’s leadership.
But because he was a born-entrepreneur, Gadenne left France at age 22 because it was socialist and “literally killed” its entrepreneurs. He came to America to study for an MBA at Northwestern University’s Kellogg School of Management.
Poking fun of himself, Gadenne says his “claim to fame” is that he led the team at Arthur D. Little that built NASA’s weather forecasting after the Challenger disaster in 1986. He says weather data and financial data are a lot alike and went on to build financial software using artificial intelligence in a venture that was acquired by Standard & Poor’s in 1999.
“After the earn-out, I retired,” says Gadenne. “Then my wife told me that she married me for life and not just for lunch, and she told me to go do another one.” Gadenne started another company working with insurance companies on annuity products. It was his work there that drew Gadenne into creation of the RIIA in 2006. The product companies were the initial backers of RIIA and after a year of working on the start up of RIIA, Gadenne was asked by them to run RIIA full time. He placed his interest in his software company in a blind trust.
“Under the investment management model, you sell to clients a probabilistic return and the way you make money as an advisor is to gather AUMs and basically feed off them,” says Gadenne. “But you’re really selling an outcome that’s measure in dollars and you better deliver on that. But you have to deliver even when you are emptying bathtub, where you must make payments as opposed to collecting AUMs going in.”
“You’re selling something that has great fiduciary implications and it is much easier at the client level to measure whether you are meeting expectations,” says Gadenne. It completely changes the business model of advisors because you must learn how to make money as money is flowing out and AUMs are decreasing.”
“RIIA is not here to preserve the status quo or kiss up to the product people,” says Gadenne. “We want to bring all the people with a stake in the issues, identify them, research them, and publish solutions.
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