Collaboration in dealing with complex challenges was a key theme of the “Fireside Chat with the IPA Chairmen” panel featuring Tom Sittema, CEO of CNL Financial Group and Mitchell Sabshon, president and CEO of Inland Real Estate Investment Corporation; and moderated by Thayer Gallison, AVP, Director of Alternative Investments, AIG Advisor Group.
While coming to consensus as an association takes time and deep collaboration on the issues, the end result of having a unified voice makes the IPA an effective industry advocate. A major initiative next year for the IPA will be changing some of the negative perceptions of the alternatives industry, which continues to come under increased regulations.
“The IPA is the best collaborative organization in the industry,” Sabshon said. “The real issue is that our industry is materially different today. We’re delivering better products, better sponsors and more consistent returns, but we refer to the industry the same way as we did 10 years ago.”
As financial products change and evolve, the IPA and its brand need to shift language to talk about the benefits and the solutions for investors as well as the creative, new products being created, Sabshon said. By focusing on the positive aspect of the industry, the IPA hopes to change the way regulators and investors see alternative investment products.
Another key advantage of the IPA is setting common industry standards and guidelines. The best approach is to build relationships across the industry that drive trust, collaboration and focus on education, Sittema said. Sabshon agreed, citing the example of his own disagreement with the IPA’s valuation methodology for assets during the development stage. But when it was decided, he went along with the decision in order to be in line with the rest of the industry, something that was important to his firm and to aid broker-dealers in comparing offerings.
But not everything facing the alternatives industry is negative. There have been many positive changes as well. Transparency in assets and valuations offers clients a better sense of what they’re holding, Sabshon said. Sittema agreed, saying that much of the market evolution is putting investors’ needs first, making sure products are prudent and deliver returns.
Products are evolving quickly in order to comply with regulatory changes and to meet the demand for new structures that work. Given the stage of the economic cycle, finding and investing in the right assets to generate returns has taken on increasing importance. This primary focus on performance is positive for both the industry and for investors.
The IPA is working to promote and develop the industry with all constituents in mind, work that is increasingly important as products change rapidly.
“We’re in the trust business,” said Sittema. “I love this industry. We have strong values and continuously strive to make the industry better, to improve the image, character and quality of the industry. The pure profit motive isn’t what should drive business. Having profit doesn’t mean you fulfilled your purpose. ”