What I told the traders

I’m not a trader, I’m an investor. But without traders, investors would be nowhere. And without markets that work, investment advisors would be utterly lost. 

Every week, millions of dollars come into the firm that we must deploy on behalf of our clients – in stocks, bonds, ETFs and mutual funds. I think it is taken for granted at advisory firms like mine that there is a mechanism being worked on constantly to ensure that this can happen. The people who support this activity don’t get nearly as much credit as they ought to. 

When the Security Traders Association of New York (STANY) asked me to come back this year for their annual event at the NYSE, I decided to take the opportunity to say thank you. Below are the remarks I delivered on stage yesterday, edited for profanity 🙂

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This is now my third appearance speaking at this event. And in the years since I was last here, I have definitely gained a new level of appreciation for the trading community on Wall Street. I have also definitely gained at least 20 pounds.

When the STANY folks asked me to take part in this event I told them I wanted to use this opportunity to talk about how important the work that you all do every day is for an entrepreneur like myself in the industry.

There are 11,000 registered investment advisory firms in the United States and collectively we now have a 40% market share of the wealth management market. And the vast majority of us take the mechanics of the market for granted, as do many of our clients.

We go about our days allocating client accounts, recommending investment products and securities, tweeting, etc, without ever giving much thought to the nuts and bolts of the marketplace and all of the critical work that goes on behind the scenes so that everything runs smoothly.

Just like when you click on an iPhone or you flip on the television, you simply expect it to work right, to function correctly. It almost never occurs to us how critical the underlying infrastructure and the people who manage it are. We frequently ignore what’s going on behind all of the user interfaces and layers of software.

Another thing we take for granted is the trust our clients have in the investment markets. If they didn’t trust the markets to work properly and the assets they’re invested in to be handled correctly, they would never trust us or our abilities. If there weren’t an orderly, liquid market into which they could invest their retirement savings, people like me would not be able to do what we do.

But fortunately, investors do trust the markets. I’ll quantify the degree of that trust – last year 401(k) balances broke above $5.3 trillion. IRAs held an additional $8.9 trillion. Almost all of that money belongs to relatively unsophisticated investors. The Federal Government’s pension fund totals almost $4 trillion, which is up double since the year 2000. There are 138 Americans enrolled in some form of organized retirement plan, be it 401(k), defined contribution, defined benefit or otherwise.

You are the reason why all of these people have enough faith and confidence to entrust their future wellbeing and security in the stock and bond markets. The work that you do everyday is what’s going to enable a hundred million households to retire, fund college educations and leave an inheritance to the next generation.

Regardless of how little attention you get day to day, or how much the news media chooses to focus on the negatives whenever something temporarily goes wrong (shoutout to Knight Capital Group), I want you to know, on behalf of my industry, how appreciative some of us are, and all of us should be.

A person like me could never have built what I’ve built on a foundation of quicksand – where markets were chaotic, traders were untrustworthy and systems were breaking down. Fortunately, I didn’t have to. It’s because of the bedrock that you all have put in place and continue to support that my clients can retire and I can earn a living.

So thank you. And keep up the great work. It’s going to save this country.

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I meant every word of it. Even though advisors are fairly removed from the nuts and bolts of trading, from orders and execution and reconciliation and settlements, they should never forget how hard people are working keep everything running smoothly.