John Jacobs is excited about the future.
His job is to find solutions to the problems plaguing the financial sector, and he thinks there is a lot to fix. But he also sees unprecedented changes happening now.
In his nearly 40 years in the industry, the longtime Nasdaq executive, who is now executive director of Georgetown University Center for Financial Markets and Policy can’t remember a time when he witnessed this level of interest and innovation.
“There are things happening right now and over the last 20 months that are going to be paradigm shifting in financial services,” Jacobs said. “I’ve been in this business for almost 40 years, and I can see it.”
Jacobs has been talking a lot about the future this week as the center hosts the Conference on the quality of financial markets 2021. The three-day event includes a guest list of FINRA executives, SEC commissioners, industry CEOs and policy directors, among others.
Launched in the aftermath of the 2008 economic crash, Jacobs said the center has always worked to fill gaps and spark discussions without an agenda. The people who run it are also used to bringing policy makers and industry leaders together amid the tumult.
“When the center started, the industry was so focused on not being the next Lehman Brothers and regulators were so focused on not letting the financial market completely die and crash that no one was talking anything,” Jacobs said. “We need to continue the conversation. The more retail educated investors and traders are, the better, and the more market participants keep investors front and centre, the better. »
For advisors, Jacobs said, the market has seen significant growth despite the circumstances. He notes the shift of wholesalers to much wider digital distribution – as well as RIAs and financial advisers armed with powerful new tools – as some of the catalysts for this growth.
“Segments of this industry have thrived in this area, and it’s a paradigm shift that’s absolutely here to stay,” he said. “In the future, financial advisors will communicate with their clients more efficiently, effectively and richly.”
Jacobs said the two hottest topics at this year’s conference are ESG and cryptocurrencies. These questions took center stage when SEC Commissioners Allison Herren Lee and Hester Peirce kicked off the annual conference.
When it comes to digital assets, Jacobs remains stunned by the growth and increasing applications of blockchain. He said that beyond the realm of financial services, every global industry is trying to figure out how to use blockchain as part of their infrastructure.
He adds that crypto will continue to present a challenge to regulators, advisors and consumers, as its advancement remains several steps ahead of anything he has ever seen.
“Think of the Internet. As fast as it is, it existed for decades before it was commercialized and modified. Same with cell phones, or whatever,” Jacobs said. “No other technology has evolved faster than crypto and blockchain, and investors want to get in on it.”
ESG investing has an equally long to-do list, Jacobs said. The number of panels he has led on the subject over the past year has soared into the double digits.
He considers that the main concern of most investors is whether or not these products are really what they present themselves to be. There is also the balance between doing good deeds and doing good business.
The problem of greenwashing and self-reporting also persists, and it plagues issuers themselves. Jacobs said they struggle to disclose because of the non-existent guidelines, which in turn can create problems for advisors when offering these products to clients.
“Investors want access to it. But they want to make sure they’re buying what they think they’re buying, and they want to understand what they’re buying,” he said. “And I’m not saying companies are trying to greenwash, but they can inadvertently do so if they don’t have any kind of disclosure rules or guidelines to follow.”