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The DI Wire’s Q&A With CNL CEO Tom Sittema

Editor’s Note: The DI Wire had a chance to speak with Tom Sittema, the chief executive officer of CNL Financial Group, a private investment firm that provides global real estate and alternative investments. Tom also serves as the current chairman of the board at the Investment Program Association, a trade organization representing the direct investment industry.

Can you share a bit about your background and history within the direct investment space?

Before joining CNL, I was with Bank of America and Bank of America Merrill Lynch for almost 27 years. During my time there, I served as the U.S. sector head of REITs and lodging, with the responsibility for M&A advisory, equity, and debt capital raising assignments for my clients. That gave me a broad exposure of the direct investment industry including sponsors and products. My time at CNL has allowed me to be very involved with the space and gain an even deeper perspective.

It’s been roughly five years since you were named CEO of CNL Financial. Can you share any unexpected challenges that you have faced during that time? What have you found particularly rewarding?

Like many industries, alternative investments have undergone much change in the last several years. Five years ago, one couldn’t envision the regulatory environment we are facing and the impact that will have on the way our industry does business. While some of these changes will benefit our investors, they have also created a new set of challenges and opportunities for CNL and our clients.

I think what I have found most rewarding is working with the great team we have here at CNL. The company is more than 40 years old and throughout its history has been bringing to market innovative products and attracting the top people in the field. It is very rewarding to have the opportunity to continue that legacy and work with our associates striving for excellence and building a durable and values-based culture every day.

You also serve as chairman of the board at IPA. What are you looking forward to the most during your time in this position?

This is a time of tremendous change in the industry. CNL and all of the members of the IPA are really trying to understand these changes and how they will ultimately impact our companies and our investors. I feel honored to have the opportunity to serve as chairman of the board during this time and I look forward to being one of the voices both championing for greater clarity for investors and expressing our concerns about some of these proposals that we feel could have unintended negative consequences for many investors.

What do you hope to accomplish during your term?

We have had some great board chairs in the past who have helped to unify the industry and champion for greater insight and clarity to our investors; I hope to continue in that tradition.

How do you think that the new regulatory changes – specifically the DOL fiduciary rule and 15-02 – will impact the industry? How does CNL plan to address these new regulations?

The need for solid institutional and quality alternative investments does not change, even in this new regulatory environment. Well before these new rules were proposed, CNL had begun diversifying its product offerings and distribution channels to meet the changing needs of investors and to remain a trusted partner to our network of financial advisors and broker-dealers.

Our existing products will continue to be available in both qualified and nonqualified accounts in a variety of share class structures. Additionally, we are researching new products that we expect to be made available to investors for qualified accounts under the new regulations and the Best Interest Contract. If a financial advisor does choose to move to a fee-based model, our current products should also be available there.

Throughout all of these changes, we will actively partner with broker-dealers to better understand the rules and regulations and to help them address any potential impact to their business. As one piece of this, we are creating educational content that will help broker/dealers and financial advisors understand the ruling and its implications.

Where do you see the industry heading? How will it be different in the next 5 or ten years?

Just as five years ago I couldn’t have predicted the current regulatory environment, it’s hard for me to know exactly what the industry will look like in five or 10 years. We will continue to see companies like CNL bring new and innovative products to market and offer investors new products to invest in as well as different approaches to share classes. We will see new sponsors emerge, and some consolidation will likely occur as well. These changes will yield better solutions for investors will better product performance and greater transparency. It will continue to be a dynamic industry.

On a personal note, you play or have played an active role in number of community, special interest and charity organizations and have been recognized for your service – even receiving a 2013 Father of the Year honor from the American Diabetes Association. Can you tell our readers what motivates you to give back to your own community – and other communities around the world? Do you believe that it makes you a better, more effective leader in your professional life to do so?

I have been incredibly blessed in my own life, both professionally and personally. It is both my obligation and my privilege to find a way to give back to others. I think any time we can give of ourselves to a greater cause or purpose, it makes us better and more effective in our professional lives by allowing us to think more creatively and focus on a purpose that is much greater than ourselves. That is one of the reasons I worked with so many other corporate leaders in the Orlando area to form Lift Orlando, a nonprofit organization seeking to transform an area of generational concentrated poverty.

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