New IPA Head Confident About Direct Investment Industry’s Future

Editor’s note: Direct investment industry veteran Anthony “Tony” Chereso was named the new president and CEO of the Investment Program Association in December 2015. We recently discussed his new role, challenges facing the industry, and the outlook for the future.

At a time of unprecedented regulatory changes facing the direct investment industry, Tony Chereso has his work cut out for him. With the upcoming FINRA regulatory notice 15-02, the Department of Labor’s fiduciary rule, and the rise and fall of one of the biggest names in the space, the new president and chief executive officer of the Investment Program Association will face challenges not experienced by his predecessors. Despite all of the uncertainty, Chereso remains optimistic about the future.

Chereso’s lengthy history in the industry may prove helpful to navigate the unknown waters ahead. With a background in finance, tax and audit, he helped found the third party due diligence and risk management firm, FactRight, back in 2006.

Although Chereso sold his interest in FactRight three years ago, it was there that he gained a first-hand, intimate understanding of the pressures facing the broker-dealer community.

Under his leadership, according to Chereso, the IPA will continue to focus on its three core pillars – education, advocacy and collaboration. It will further grow its political and public advocacy work by taking its message, not only to Washington, but to investors and advisors as well.

And with a glut of bad press surrounding certain sponsors, effective communication between advisor and investor is all the more necessary, he says. Chereso explained that when it comes to these programs, the experience and integrity of the sponsor is paramount, as is the need for public advocacy and sharing the story of sponsors that are doing the right thing.

“The wrapper is not important – whether it’s a BDC, REIT or DST – we must start with understanding the experience, capabilities and integrity of the issuer, ensuring they have a solid infrastructure, corporate governance and background, with short-term and long-term core goals in place.”

Chereso also stressed the importance of building coalitions to address the upcoming regulatory issues.

With respect to FINRA’s 15-02, the IPA remains focused on education and is teaming up with broker-dealers to create informative tools and resources that advisors can use with clients – many of which are available online at IPA.com.

They are also working with a wide variety of industry partners and meeting with regulators in Washington, D.C. on the upcoming fiduciary rule, which may be effective by the end of 2016. Because of the short timeline to adjust, the IPA is focusing its efforts on supporting industry professionals on how to deal with the potential impact.

“We will see shortly what the final rule is, and we’re planning for several potential outcomes,” said Chereso.

And while the short term impacts have already been felt throughout the industry, he remains confident in the resiliency of the direct investment market and its professionals.

And there are other challenges facing the space, like a slower economic recovery and further expected interest rate hikes. Chereso doesn’t necessarily view this a bad thing.

“We continue to see strong growth in the commercial real estate funds, although the economic recovery has been slower overall. I actually prefer to see an ‘L’ shaped recovery rather than a ‘V’ shaped recovery that can move in unison with the overall growth in the space,” said Chereso.

He added, “And I don’t necessarily see increased interest rates as negative – per se. Interest rates go up when the economy is thriving, where there is increased job growth and wage inflation. It has a rippling effect which can be positive for the direct investment industry overall.”

Women will continue to play an important role at the IPA, which has been instrumental in advocating for female professionals in the direct investment industry. Chereso indicated that women currently hold five leadership roles on the board of the IPA. The popular IPA Women’s Leadership Forum, cosponsored with Investment News, has had an overwhelming response since it started four years ago, and sold out last year. This year’s event on March 16 in New York City has been sold out since January.

Chereso said that he is proud to be a part of an organization that encourages female professionals to mentor other women so that they can continue to progress and succeed in our industry.

As for the future, Chereso remains confident. He explained, “It is an exciting time in the industry, even with the challenges and uncertainties facing us. It has been a transformative year, and we will continue to move forward, evolve and find the best opportunities for the retail investor. We have come so far already. Many of these products weren’t even available until relatively recently and I am proud to be a part of an industry that continues to proactively evolve to address the ever changing market conditions.”

Chereso believes that his knack for forging relationships and his determination to bring people together are strong attributes for a leader to have.

“We are stronger as a team and can accomplish great things together,” he said.