Even Jeb Bush, who comes from one of America鈥檚 best-known political families, says he鈥檚 trying to avoid political news during these days and months of political upheaval in Washington.
At the Carroll School鈥檚聽2017 Finance Conference, the former Florida governor and Republican presidential candidate explained during the Q&A that he鈥檚 been watching ESPN rather than news channels. 鈥淏ut even that鈥檚 getting political,鈥� he said, drawing laughs. What Bush and others made clear at the June 8 conference is that politics isn鈥檛 just unavoidable. It鈥檚 increasingly a wild card in today鈥檚 financial markets.
Technological disruption is only adding to the challenges ahead for financial professionals, according to industry leaders at the annual conference.
The daylong event brought together more than 200 of those professionals and highlighted speakers including Nicholas Burns 鈥�78, a Harvard professor who has served as a top U.S. foreign policy official, and Alfred F. Kelly Jr., CEO of Visa, Inc. Panels addressed questions such as how public affairs and world events are influencing equity investing and how 鈥淔inTech鈥� (financial technology) startups are disrupting the industry.
In his opening talk, Bush called attention to what has traditionally been a Democratic issue while presenting Republican solutions to the problem. He focused on the question of economic stratification, or inequality, in American society.
America has always been a place where people at the bottom of the socioeconomic ladder could move up鈥斺�淚t鈥檚 part of who we are, it鈥檚 in our DNA,鈥� said Bush, who delivered the Dorothy Margaret Rose Knight Economic Keynote Address. 鈥淚s that the America of today?鈥� He expressed doubts. 鈥淚f you鈥檙e born poor in America today, you鈥檙e more likely to stay poor than at any time in our history,鈥� Bush said, pointing to causes such as the decline of two-parent families and inadequate education systems.
He also pointed to 鈥渢he skills gap鈥濃�攎illions of jobs going unfilled because of too few qualified workers. 鈥淲e鈥檙e not generating the kind of dynamism that we need,鈥� Bush said. As solutions to these problems, he cited the need for lower taxes, fewer government regulations, less unionization in public schools, and other familiar items on his party鈥檚 policy agenda.
During the Q&A, he was asked to speculate about likely contenders for the 2020 presidential nominations. 鈥淟et鈥檚 just get through June,鈥� Bush quipped, referring to the Trump-Russia controversy and other turmoil in Washington. That鈥檚 when he made his comment about watching sports rather than news.
鈥淢OST COMPLEX鈥� SECURITY ENVIRONMENT
The next speaker was Burns, who聽聽during the administration of Bush鈥檚 brother, George W. The 涩里番下载 alum said that although he learned from Jesuits not to engage in hyperbole, his considered judgment is that the United States is facing its 鈥渕ost complex national security environment鈥� since World War II. He cited regional instability in many corners of the globe along with climate change, global pandemics, and drug cartels.
He made a particular plea regarding Europe. 鈥淲e鈥檝e got to appreciate how vital Europe is,鈥� said Burns, who is the parent of two other 涩里番下载 alums and the recipient of a 2002 honorary doctorate from the University. He noted that Europe is America鈥檚 sturdiest ally as well as our largest trading partner. 鈥淲e can count on those countries. They have our back.鈥� Burns argued that instead of reaching out to Europe at a time when its countries are under pressure from extremist movements and a hostile Russian government, Washington has been alienating the continent (for example, by sending mixed signals about the U.S. commitment to NATO).
Referring to a 鈥渉ighly destabilized鈥� environment in the Middle East and the lack of a U.S. response to the Syrian refugee crisis, he said, 鈥淚 think we have a leadership crisis here in the U.S., and it鈥檚 a profound crisis.鈥� Burns, who was the State Department鈥檚 top political affairs official as well as ambassador to NATO, now teaches at Harvard鈥檚 Kennedy School of Government.
One of the questions put to him after his formal remarks had to do with Russian hacking into U.S. election processes and other cyberthreats to the United States. 鈥淭his is a battle that will not be fought by soldiers. It will be a battle fought by geeks,鈥� Burns said.
DISRUPTING FINANCE
His allusion to tech was a pretty good segue to a panel that followed鈥斺�淔inTech: What鈥檚 Real? What鈥檚 Not? Why it Matters.鈥� FinTech refers to a wide variety of startup companies using new technologies to improve financial services for customers and clients. 鈥淵ou can鈥檛 pick up the聽Wall Street Journal聽without reading about something happening with FinTech,鈥� said panel moderator Jere Doyle 鈥�87, a prominent serial entrepreneur and executive director of the聽Edmund H. Shea Jr. Center for Entrepreneurship聽at the Carroll School.
One example is Honest Dollar, a digital retirement saving platform geared toward companies that do not offer 401k plans to their employees. 鈥淭here鈥檚 a savings crisis in this country,鈥� said panelist William Hurley about the need for this app that costs employers a flat monthly fee of $5 per employee. He is a celebrated tech entrepreneur and systems theorist who founded Honest Dollar and goes by 鈥渨hurley鈥� (lowercase).
FinTech companies compete with traditional financial institutions such as banks and payment firms, but Honest Dollar was acquired by Goldman Sachs in 2016. Larry Restieri, who heads digital strategies at Goldman, was also on the panel and said, 鈥淲e鈥檙e embracing technology. We have to. We have to change.鈥�
In an afternoon session, Visa鈥檚 Kelly鈥攑roud alum of Iona College who has sent four of his five children to 涩里番下载鈥攕poke of the dramatically growing numbers of non-cash transactions worldwide. 鈥淭he pace of change is incredible,鈥� he said, noting that Visa has aimed to stay ahead of the learning curve by becoming what he called 鈥渁n open company willing to talk to anyone about anything,鈥� especially engineers and others on the subject of pay technologies. Kelly was interviewed on stage by PIMCO鈥檚 Marc Seidner 鈥�88.
POLITICAL RISKS
The final panel, 鈥淓quity Investing in a Dynamic World,鈥� drew the sharpest connections between political happenings discussed that morning and what鈥檚 ahead for financial markets. 鈥淭here are constantly more political risks, and that may cause volatility and affect our investments,鈥� said聽Seidner Family Faculty Fellow Ronnie Sadka, who moderated the panel and is chair of the Finance Department as well as senior associate dean for faculty at the Carroll School.
The panelists consisted of 涩里番下载 alumni and parents: Steven M. Barry 鈥�85, P鈥�14, 鈥�17, chief investment officer of Fundamental Equity at Goldman Sachs; Vince Gubitosi 鈥�94, president and chief investment officer at Geode Capital Management; and Jay Paul Leupp, P鈥�20, managing director and portfolio manager at Lazard Asset Management. They touched on a number of political question marks including tax reform, trade policies toward China and Mexico, the continuing European fallout from Brexit, and geopolitical flash points such as nuclear-armed North Korea.
The market hasn鈥檛 yet clearly reacted to these and other potential volatilities, but 鈥渢here鈥檚 certainly that risk,鈥� said Gubitosi. Referring also to recent waves of cyberattacks, Barry pointed to risks related to companies underinvesting in their own cybersecurity.
鈥淲e try not to handicap the elections, but we do try to be proactive and nimble once we have the facts,鈥� said Leupp, who proceeded to cite what his and other investment firms missed in connection with the U.S. presidential election last November. Like nearly everyone else, they did not expect Donald Trump to prevail, and so they missed out on significant gains in both hotel and prison-industry stocks that resulted from the election of a hotel magnate who favors privately run prisons, he related.
The Finance Conference is the signature public event offered each year by the Carroll School, bringing together practitioners, academics, and policy makers. As always, the conference highlighted 鈥済reat ideas and exhilarating conversation,鈥� which the Carroll School strives to nurture among its students, said John and Linda Powers Family Dean Andy Boynton. He co-chaired the event with Seidner, Daniel E. Holland III 鈥�79, P鈥�07, 鈥�08, Professor Jonathan Reuter, Lindsay LoBue 鈥�96, and James E. Walker III 鈥�84, P鈥�18.
William Bole is senior writer and editor at the Carroll School.
Photography by Gary Gilbert and Christopher Soldt.