Reputational Defense is More Important Than Ever

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

A recent survey by our partners at Makovsky and Company demonstrates the negative effect that the financial crisis continues to have on stakeholder perceptions.

The 2014 Makovsky Wall Street Reputation Study revealed that financial services companies continue to struggle with reputational and customer services issues stemming from the financial crisis six years ago. In preparing its report, Makovsky interviewed about 225 executives at banks, credit card companies, mutual funds and other financial services providers.

Eighty-one percent (81%) of communications, investor relations and marketing executives surveyed last month said the financial crisis continues to have a major effect on stakeholder perceptions of their companies.

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When asked to rank the issues that negatively affected their company’s reputation over the last 12 months, the top three 2014 responses were:

  • Negative perception of the financial services industry (64%);
  • Regulatory investigations, actions and fines or lawsuits (55%); and
  • Capital and liquidity challenges (53%).

Looking to the next 12 months, financial services firms said their greatest reputational challenges will be:

  • Differentiating from financial firms and competitors with bad reputation problems;
  • Improving the reputation of the company to increase sales, (a +300% increase over 2013 findings);
  • Rebuilding trust in the overall financial system; and
  • Increasing awareness with stakeholders also ranked high in 2014 (a 200% increase over 2013 findings).

At least six out of ten of executives ranked each of the following initiatives as “very important” to achieving stronger reputation:

  • Improve customer satisfaction (64%);
  • Take ownership of issues that matter to customers (64%);
  • Employee satisfaction (60%); and
  • Better financial performance (60%).

The IPA, along with our partners at Makovsky, remains committed to increasing positive awareness of Direct Investments and defending our industry’s reputation.

Kevin Hogan

The IPA’s Growing Network of Partners

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

The strength of any professional association lies in its ability to influence the events that shape its industry. Over the past several years, as direct investment products have faced increasing regulatory scrutiny and a rapidly evolving landscape, the IPA has expanded its network of association and professional partners. As our network continues to grow and strengthen, we’re beginning to see the importance of those efforts.

Coalition Strength

The IPA has been actively participating with a coalition of financial services industry partners who actively monitor our industry’s most pressing issues, including the DOL Fiduciary Standard, JOBS Act Implementation and FINRA 14-006. The coalition actively submitted 18 individual comment letters in response to SR-FINRA-2014-006, including letters from FSI, SIFMA, NAREIT, REISA and the U.S. Chamber of Commerce. Many of those same coalition partners also submitted letters based on the SEC’s request for public comment on Proposed Amendments to Regulation A emanating from the JOBS Act, better know as “Reg A+”. This demonstration of industry unity is critical as we work together with FINRA and the SEC to ultimately produce a more balanced regulatory environment.

Raising Awareness

The IPA continues to raise awareness of direct investments at investment conferences, and is developing beneficial relationships with a wide range of new business partners. We will be presenting at the upcoming TBLI Conference and the *IMN Non-Traded REIT Industry Symposium in June. And we’ll have a presence at broker dealer forums across the industry, speaking directly with top financial advisors about the unique benefits of
direct investment products.

A Balanced Story

We are also developing new relationships with emerging media platforms that promise to tell a more balanced story of our industry. In the months ahead you’ll hear more about our partnerships with Institutional Real Estate Inc.’s new publication “Real Assets Advisor” and The DI Wire , which focuses exclusively on direct investment industry news.

Now is the time to raise awareness and expand the reach of direct investments, and the IPA is committed to leading that conversation.

Kevin Hogan


Our Historic Year

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

Reflection can be central to good preparation. With that in mind, it’s instructive to look at what we achieved last year as we gear up for 2014.

In 2013, the IPA and its members celebrated key milestones and record-breaking direct investment sales. We continued to champion transparency and a new degree of advocacy for our industry. The IPA also released more premiere educational resources, and supported diversity among our membership. These are only some of the highlights of our own banner year as we worked to advance the direct investment industry.

Reflecting strong investor demand and competitive, attractive returns to investors, the IPA’s robust membership activities were mirrored by strong sales of direct investment vehicles. Blockbuster capital raising continued steadily throughout the year reaching $24.6 billion by year-end. Data developed by Robert A. Stanger & Co. shows equity capital flows to direct investments in 2013 rose $11.2 billion from the 2012 total of $13.4 billion – an 84% increase.

Regulation and Advocacy

In 2013, the IPA’s leadership worked tirelessly with regulators to provide  recommendations, expertise and create even greater transparency. Some of our initiatives included working collaboratively with the Financial Industry Regulatory Authority (FINRA) to provide input into the final Regulatory Notice 12-14. The IPA has also been working with the North American Securities Administrators Association (NASAA) to provide input and suggestions concerning recommended BDC and REIT guideline provisions, including the use of electronic signatures. We also provided recommendations to the Department of Labor regarding commission practices.

During our initial year of formal Washington advocacy, the first Congressional Testimony by an IPA member was delivered by Wayne Souza of Walton International. At a July hearing of the House Financial Services Committee on Capitol Hill, he addressed potential enhancements to securities laws to enhance U.S. job creation using the JOBS Act.

Finally, to promote awareness and education on behalf of the direct investment industry, IPA executives presented at a NASAA conference to discuss strengths of third-party due diligence and the IPA Valuation Guideline.

Unanimously adopted in April 2013, we expect broad implementation of that guideline in 2014 to help standardize the frequency and modes of reporting non-listed REITs.

Stanger & Co. conducted a groundbreaking survey released in November of financial advisors’ attitudes toward non-listed REITs. Conducted in March 2013 and released the following month, the IPA Investor Survey pointed to a strong future for our industry among end-clients.

Fly-In and Conference

Last May, we held our 2013 Spring Conference and Fly-In in Washington, D.C., and our Fall Conference last November in Dallas. The events were attended by approximately 350 members representing more than 100 companies. Before the beginning of the Spring Conference, IPA members met with members of Congress, including Rep. Kevin McCarthy, House Majority Whip. Keynote speakers in the Spring were Andy Friedman of The Washington Update – Economist, and Harvard-trained researcher Shawn Achor, author of The Happiness Advantage.

The Fall Conference featured keynote speakers George Will, Pulitzer-Prize-winning columnist for *The Washington Post* and FOX News commentator, and Heisman Trophy winner Roger Staubach, along with dozens of industry leaders.

IPA Education, Mentorship . . . and the Future.

To expand our industry leading educational offerings, we added significant new resources last year with the release of new education modules on non-listed REITs and business development companies (BDCs), and a Financial Advisor Certification Program specially designed for financial advisors and support staff. The modules include in-depth white papers, ongoing certification programs, and e-learning courses.

To encourage the inclusion of more women, young professionals, and minorities in our industry, we held our first-ever Women’s Forum in New York in June. The hugely successful, sold-out conference addressed issues of interest to women in the direct investment and financial services industries. The event also helped to kick off the IPA’s Mentorship Program to create more opportunities for networking, training, and professional development.

Without you, these accomplishments would not have been possible. The next year could well present challenges and changes to our industry like never before. We will need your active involvement to meet these challenges and move forward with even greater success.

We look forward to working with you to advance and strengthen our industry.

Kevin Hogan


Rise and Shine: Women’s Initiative Networking Breakfast

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

At our Fall Conference in Dallas earlier this month, the Women’s Initiative Network (WIN) Committee of the Investment Program Association held a hugely successful breakfast on November 7, at the bright-and-early time of 7:00 a.m. It was an opportune forum to assess our accomplishments, as well as how to further our goals of empowering women across the industry.

I was excited to see such a dynamic, diverse group of women and men attend the breakfast, representing all constituencies of members who share an interest in our initiatives, including associate members, sponsors, broker-dealers, outside counsel, financial advisors, accounting, and investment professionals. To maximize participation, the WIN get together was scheduled at a time that didn’t conflict with any other sessions or meetings. We plan to repeat this strategy for the Spring Conference since the turn out for our first WIN Committee breakfast attracted more than 50 attendees!

The IPA is focusing on women in our industry to help propel them in their careers by creating a centralized forum for mentorship, advocacy, education, training, communications and networking. I’m excited that we’re building off the momentum of our newly established mentorship program, and the first-ever IPA Women’s Forum in June 2013 in New York in partnership with InvestmentNews. As a matter of fact, by popular demand, we’re in the process of planning the second Women’s Forum in June 2014. Stay tuned!

The Fall Conference was an ideal format for a group that cares about our industry and a great kick-off for all we have planned for next year. In 2014, the IPA’s mentorship program will officially launch after months of careful planning and finalizing. Of all of the IPA’s large and active committees, the WIN Committee is the largest of the IPA. This is a testament to the diversity of the direct investment industry and the desire to help foster relationships that benefit from sharing professional insights. The popularity of the committee and the recent breakfast is also an indicator of people’s drive to connect and provide even more
opportunities for professional development.

Again, I’d like to thank everyone who I met in Dallas. Breakfast attendance at the Fall Conference in Dallas exceeded expectations. To learn more about the IPA’s mentorship program and how to get involved, please visit:

Up Your BDC Game

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

Writing about the non-listed REITs in March, this blog commented on mastery and confidence working hand-in-hand to create better client outcomes. Specifically, how advisors and brokers can generate confidence for themselves and clients by mastering a subject which, once repeated, create opportunities for achievement. Working in tandem, mastery and confidence create a repeatable virtuous cycle.

Since the Great Recession’s start, there are few success stories that rival the rise of non-listed Business Development Companies. According to Robert A. Stanger & Co., non-traded BDCs have gone from a standing start in 2008 to a $2.8 billion capital raise in 2012, an 89% increase over 2011. Since the start of 2013, BDCs have already surpassed last year’s total, raising just over $3.0 billion through August.

BDCs and non-listed REITs both pay distributions that are above the market average, but there are critical differences between the two. Think leverage (no more than 2:1). Think valuations (quarterly). And more.

How can you solidify your knowledge of the differences and have that knowledge at hand to discuss authoritatively with clients?

Since June, the IPA has made three significant additions to our education series for broker-dealers and advisors, all focused on BDCs, all designed to expand advisor mastery.

First, we’ve developed a new white paper, Portfolio Construction Using Non-Traded Business Development Companies (BDCs).  Written by Cynthia M. Krus and Owen J. Pinkerton of Sutherland Asbill & Brennan, this easy-to-read piece reviews the characteristics shared by traded and non-traded BDCs, and explores factors that broker-dealers and financial advisors should consider in analyzing non-traded BDCs as investment opportunities.

Second, our Proficiency Certification course for BDCs is designed for advisors who are beginning to use or have expanded their use of direct investments. It joins a similar course for non-listed REITs introduced in January. Completion of this online designation provides advisors with a fundamental understanding of Business Development Companies and gives them a more robust knowledge of investor applications and uses of BDCs.

The Proficiency Certification consists of a presentation of real estate and non-listed REIT basics followed by a test. The entire module takes about one hour to complete and carries one hour of CFP continuing education credit.

Third, and at the expert level, we recently released the fourth IPA e-learning course, “Portfolio Diversification with BDCs.” This two-hour course takes education for advisors and support staff in the broker-dealer and sponsor communities to the next level, integrating the two initial courses, “Fundamentals of Direct Investments,” “Introduction to Portfolio Construction and Management with Direct Investments,” and our January addition “Investing in Non-Traded REITs.”

Upon completion, an electronic certificate will be issued, which can be printed to leverage with investors, prospects and colleagues.  The e-learning course carries two hours of CFP continuing education credits for the E-Learning course.

Later this year we expect to offer a FINRA-approved “Guide to Understanding Business Development Companies” aimed at the basic investor level. The brochure is intended for use by advisors when speaking with clients about adding non-traded BDCs to their portfolios. It joins our other FINRA-approved “Guide to Understanding Real Estate Investment Trusts” and will be able to be customized with a firm’s logo, address and phone number.

We believe these courses will increase both mastery and confidence across our member firms.  But they must be implemented to achieve results. Please contact Director of Education Ken Montgomery at if you have any questions or need help getting started.

Behind The First Half 2013 Numbers

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

Fund raising for direct investments hit an all-time high for the first six months of this year, the IPA announced last week with Robert A. Stanger & Co. Investments reached $10.7 billion, up by 65% compared with the first half of 2012.  In June alone, direct investments raised $1.9 billion.

The compelling story for the first half of 2013—and the rest of the year—goes well beyond these numbers.  As Stanger executives mentioned, lending from traditional sources remains well below historic levels, giving BDCs investment opportunities to finance growing businesses. For nonlisted REITs, a gradual but steadily improving U.S. economy and employment are underpinning increased occupancy and rental rates. And the near-record low interest rate environment has provided highly attractive positive leverage opportunities for real estate owners.

In short, we’re no longer facing serious headwinds.

In fact, one of the most important factors beyond the powerful fund raising numbers directly relates to return on investment: valuations and performance of nonlisted REITs are improving as the real estate sector rises from post-crisis levels.

Rising industry valuations are an unseen component of the sales dynamic that’s also being propelled by two other factors: attractive 4-to-6% distributions and the year-to-date liquidity events.  These liquidity events will have returned approximately $15 billion to shareholders year to date, with some $11 billion of that in the first half alone.

It’s this total return to shareholders that creates the most powerful demand for our products.

There is an ample supply of nonlisted REITs and BDCs on brokers’ shelves. As of the end of June, 40 public, non-listed REITs are in the market and actively seeking to raise $69 billion in equity capital, while nine non-listed BDCs are in the market and actively seeking to raise more than $11 billion.

At current rates, experts say that fund raising for the direct investment industry could reach $18 billion for 2013 compared to $13.3 billion in 2012.

The products’ overall performance remains the most important dynamic behind those numbers—and our industry.




IPA Testimony

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

IPA Makes First Congressional Testimony; Focus on Job Creation and Regulatory Streamlining

This year, we’ve undertaken a comprehensive advocacy and lobbying program to support our members in the direct investment industry, and engage with lawmakers and regulators. At the Investment Program Association, we are committed to creating opportunities to promote the advancement of IPA objectives through engagement with the regulatory and political community. We’ve undertaken a comprehensive advocacy and lobbying program to support our members and the development of the IPA.

The IPA took a major step in our advocacy initiative on July 10, when Wayne Souza, General Council and Executive Vice President of Law at Walton International Group and an IPA member, testified before the Capital Markets Subcommittee on Capital Markets and Government Sponsored Enterprises. The IPA was invited to provide testimony on behalf of the industry. Souza’s testimony, “Reducing Barriers to Capital Formation, Part II,” [insert link] focused on the Jumpstart Our Business Startups (JOBS) Act’s impact on direct investment. He discussed recommendations to facilitate job creation through capital investment, economic growth, and industry modernization.

Souza remarked that part of the JOBS Act provides an “‘IPO On-Ramp’ that makes it easier for private companies designated as ‘emerging growth companies’ to seek capital through an initial public offering.” This makes capital formation more accessible to startups, in effect, improving the registration process for business development companies (BDCs), one of the fastest growing segments of the IPA’s membership.

On behalf of the IPA, Souza also suggested reducing compliance burdens on BDCs to get the funds invested more rapidly in growing U.S.-based businesses. To free up time and resources, and reduce costs, Souza suggested that  “a provision to streamline BDCs’ registration statement filing requirements with the SEC, by allowing them to incorporate by reference from reports already filed with the SEC, would reduce duplication of effort and unnecessary regulatory burden,” ultimately promoting U.S. economic growth and domestic job creation. The third pillar of his testimony advocated for the acceptance of electronic signatures by states in executing the sales of securities products to promote commerce and industry modernization.

These issues in the end will help speed up job creation as they benefit investors and enhance the U.S. economy. This and future testimony, as well as the IPA’s comment letters, help to assist and educate regulatory bodies and organizations to consider changing rules and guidelines, and suggest the adoption of best practices.

As the IPA’s President and CEO, I welcome our members’ suggestions for ways to shape a long-term strategic policy plan. One which builds a stronger foundation for the direct investment industry, and promotes improvements for our business. To be effective, it will need your active participation.  I also invite you to join, or send your ideas to, the IPA Policy Advocacy Committee.  Along with our partners at the Eris Group, this committee coordinates our ongoing dialogue with policymakers, regulators, and governmental entities, such as NASAA, FINRA, and the SEC.  We welcome your ideas or your interest in getting involved in the IPA’s advocacy efforts.

IPA’s Women’s Forum is a Success!

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

On June 19, 2013, The Investment Program Association’s Women’s Initiatives Network (WIN) partnered with InvestmentNews to deliver a powerful agenda for the more than 150 women from a broad array of financial services firms who attended our first-ever Women’s Forum in New York.

The half-day event themed “Relationship-Driven Success,” featured sessions dedicated to best practices from successful mentorships, achieving success across multiple generations, fostering women’s development in their companies, and networking. The meeting content was fully aligned with the WIN committee’s primary objectives – the design and delivery of an effective mentorship program, one which allows a framework for matching mentors and mentees and provides a forum for participants to share ideas, learn new skills, empower and inspire career objectives, and seek trusted counsel.

Among the highlights from the inaugural Women’s Forum was the closing keynote delivered by Consuelo Mack, Executive Producer and Managing Editor of Consuelo Mack WealthTrack, who discussed her pioneering career in financial journalism and how she overcame challenges along the way. Attendees also heard a presentation on “Maximizing Relationships: Best Practices from Successful Mentorships,” which featured a senior executive responsible for creating and executing their firm’s women’s program and a mentor-mentee team: Brenda Gujral, Director, Inland Real Estate Investment Corporation; Erica McGinnis, Senior Vice President and Chief Compliance Officer, Advisor Group; and JoAnn McGuinness, President and CEO, Inland Diversified Real Estate Services LLC.

Jeanne Meister, author of The 2020 Workplace, and founder of Future Workplace, an HR consulting firm,  discussed mentoring Millennials. She expounded on how mentorship has changed and what it can accomplish. Cecile V. Munoz, founder and president of U.S. Executive Search, Inc., discussed what financial services firms can do to better recruit high-achieving women. The Forum agenda also included break-out roundtable discussions to help identify what the attendees are looking for in the mentorship program and how they plan to use it.

I’m thrilled that the attendance at our Women’s Forum was filled to capacity and for the enthusiastic kick-off to the IPA’s mentoring program. The WIN Committee of the IPA is committed to empowering women and young professionals across the Direct Investment industry by providing valuable opportunities for mentorship, advocacy, education, and networking. We’re proud to launch our association’s mentorship program and hope more of our IPA members will get involved. It’s a fantastic opportunity for you to share your wisdom with each other and continue the pursuit of learning. For more information or to join IPA’s Women’s Initiatives Network Committee, please visit:

Louisa Quarto, Chair of the Women’s Initiatives Network Committee,
Investment Program Association, President, Realty Capital Securities, LLC



Making History

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

It’s rare that we at the IPA can use the words “first” or “historic,” let alone twice in six days.

On May 8, in conjunction with the IPA’s Spring Conference, more than 40 IPA representatives from 36 companies met in Washington, D.C., for the association’s first “Fly-In.” Over the course of the day, select IPA members conducted a series of more than 65 meetings with Senators, Members of the House of Representatives or their all-important staffs. In all, we met with officials from 16 states. These lawmakers were chosen by our consultants the Eris Group because they sit on key committees that influence current or potential legislation, or have responsibility to review of how effectively the Executive branch carries out laws Congress has passed.

The IPA teams reported successful engagements in each of the meetings. This is the first of many IPA-wide meetings with lawmakers and regulators, and we look forward to your participation in other similar events and our engagement with legislators and regulators.

Our second “first,” was the issuance of the Valuation Guideline for non-listed REITs, which went into effect on May 1. Two years in the making, the Guideline aims to align different valuation methods used by sponsors across the industry. Having one Guideline will make it easier for our audiences—investors, investment advisors, broker-dealers, and securities
analysts—to more accurately compare non-listed REIT valuations and investment performance.

Let me highlight three of its important features.

Timeliness – When implemented, sponsors will significantly accelerate the delivery of their first valuations. Instead of waiting up to 4.5 years for an initial non-listed REIT valuation, the Guideline cuts that delivery time almost in half.

Board of Director independence – The Guideline also emphasizes the importance of independence. It calls for the Board of Directors of each REIT to establish a committee comprised of the REIT’s independent directors to oversee the valuation process and recommend a final valuation, subject to approval by the non-listed REIT’s board of directors.

Third-party engagement – The Guideline injects additional independence into the process, calling for the engagement of third-party valuation experts and appraisers to determine the value of the REIT’s investments in the initial year of valuation and at least every other year there after. For any intervening years in which the REIT’s advisor performs the valuation, a third-party valuation expert would be engaged to confirm the valuation determined by the REIT’s advisor.

I’m taking time to discuss each initiative briefly because you’ll hear much more about them. Both are essential to the IPA’s future and you’ll hear more about each in the coming months.

If you have questions about either the Fly-In or the Valuation Guideline, please drop me a line at

Mastery and Confidence

Kevin Hogan, President & CEO, IPA

Kevin Hogan, President & CEO, IPA

Mastery and confidence. They’re essential elements of success that work hand in hand to create better outcomes. Whether you’re improving your golf game or your tennis swing, trying to beat your best time on your next run, or applying investment insights to client portfolios, confidence arises from mastering a subject which, in turn, increases your opportunities for achievement. Working in tandem, these traits create a virtuous cycle.

In the last few months, the IPA has made significant additions to our non-traded REIT education curriculum to boost advisor mastery and client confidence. These educational resources are offered at no charge to our members. It’s worth revisiting our non-traded REIT education curriculum to explore the enhancements we’ve recently made.

At the “investor,” or basic, level we offer members a FINRA-approved “Guide to Understanding Real Estate Investment Trusts.” Released in December 2012, this brochure can be used by advisors when speaking with investors about adding non-traded REITs to their portfolios. It can also be customized with a firm’s logo, address and phone number.

Non-listed REITs are complex investments that typically require more than one conversation with a prospect or investor. This brochure provides a place to begin a confident, informed discussion with investors about adding non-traded REITs to their investment portfolio.

At the “advisor” level, we’ve made two significant additions to our curriculum, both designed to facilitate professional mastery and confidence. In January, we introduced the IPA’s first Proficiency Certification Series covering non-listed REITs. The Proficiency Certification course, which will become part of a series covering other vehicles, is designed for advisors who are beginning to use or have expanded their use of direct investments. Completion of this online designation provides advisors with a fundamental understanding of Non-Listed Real Estate Investment Trusts and gives them a more robust knowledge of investor applications and uses of Non-Listed REITs.

The Proficiency Certification consists of a presentation of real estate and non-listed REIT basics followed by a test. The entire module takes about one hour to complete.

Lastly, at the “expert” level, we recently released the third IPA e-learning course, “Investing in Non-Traded REITs.” This two-hour course takes education for advisors and support staff in the broker-dealer and sponsor communities to the next level, integrating the first two courses, “Fundamentals of Direct Investments” and “Introduction to Portfolio Construction and Management with Direct Investments.”

Upon completion, a certificate will be issued, which can be printed out to leverage with investors, prospects and colleagues.

We believe these courses will increase both mastery and confidence across our member firms.  But they must be implemented to achieve results. Please contact Director of Education Ken Montgomery at if you have any questions or need hel