ICI Chief Upholds the Industry's Integrity
March 27, 2000
Ask Matthew Fink, president of the Investment Company Institute for the past 29 years, about the slowdown in growth in the U.S. mutual fund industry and increasing competition from foreign fund companies, exchange-traded funds and separate accounts, and Fink either gently deflects or dismisses each question.
"I am a lawyer-lobbyist," said Fink, in his authoritative, matter-of-fact fashion. "Marketing is not my bag."
As the head of the leading trade organization for the $6 trillion mutual fund industry, Fink is far more comfortable and forthcoming about the legislative milestones he has helped reach in his career at the ICI.
At each juncture, the ICI has worked tirelessly to protect shareholders' interest, guard the industry's integrity and seek consistent state and federal laws, Fink said.
Fink makes no apologies for spending nearly all of his career at one organization.
"I have always found it very interesting to be at the ICI because of the industry's tremendous growth," said Fink. "There's always a different issue." The focus of attention now, for example, is independent directors.
Fink joined the ICI in 1971, having served in the army and then briefly in a Washington law firm. He has a B.A. in history from Brown University, a law degree from Harvard and he spent a year at the London School of Economics. But when another Washington lawyer told him about the ICI and how it had been formed out of the Investment Company Act of 1940, Fink's interest was piqued.
"I was only 30 years old or so," Fink recalled. "A number of people had said the ICI was more than just a regular trade association. It had a culture of its own" and was influential with state legislators and on Capitol Hill. The legislative involvement was enticing, Fink said.
When he joined the Investment Company Institute as general counsel, Fink found himself in the midst of an intense debate between fund companies and banks over money market funds, he said. Banks sought state legislation to prevent fund companies from offering the then-highly popular funds, he said.
"When money market funds first started, banks and savings and loans around the country tried to wipe them out because they saw them as competition for CD's [certificates of deposit]," said Fink. "In fact, there was legislation pending in 24 states that would have done so. So, we had fights in 24 states. Well, we went right to investors and consumers to ask them what they wanted, and we beat the banks out."
Fink next found himself involved in the development of the Employee Retirement Income Security Act (ERISA) of 1974. The ICI worked closely with the fund industry and Congress to make sure that ERISA favored investors, Fink said.
In 1977, Congress sought to impose 30 percent taxes on all investments, which the ICI managed to thwart, Fink said.
The next big challenge for the ICI came in 1994, when the institute convinced portfolio managers to accept and comply with a set of investment policy standards, Fink said.
"There have been a series of fascinating issues nearly every year," which has made his three decades at the ICI worthwhile, Fink said.
As ICI president since 1991, Fink has a solid reputation as a consensus-builder, said Jack Brennan, president and CEO of The Vanguard Group of Malvern, Pa., and chairman of the ICI. In this regard, Fink is as well respected as Arthur Levitt, chairman of the Securities & Exchange Commission, Brennan said.
"Whether it's a legislative, regulatory or public relations issue, Matt is adept at bringing industry people back to the right thing, and that is respecting and upholding the rights of the shareholder," Brennan said.
Fink is proud of his negotiating prowess. He recalled a time when one of the most influential executive in the mutual fund industry called him to tell him he thought that Fink and the ICI were on the wrong side of a critical issue. Fink remembered that he paused, anticipating the executive would threaten to exert his influence to oppose the ICI stance.
But the caller said that because Fink had orchestrated an industry consensus, he would keep his opinions to himself and lend his firm's weight to the industry's cause, Fink said.
"In the interest of the investors, Matt has repeatedly succeeded in building a cohesive coalition of disparate sponsors, be they fund companies, insurance firms or broker/dealers," said Brennan. "And when you think about that, this is no small feat."
It is this theme, of the individual investor's rights and the integrity of the industry, that Fink refers to repeatedly, regardless of what he is asked.
In the future, investor rights will continue to be his guiding principle, said Fink.
"The biggest legislative issue facing our industry today is still remaining true to the core of the Investment Company Act, and that is integrity," Fink said.