Securities America

An Interview with Mr. Jim Nagengast, CEO and President of Securities America Financial Corporation
By Bridget Fitzgerald and John Vyhlidal, Creighton University MBA students

Mr. Nagengast was born and raised in a small town in northeast Nebraska. After High School he moved east where he earned his Bachelor of Arts in Economics from Harvard University. After college Mr. Nagengast moved to New York City where he worked as an analyst at Merrill Lynch. He then worked in consulting at Marakon in Connecticut.

In 1992 he earned his MBA from Columbia University and returned to the Midwest where he worked for a pharmaceutical and food processing company in Iowa. In 1994 he joined Securities America as a Vice President of Finance. From that role he progressively grew into his current role as CEO and President of Securities America Financial Corporation.

Mr. Nagengast credits his upbringing in small town Nebraska as a key to his ethical mindset. Mr. Nagengast noted that, “... in a small town you grow up with the same group of kids, everyone knows everyone and you don’t want to let people down.”

Mr. Nagengast credited his father, the local town doctor, as his ethical mentor. His father taught him the concept of service and the importance of helping others. For Mr. Nagengast the notion of ethics is rooted in that service mindset, “[Ethics] is about doing the right thing when no one is looking. It is about treating people how you want to be treated.”

“In [Omaha] your word means something, you can still get a lot done on your word.”

Mr. Nagengast believes that the concept of people helping people is the foundation of the Omaha business culture. He feels that Omaha has a strong ethical business community culture. He noted that, “In this town your word means something, you can still get

a lot done on your word.” Mr. Nagengast gave a number of examples where he closed business deals with partners from Omaha over lunch and a handshake. According to Mr. Nagengast, “If you have built up years of trust you can get things done very quickly.”

Mr. Nagengast has carried his practical approach to ethics to Securities America’s culture. Securities America provides back office support to independent financial representatives. This support provides tools necessary to successfully run a small business, which includes a number of regulatory compliance responsibilities. Securities America helps to provide guidelines for their clients (the advisors) to support their clients (the individual consumer).

In the United States, broker dealers are regulated by the Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC). The regulations, along with other market conditions, create a frequently changing landscape for independent financial advisors. These conditions can create uncertainty on how to best serve the individual consumer. According to Mr. Nagengast, a strong ethical compass is necessary to navigate the grey area created by the complex landscape.

Securities America relies on their strong ethical culture when developing guidelines for the independent financial advisors. These guidelines help the independent financial advisors make decisions for their clients based on a number of factors which include the client’s age, net worth, and the overall liquidity of their portfolio. According to Mr. Nagengast, Securities America frequently challenges their assumptions by asking themselves the question “Would we recommend this to our loved ones?”

In order to maintain a culture of ethics at Securities America Mr. Nagengast believes the tone at the top is critical. In order to establish the proper tone, Mr. Nagengast believes that he and the rest of the leadership team need to have clear communication with their employees, in both good times and bad times. Mr. Nagengast and the leadership team at Securities America often need to make difficult decisions that impact a number of stakeholders. It is critical that they approach these decisions in a manner that reflects the same practical ethical considerations that Securities America uses when making client‐based decisions. Mr. Nagengast noted that, “It is all about respect. When you treat people with respect it builds trust and allows us to be more effective. We are able to get things done faster when employees and clients are not second guessing our decisions.”

“We frequently challenge our assumptions by asking ourselves, ‘Would we recommend this to our loved ones?’”

Mr. Nagengast reflected on a situation where this trust helped to navigate a difficult situation, one that could be difficult to address without a sound ethical compass. Approximately eight years prior, a former employee of Securities America was caught stealing money from the company. The leadership team recognized that if they pressed charges against the employee there would likely be press coverage of the situation, which could potentially reflect negatively on Securities America. They also knew that it would not be right to quietly let the employee go without pressing charges, as the next employer of the employee would likely have to deal with the situation.

Mr. Nagengast and the rest of the leadership team chose to press charges on the employee and allow due process to run its course. Through the process, the Securities America employees and clients trusted Mr. Nagengast and the leadership team’s decisions because of the culture of trust and respect that had been built.

He noted that his religion gives him guidance on how to treat people, both in his personal and professional life. He recalled a recent sermon he heard titled, “Showing Grace through the Rat Race.” Mr. Nagengast went further to discuss the people‐ centered culture at Securities America. He noted that when dealing with instances when things go wrong it is important to first look at where the process failed, and not the people within the process. “We don’t do a lot of yelling here,” noted Mr. Nagengast.

During our conversation with Mr. Nagengast we talked about how ethical decisions have evolved over the years. He noted that the core fundamentals have not, and will not change, however technology has changed the business environment. “We now have vast amounts of information at our fingertips and if you make a mistake it can be found by future employers or business partners much easier.” Mr. Nagengast went on to note that in today’s environment, “We are no longer judged on whether or not our decision was within guidelines, but if the decision is perceived to be right or wrong.”