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New Tiburon Research Report - Fee-Only Financial Advisors (RIAs) Market

Tiburon Strategic Advisors, a market research & strategy consulting firm serving a wide variety of financial institutions and investment managers, is pleased release highlights from its newly updated research report on the Fee-Only Financial Advisors Market: An Initial Overview of the Fee-Only Financial Advisors (RIAs) Market.

Please click the image above to view the table of contents for Tiburon's newly updated Fee-Only Financial Advisors (RIAs) Market Research Report

The purpose of this report is to provide readers with an initial overview of the fee-only financial advisors (RIAs) industry, the fastest growing distribution channel. This is Tiburon's second effort at putting its views regarding this unmeasured but widely speculated market into a single report.

Tiburon’s first draft of this report was published in 2007. That version was developed by summarizing existing Tiburon research.

This is Tiburon’s second draft of this report. The objective here was to further develop the storyline and tighten the profiles of the leading custodians.

Key Highlights
This report has a long list of interesting facts to share:

Evolution of the Fee-Only Financial Advisors Business
This section reviews the evolution of the fee-only financial advisors business:

  • Fee-only financial advisors or registered investment advisors (RIAs) are one of the hot growth channels but data is widely misunderstood
  • Inaccurate counting and misunderstood data has led to numerous fee-only financial advisors industry myths, including huge numbers of new fee-only financial advisors, booming numbers of break-away brokers, & the perceived absoluteness of the independent broker/dealer to registered investment advisor trend
  • Although numerous, state registered advisors add little to the market size
  • The number of fee-only financial advisors has been relatively flat in recent years. There were 19,500 fee-only financial advisors in 2002
  • There are 10,466 Securities & Exchange Commission registered fee-only financial advisors, an increase of over 40% since 2004
  • There are 11,919 state registered fee-only financial advisors
  • There are 43,000 fee-only financial advisor partners practicing within fee-only financial advisor firms
  • Fee-only financial advisors state registered assets under management has grown rapidly since 2005
  • Fee-only financial advisor assets under management have grown rapidly since 2005
  • Fee-only financial advisors generate $30 billion in revenues, up 17% since 2006
  • Fee-only financial advisors earn $15 billion, a 7% increase since 2006
  • Many advisors are really fee-based; fee-only financial advisors account for just 35% of all fee-only & fee-based financial advisors
  • Fee-only advisors have 25% fewer accounts, on average, than fee-based & commissioned advisors
  • Fee-only financial advisors with firm size under $25 million and no assets account for one-half of financial advisors
  • Over half of all fee-only financial advisor assets are controlled by the 2,000 advisors with greater than $200 million in assets
  • Fee-only financial advisors average fee increased 2 basis points to 1.00% in 2006
  • One-third of fee-only financial advisor assets come from retirement plan rollovers and another third is moved from a different broker
  • Fee-only financial advisors' ultra-high-net-worth investors have increased 2% in 2006 while their high-net-worth investors have decreased 8%
  • When all investment styles employed are considered, tactical asset allocation accounts for the most mentions followed by market timing

Key Vendors to Fee-Only Financial Advisors
This section reviews key vendors to fee-only financial advisors:

  • Over three-quarters of registered investment advisors clear trades & custody assets with one or more of the major clearing agents
  • The Charles Schwab Corporation still dominates in number of fee-only financial advisors when counting all competitors. The Charles Schwab Corporation has 5,100 fee-only financial advisors, while TD Ameritrade only has 4,400 and Fidelity has 3,800
  • The Charles Schwab Corporation leads all major custodians in assets under administration, with nearly two-thirds of all assets under administration
  • Fee-based financial advisors may buy $75 billion per year in annuities
  • Most fee-only financial advisors commented that offering wealth management services is a key to attracting high net worth clients

Future Predictions for the Fee-Only Financial Advisors Market
This section reviews future predictions for the fee-only financial advisors market:

  • Fee-only financial advisors will increase at a slower rate to 27,000 by 2012
  • Fee-only financial advisor partners will increase more rapidly to 55,000 by 2012
  • The number of fee-only financial advisor partners per firm will remain flat, stagnating around 2.0
  • The number of fee-only financial advisor employees will increase to 405,000 by 2012
  • Fee-only financial advisors non-advisor-to-advisor ratio will increase to 3.0X by 2012
  • Fee-only financial advisors average employee compensation will increase to $1.1 million by 2012
  • Fee-only financial advisor clients will increase very rapidly to 3.2 million by 2012
  • Almost two-thirds of registered fee-only financial advisors have fewer than 100 clients
  • Fee-only financial advisor clients per firm will increase to 119
  • Fee-only financial advisor clients per partner will increase to 58.1
  • Fee-only financial advisor accounts per partner steadily increase to 189.1 per partner in 2012
  • Fee-only financial advisor average assets under management will grow to $310 million by 2012
  • Fee-only financial advisor assets under management per partner will increase to $255 million by 2012
  • Fee-only financial advisor revenues will increase to $55 billion by 2012
  • Fee-only financial advisor revenues per firm will increase to $2 million in 2012
  • Fee-only financial advisors revenues per partner will increase to $1 million.
  • Fee-only financial advisors net income will increase to $20 billion by 2012
  • Fee-only financial advisors net income per firm will increase steadily to $740,700
  • Fee-only financial advisors net income per partner will increase to $363,600
  • Fee-only financial advisors profit margin will decrease to 36% in 2012
  • The number of fee-only financial advisors served by custodians will increase at a slower rate to 27,000 by 2012
  • The number of end clients served by fee-only financial advisor custodians will increase to 3.2 million in 2012
  • The number of accounts served by fee-only financial advisor custodians will increase to over 10 million by 2012
  • Fee-only financial advisors will invest over half of their assets under management in mutual funds & individual securities
  • Fee-only financial advisors & fee-based independent financial advisors are far less likely to want in-person visits than fee-based wirehouse financial advisors
  • Fee-only financial advisors prefer to receive contacts quarterly, and financial advisors generally prefer less contact as the portion they accept in commissions increase
  • Fee-only financial advisor mergers & acquisitions are up over 600% since 1999, with 81 deals taking place in 2007

To better understand the developments in the Fee-Only Financial Advisors (RIAs) Market executives can purchase Tiburon's An Initial Overview of the Fee-Only Financial Advisors (RIAs) Market research report where the key learnings highlighted above are covered in greater detail. Please contact Sarah Sage at SSage@TiburonAdvisors.Com or 415-789-2540.

More Information

The following links will open specific pages on Tiburon's web site:

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Tiburon Strategic Advisors

Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:

  • The firm has served over 300 corporate clients and completed over 1,000 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, and various international markets.
  • Tiburon holds a series of CEO Summits semi-annually for its executive-level clients. The next CEO Summit is scheduled for April 10-11, 2008 at the Ritz Carlton Hotel in New York, NY. Fall 2008 and 2009 dates are October 14-15, 2008 (San Francisco, CA), April 9-10, 2009 (New York, NY), and October 7-8, 2009 (San Francisco, CA). Attendance is by invitation only and attendance at each Summit is limited to 100 senior industry executives. Visit the CEO Summits section of Tiburon's web site for details on current and past CEO Summits, including attendee lists, meeting agendas, and highlights. Please contact Tiburon's Managing Principal Chip Roame at CRoame@TiburonAdvisors.Com or (415) 789-2541 if you are a Tiburon client and have an interest in attending a future Tiburon CEO Summit.
  • Tiburon has published thirty-eight ~300-400+ page research reports, which offer detailed analyses of growing business segments; each is available for $5,000; these reports can be ordered by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540.
  • Tiburon offers an annual research report retainer service, whereby dozens of clients receive all Tiburon reports published within a year for $25,000; clients can subscribe to Tiburon's 2008 Research Report Retainer by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540.
  • Tiburon also offers a database access program, whereby it shares its 300,000+ person industry executives contacts database with dozens of clients for $25,000 per year (distributed quarterly); clients can subscribe to Tiburon's Database Access Program by contacting Sarah Sage at SSage@TiburonAdvisors.Com or (415) 789-2540.
  • Tiburon offers thirteen online business benchmarking tools that are available to all types of financial advisors in an effort to help them benchmark their business practices and build more successful businesses. The sites include www.BrokerBestPractice.Com for wirehouse & regional brokers, www.FABestPractices.Com for fee-only financial advisors, www.IndependentRepBestPractices.Com for independent reps, and www.PrivateBankerBestPractices.Com for private bankers. Almost 5,000 advisors have used these tools. By completing one of the online surveys, financial advisors can access a FREE copy of the relevant comprehensive Tiburon research report, which summarizes and analyzes the collective results.
  • Tiburon's weekly research releases, like this one, are emailed for free to interested industry executives, media representatives, conference planners, and individual financial advisors. Over 58,000 industry executives now receive these releases. Feel free to sign up to receive future research releases at Tiburon's web site (www.TiburonAdvisors.Com) if this release was passed to you by a colleague and you would like to receive them directly in the future.
  • Tiburon plans to expand its workforce in 2008. Specifically, the firm plans to add two-to-three incremental principals (the most senior role at the firm) and several more research and marketing managers in 2008.
  • Tiburon has built three executive programs (CEOs-in-Residence, Financial Advisor Roundtable, and Consulting Fellows) in an effort to bring the experiences of additional senior level industry executives to Tiburon clients. Feel free to contact any of the members of Tiburon’s executive programs directly or ask that they be included in any ongoing Tiburon project.

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