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New Tiburon Research Report - An Initial Overview of the Fee-Based 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 to announce the release of its newly updated research report on Fee-Based Financial Advisors. This research release summarizes some of the report's key findings.
Please click the image above to view the table of contents for Tiburon's An Initial Overview of the Fee-Based Financial Advisors (RIAs) Market Research Report |
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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 flesh out the industry’s history, develop a framework for properly measuring the industry, and enhanced the profiles of the three leading custodians - The Charles Schwab Corporation, Fidelity Investments, & TD Ameritrade.
Key Findings
This report has a long list of interesting facts to share:
Evolution of the Fee-Based Financial Advisors Business
This section provides an overview of the market history, market definition, market growth & key issues of the fee-based financial advisor business.
Market History
- Fidelity Investments was founded in 1930 as the Fidelity Fund
- The Securities Act of 1933 regulated the offering of new securities to the public
- The Charles Schwab Corporation was founded in 1973 as a refuge for investors who felt they had been burned by full-service brokers
- TD Bank financial group’s predecessor Ameritrade entered the custody business in 2000
Market Definition
- Fee-based financial advisors (RIAs) are generally defined as independent, Securities & Exchange Commission or State registered, fee-based financial advisors that serve primarily private clients and utilize asset allocation
Market Growt
h
- There are 10,466 Securities & Exchange Commission registered fee-based financial advisors, an increase of over 40% since 2004
- Fee-based financial advisors federally registered assets under management has increased over 20% since 2005 to $37.5 trillion
- Fee-based financial advisors serve 2.2 million households, an increase of 10% over 2006
- Fee-based financial advisors average revenues have increased to $1.5 million, an increase of over three-quarters since 2000
Key Issues
- Over one-quarter of financial planners have backgrounds in accounting and insurance, allowing them to offer accounting and estate-planning services
- Fee-based financial advisors who were formerly in the banking & trust industries have an average of $433 million assets under management, over three times that of former brokers who are the next most successful
- Fee-only advisors have accounts that are six times larger, on average, than fee-based & commissioned advisors
- While passive referrals are still the best source of new clients, many fee-based financial advisors are finding CPA partnerships to be a valuable resource
Leading Fee-Based Financial Advisors
- Fisher Investments leads all fee-based financial advisors in the number of partners, the number of employees, the number of clients, assets under management, & revenues
Key Vendors to Fee-Based Financial Advisors
This section will provide a comprehensive overview of key vendors to fee-based financial advisors.his section provides an overview of the market history, market definition, market growth & key issues of the fee-based financial advisor business.
Custodians, Independent Broker/Dealers, & Clearing Brokers
- Fee-based financial advisor custodians are segmented by ira/401k custody services, fee-based financial advisors custody services, & institutional custody services
- Financial advisor custodians include the Charles Schwab Corporation, Fidelity Investments, TD Ameritrade, & National Advisors Trust Company
- Fee-based financial advisors consider updates on portfolio holdings, updates on portfolio characteristics, and updates on managers’ views important support services
Mutual Fund Companies & Other Traditional Product Compa
nies
- Financial advisors who primarily use individual securities dominate the advisors industry’s assets
- Fee-based financial advisors invest 20% to 100% of their client assets in mutual funds & other packaged products
- Smaller fee-based financial advisors are the ones buying mutual funds
- Three-quarters of fee-based financial advisors use index funds
- The Vanguard Group is the most popular mutual fund company amongst fee-based financial advisors
Fee-Accounts, TAMPs, & Separately Managed Accounts
- Financial advisors with more than $200 billion assets under management invest one-fifth in wrap accounts
Exchange Traded Funds, Hedge Funds, & Other Investment Product Companies
- Financial advisors mentioned using Barclay’s iShares most often among exchange traded fund offerings, with State Street a distant second in mentions
Wealth Management & Family Office Service Product Companies
- Fee-based financial advisors commented that a big part their businesses is managing money in their clients’ trusts
- Fee-based financial advisors rated the importance of variable annuities to their businesses at an average score of only 3.3, but one-fifth of advisors gave ratings from 7.0 to 10.0
Technology Companies & Other Key Vendors to Fee-Based Financial Advisors
- Fee-based financial advisors commented that Morningstar provides a great starting point for choosing a fund and is utilized as a fund screening tool
Future Predictions For The Fee-Based Financial Advisors Market
This section discusses future predictions for the fee-based financial advisors market.his section outlines the future predictions for the upscale channels industry.
Slowing Growth in the Number of Fee-Based Financial Advisors But Rapid Growth in their Assets Under Management
- Fee-based financial advisors will increase at a slower rate to 27,0
00 by 2012
Continuing Central Role of Custodians & Difficulty in Penetrating Custody Market
- The number of fee-based financial advisor custodians will decrease as the number of consolidations will be larger than the number of new custodians entering the market
Continuing Use of Mutual Funds & Individual Securities and Growing Use of Exchange Traded Funds, Alternative Investments, & Wealth Management Products
- Mutual funds and individual stocks, & bonds account for nearly all of registered investment advisor assets under management
Increased Telephone & Virtual Wholesaling Strategies
- Fee-only financial advisors give phone service lower importance than other types of financial advisors
Opportunities in Outsourcing
- Outsourcing operations may include investment selection, performance reporting, & TAMPs
Finally Some Consolidation in the Industry
- Fee-based financial advisor mergers & acquisitions will increase to 163 per year by 2012
To better understand the developments for Fee-Based Financial Advisors, executives can purchase Tiburon's An Initial Overview of the Fee-Based Financial Advisors (RIAs) Market research report where the key findings 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 1,100 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 October 14-15, 2008 (San Francisco, CA) at the Ritz Carlton Hotel in San Francisco, CA. 2009 dates are 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 125 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 forty-two ~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 55,000 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 2008-2009. Specifically, the firm plans to add two-to-three incremental principals (the most senior role at the firm) and several more research managers in 2008-2009.
- 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 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 project.
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