See Table of Contents for Tiburon's Key Driving Factors Research Report 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 new research report on Key Driving Factors. This research release summarizes some of the report's key findings. The purpose of this report is to provide readers with an initial understanding of the key driving factors within the financial services industry, including consumer wealth, the institutional markets, & current events. This report serves to consolidate the highlights of those three Tiburon research reports, including both historical insights and future predictions. This is the second draft of Tiburon’s research on this topic. Tiburon’s first draft of this report was published in 2008; that draft consolidated prior Tiburon research into one report. This is Tiburon’s second draft of this report; this draft includes updates to Tiburon’s underlying consumer wealth and institutional markets research reports, and also includes a chapter on Tiburon’s new current events research report. This draft also shifts the report in format to instead incorporate the executive summaries of the underlying Tiburon research reports and better aligns its introduction text. Key Findings This report has a long list of interesting facts to share: Key Driving Factors This section reviews the three key driving factors, including consumer wealth, institutional markets, and current events: Consumer Wealth The worldwide consumer population is 6.5 billion, up almost 100% since 1967 There are 78 million Baby Boomers, an increase of 1.0 million since 2006 The average expected retirement age has been getting older, now at 65 up from 62 in 1996 Consumer households’ personal income has increased almost 40% since 2001 to $12.1 trillion Consumer household wages have increased over 33% since 2001 to $7.6 trillion Consumer households’ personal outlays have increased over 40% since 2001 to $10.5 trillion Consumer households have over $20 trillion of investable assets, over $60 trillion of total assets, and over $50 trillion of net worth Consumers households have $23.0 trillion in investable assets, an increase of over 40% since 2002, but a decrease of almost 20% since 2007 Consumers households assets held in brokerage accounts is $14.0 trillion, a decrease of almost 30% since its peak in 2007 Consumer households have $3.9 trillion in bonds, an increase of almost 50% since 2002 Consumer households have $1.6 trillion in annuities, an increase of 60% since 2001 Consumers have $10.3 trillion in retirement plan assets, an increase of 25% since 2002 but a decrease of 20% since 2007 Consumer households have over $40 trillion in financial assets, an increase of 70% since 2002, but a decrease of almost 20% since 2007 Consumer households have $25 trillion in personal assets, an increase of almost 40% since 2002 Consumers have $14.2 trillion of household liabilities, an increase of over 60% since 2002, but down slightly since a peak of $14.3 trillion in 2007 Consumer household debt growth decreased steeply to 0.4% in 2008 Consumer households have over $50 trillion in net worth, an increase of almost 33% since 2002, but decreasing almost 20% since its peak in 2007 Institutional Markets There are 500 institutional separate account managers, up one-third since 2001 Institutional separate account managers have $3.0 trillion assets under management, up 25% since 2001 Institutional separate account managers receive $286 billion net flows, up 35% since 2001 The average defined contribution plan participant has $43,300, up 65% since 1997 and up 45% after a dip in 2002 Fidelity Investments is the largest 401K plan provider in terms of the number of plans. The average 401K account is two-thirds invested in equities, with the remainder in bonds, cash, and other income securities Defined contribution plan assets are expected to grow at an annual rate of 13% per year over the next five years The largest player in the 403b market is Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF) Endowments & foundations have $280 billion assets under management, up 2,000% since 1975 Harvard University’s endowment fund is the largest amongst all universities Over one-third of US corporate cash is invested in money market mutual funds Current Events Over three-quarters of affluent investors are concerned that terrorism will hurt the US economy There have been 52 world disasters Three-quarters of consumers believe that the credit crisis is just as serious or more serious than the dot come bubble burst The total assets of public companies that declared bankruptcy was $1.1 trillion, up 150% - 8 - since its previous peak in 2002 First mortgage home defaults reached 2.7 million in 2008 & 2009, up 1,000% since 2007 and 300% since 2000 to 2006 Income tax related corporate penalties reached $939 million, up almost 200% since 2002 Smith Barney paid the biggest fine in the stock analyst scandal at $400 million, followed by Merrill Lynch & Credit Suisse each at $200 Million Consumer households borrowed $2.7 trillion for mortgages, down from the peak of $3.9 trillion in 2003 Subprime mortgage originations have increased rapidly to $1.3 trillion in 2007, Up 100% since 2005 & 2006 and 500% since 2002 First lien subprime mortgages without full documentation have been increasing, reaching 41% up from 22% in 1999 The financial sector and households have increased their debt over the past ten years by 128% and 97% respectively The debt-to-asset ratio of the five largest investment banks has been increasing, up 50% since 2003 Subprime mortgages account for nearly three-quarters of all mortgages that will reset in 2007 & 2008 and other non-prime loans account for most of the rest Over one-quarter of subprime adjustable rate mortgages are now 90 days or more past due, up from 5% to 10% in 2002 to 2006 There will be a peak of 11,900 Alt-A adjustable rate mortgages resetting in December 2009 Lehman Brothers is the largest US corporate bankruptcy with $639 billion assets Future Predictions for Key Driving Factors This section outlines future predictions for the three key driving factors: Future Predictions for Consumer Wealth The number of consumers is expected to grow to over 400 million by 2043, up 100 million since 2007 Consumer household investable assets will increase to over $30 trillion by 2012 as baby boomers liquefy their retirement, personal, and illiquid assets as they retire Consumer household liabilities will increase to over $17 trillion by 2012 as generation X consumers continue to take out debt to purchase personal and illiquid assets Consumer household net worth will increase over 30% to $63 trillion by 2012 Making Sense of the Impacts of Today’s Market Events American workers lost an average of over one-quarter of their 401k retirement plan savings in 2008 There were 1.1 million personal bankruptcy filings in 2008, up over 100% since 2006 but down from the peak in 2005 with 2.1 million Nearly half of firms sued in class action lawsuits in 2008 were financial services companies The market capitalization of the four largest US banks has fallen from $1.1 trillion to $229 billion Financial institutions losses & write-offs may reach $1.0 trillion by 2013 To better understand the developments for Key Driving Factors, executives can purchase Tiburon's Key Driving Factors: Defining the Role of Consumer Wealth, the Institutional Markets, & Current Events in the Future of Advice 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.