See Table of Contents for Tiburon's Winning Tactics 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 Wining Tactics. 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 five key winning tactical strategies, including defining target markets, developing sales & marketing strategies, developing appropriate staffing & compensation models, developing winning firm cultures, and leveraging technology. The report also addresses three additional financial advisor level only tactical strategies, including financial advisor benchmarking, succession planning, and profiling. 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. Several of the underlying tactical issue reports (including financial services industry networking, financial advisor sales & marketing strategies, financial advisor technology, financial advisor industry networking, and financial advisor succession planning) had previously been published. That version of the report was intended to summarize those reports and offer some predictions across the winning tactics.

This is Tiburon’s second draft of this report; this draft shifts the report in format to specifically incorporate the executive summaries of all of the underlying Tiburon research reports, brings this report into alignment with the revised drafts of many of its underlying reports, and adds a chapter addressing the conclusions of current events which helps to put this report’s predictions in perspective.

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

Making Sense of the Impacts of Today’s Market Events
This section outlines the impacts of today's market events:

Significant Consumer Impacts In Terms of Loss of Retirement Funds, Decline in Confidence, Increase in Bankruptcies, Delayed Retirements, and Consumer Skepticism & Risk Aversion

  • Consumer household assets fell to $70 billion in 2008, down almost 10% since 2007

Depressed Assets & Revenues, Enormous Losses, & Write-Downs, Incredible Market Capitalization Declines, Huge Capital Raises, Huge Number of Financial Services Company Failures, & Dozens of Related Industry Impacts

  • The market capitalization of the four largest US banks has fallen from $1.1 trillion to $229 billion

New Regulatory Regime

  • The Economic Stabilization Act was the largest government bail out ever, 250% larger than the Fannie Mae & Freddie Mac takeover

A Return to Simplicity

  • Financial institutions losses & write-offs may reach $1.0 trillion by 2013

Abundant Financial Services Industry Investment Opportunities, Increasing Financial Services Industry M&A Activity, & the Return of Financial Services Industry Private Equity Investments

  • Financial institutions buyouts accounted for 13% of all buyouts, up from just 6% in 2004 but still far below their share of all public companies

Financial Services Industry & Financial Advisor Winning Tactics: Defining the Five Tactical Keys to Success
This section explains the winning tactics of the financial services industry, financial advisors and also outlines the best practices of financial advisors:

Financial Services Industry Tactics

  • There are 15,000 national trade & professional associations
  • There are 100,000 state, regional, and local trade & professional associations
  • Nevada is the fastest growing state
  • California leads all states in number of high net worth households by far, with nearly 900,000
  • Almost one-half of the ultra high net worth households in the country are in the Northeast and Southeast
  • Over four million Americans now live outside the US in more than 160 different countries
  • The most often paid bills online are utilities and credit cards. 78% of online bill payers pay utilities online, and 78% pay credit card bills
  • About one-third of banking industry executives feel that their technology spending is driven by a need to replace outdated systems
  • And two-thirds of the bank industry’s customer invoices contain errors
  • Leaders in the ATM market include Diebold, TRM Corporation, and Euronet Worldwide
  • Market share of online banking technology is primarily in the hands of a few leaders including Corillian
  • Fiserv’s CheckFree handles 50% of all online bill payments
  • Ten million Americans are victimized by identity theft per year

Financial Advisor Tactics

  • The number of consumers between 55 and 64 years old is expected to grow the fastest at about 4% per year
  • 12,000 baby boomers turn 50 every day
  • Consumers households have $23 trillion in investable assets, an increase of over 40% since 2002, but a decrease of almost 20% since 2007
  • Consumer household have $7.7 trillion in bank accounts, an increase of almost 100% since 1999
  • Consumer households have $5.9 trillion in time & savings deposits, flat since 2007 and an increase of almost 60% since 2002
  • Consumer households have $3.9 trillion in bonds, an increase of almost 50% since 2002
  • The consumer population over age 65 has risen dramatically and is projected to continue to rise, up nearly 7% since 1940 and projected to rise another 6% to nearly 20% by 2030
  • Women carry almost 80 million credit cards, over 10% more than men
  • There are 1.4 million women investor households with over $500,000 in total assets
  • The Hispanic segment is poised to control over $1 trillion in household disposable income by 2010
  • Less than two-thirds of affluent Asian Americans use financial advisors, which presents a significant opportunity for advice
  • The disabled community consists of over 50 million people, or 19% of the US population
  • Two-thirds of expenses of tax professionals go towards office expenses, while about one-third goes to paying non-owners compensation; marketing does not even make the cut
  • Sanford & Bernstein focuses 60% of its marketing efforts on pensions
  • Fisher Investments focuses 50% of its marketing efforts on the high net worth market
  • Full-service brokers rely heavily on passive client referrals
  • One-third of top producing fee-only financial advisor clients come from client referrals
  • Two-thirds of new clients for tax professionals come from client referrals, mostly from passive referrals
  • Over one-half of financial advisors do not ask clients for additional assets
  • One-quarter of estate planning lawyers actively seek clients to refer to outside advisors
  • Financial advisors have found that nearly one-half of their seminar attendees request follow-up appointments
  • The most popular seminar materials amongst fee-only financial advisors come from Ibbotson
  • Emerald Publishing delivers the most popular seminar materials for independent reps
  • Larger independent rep firms allocate more of their expense budget to rep and administration support compensation
  • The average fee-based financial advisor in the survey allocates about a third of their expense budget to staff compensation
  • The average tax pro firm allocates less than a third of their expense budget to non-owner compensation
  • The average lawyer firm allocates less than a third of their expense budget to non-owner compensation
  • The most often paid bills online are utilities and credit cards
  • Nearly twenty five million individual tax returns were being filed via software or the web in 2000
  • There are 57 financial planning software products
  • NaviPlan is the leading financial planning software in terms of users, likely because of its early launches of 1995 in Canada and 1998 in the US, and its institutional target market
  • Morningstar is the most popular financial planning software across all segments of advisors, peaking at well over 80% amongst the largest advisors
  • Schwab (20%) and Morningstar (19%) have the most popular web sites amongst fee-only financial advisors
  • The Charles Schwab Corporation leads in data download software users
  • Yodlee! owned nearly two-thirds of the account aggregation for institutions market by 2003
  • Contact management software sales are led by ACT!
  • There are 82 financial advisor industry networks
  • Financial advisor industry networks, have 1.6 million members
  • The leading financial advisor industry network in terms of members are the American Institute of Certified Public Accountants and Independent Insurance Agents & Brokers of America
  • The leading financial advisor industry publication in terms of readers is the Wall Street Journal
  • Financial advisor industry trade groups, conferences, designations, & other networks have grown to 1.5 million members
  • The American Institute of Certified Public Accountants and Independent Insurance Agents & Brokers of America Each have more members than the other top ten financial advisor trade groups combined
  • Fee-based financial advisor mergers & acquisitions are up over 600% since 1999, with 81 deals taking place in 2007
  • The average fee-based financial advisor has been growing revenues 19% per annum, with growth rates steady across firm sizes
  • The average independent rep firm has grown its revenues by 16% per year

Financial Advisor Benchmarking & Best Practices Tactics

  • The average independent rep firm serves 169 clients per partner; the largest independent reps are able to serve more than twice as many clients per partner
  • The average independent rep firm advises on $142,000 of assets per client; average client assets increase with rep firm size
  • Nearly two thirds of expenses for fee-based financial advisors are devoted to principal & staff compensation
  • More than half of fee-based financial advisors intend to sell their businesses upon retirement, with selling to an existing partner or employee being the most popular planned exit strategy
  • Only 20% of fee-based financial advisors have previously worked at one of the wirehouses
  • Over one-third of fee-based financial advisors are looking to purchase another fee-based financial advisor firm within the next year
  • One-third of fee-based financial advisors assets come from retirement plan rollovers and another third is moved from a different broker
  • Over half of tax professionals say they are putting in between 40 and 50 hours per week
  • Two-thirds of tax professionals offer their services on a commission only basis, and very few work on a fee-based basis
  • Morningstar Advisor is the most widely visited web site by independent reps, with almost half (41%) of all reps visiting it regularly
  • The largest share (40%) of independent reps’ clients is in the moderately affluent category of $100,000 - $1 million of investable assets
  • Independent reps utilize a wide variety of annuity companies, with Nationwide (35%) and SunAmerica (34%) leading the way
  • Morningstar and, to a lesser extent, Financial Profiles are the leading financial planning software products used by independent reps
  • Morningstar is the leading asset allocation software product used by independent reps (42%)
  • The average independent rep firm has 4.1 employees
  • The average rep firm generates $437,000 in revenues; the largest independent reps generate more than five times this amount
  • The average rep firm generates $278,000 of revenues per partner
  • The average rep firm has grown its client base by 5% per year; growth has stagnated for the larger firms
  • The average rep firm spends $41,000 on administrative support compensation; the largest independent reps spend almost eight times this amount
  • The vast majority of independent reps across all broker/dealers have a compliance manual (~70%-90%) and most have a policies & procedures manual and a client agreement
  • Only about 15% of independent reps across broker/dealers have a succession plan (8%-27%)
  • The average independent tax professional is 48 years old; age does not seem to define success
  • The two most popular licenses amongst tax professionals are Series 63 and Series 6 securities licenses
  • Tax professionals serve a relatively lower net worth clientele, with half of all clients (50%) having less than $100,000 of investable assets
  • Two-thirds of new clients for tax professionals come from client referrals (64%), mostly from passive referrals (49%)
  • The average tax professional generates $132,000 of tax service revenues, increasing with firm size
  • The average tax professional generates $44,000 in accounting and book keeping revenues, increasing with firm size
  • Tax services and financial planning account for almost 70% (67%) of the time of tax professionals
  • Almost 60% of tax professionals’ client assets are invested in commissionable mutual funds
  • Lincoln Benefit is the most widely utilized insurance company across all independent tax professionals
  • National Financial is the leading clearing broker utilized by independent tax professionals
  • Morningstar receives the highest satisfaction score amongst data & research services across tax professionals
  • HDV Link is the most popular contact management software product utilized by tax professionals
  • Tax professionals using Charles Schwab are the most successful at gathering client assets per employee
  • Amongst tax professionals who do make referrals, on average, they send three per year to estate attorneys
  • Two-thirds of expenses of tax professionals go towards office expenses, while less than a third go to paying non-owners’ compensation
  • A whopping 60% (56%) of tax professionals intend to retire in the next fifteen year

Predictions for Financial Services Industry & Financial Advisor Winning Tactics
This section explains the predictions for financial services industry and financial advisors winning tactics:

Financial Services Industry Predictions

  • Fidelity Investments, The Charles Schwab Corporation, & Merrill Lynch will continue to lead the way in technology spending

Financial Advisors Predictions

  • Financial advisor technology spending is expected to grow steadily at 4% a year until 2013

Financial Advisor Benchmarking & Best Practices Predictions

  • Only 10% of independent reps have succession plans, although a greater share of larger independent reps have one

To better understand the developments for Consumer Wealth, executives can purchase Tiburon's Financial Services Industry & Financial Advisor Winning Tactics: Defining the Five Tactical Keys to Success 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.