Prior CEO Summits 2007-2009

Tiburon has held sixteen prior CEO Summits, with the first CEO Summit taking place in July 2001. Tiburon CEO Summits will continue to be held semi-annually. Details of Tiburon CEO Summits XII-XVI are below; click here for details of earlier Summits.

Tiburon CEO Summit XVI was held April 15-16, 2009 in New York, NY at the Ritz Carlton Hotel. The Summit started at 7:45am on Tuesday, April 15, included a networking dinner that evening at Delmonico's Restaurant, & concluded at 5:30pm on Wednesday, April 16. Over 125 senior industry executives took two days out of their busy schedules to participate. Chip Roame (Managing Principal, Tiburon Strategic Advisors), Jud Bergman (CEO, Envestnet Asset Management), Jessica Bibliowicz (CEO, National Financial Partners), Mark Casady (CEO, LPL Financial), Kip Condron (CEO, Axa Financial), Jeffrey Dunham (CEO, Dunham & Associates Investment Counsel), Ken Fisher (CEO, Fisher Investments), Roger Ibbotson (Professor, Yale University; CEO, Zebra Capital Management; & Former CEO, Ibbotson Associates), Scott Powers (CEO, State Street Global Advisors), & Paul Stevens (CEO, Investment Company Institute) made general session presentations. Four general session panel discussions included a consumers panel, an advisors panel, a gatekeepers panel, & the now permanent special general session panel discussion addressing current events.

Also in attendance for Tiburon CEO Summit XVI was Tiburon employee Tudor Jones (Director, Business & Marketing).

Opening Keynote Presentation:


		Tiburon Managing Principal Chip Roame kicks off CEO Summit XVI by addressing the state of the financial services industry

Chip Roame (Managing Principal, Tiburon Strategic Advisors)

Tiburon CEO Summit XVI Welcome & State of the Financial Services IndustryTiburon CEO Summits Vision, Tiburon Core Business Services, & A Brief Introduction

Mr. Roame summarized the Tiburon CEO Summits vision and outlined the firm's core business services, taking a few moments to thank the Tiburon CEO Summit XVI speakers & sponsors:

Tiburon's CEO Summits were created in 2001 after Mr. Roame noted the lack of CEO-level interaction across traditional industry lines and yet saw the consistency of issues being addressed by these same executives

Tiburon's CEO Summits have evolved from a just a handful of industry colleagues meeting in Tiburon to 100+ CEO-level Tiburon clients attending two day conferences at the Ritz Carlton Hotel in San Francisco, CA & New York, NY

Mr. Roame reiterated the two themes of all Tiburon CEO Summits - Challenging Conventional Wisdom & Maintaining a Consumer Orientation

Tiburon's core businesses include Research Reports & Research Report Access Program, Market Seminars & Conference Speeches, Market Research & Strategy Consulting Projects, & Advisory Board Roles

Mr. Roame introduced Tiburon CEO Summit XVI's nine terrific guest speakers, including Jud Bergman (CEO, Envestnet Asset Management), Jessica Bibliowicz (CEO, National Financial Partners), Mark Casady (CEO, LPL Financial Services), Kip Condron (CEO, Axa Financial), Jeffrey Dunham (CEO, Dunham & Associates Investment Counsel), Ken Fisher (CEO, Fisher Investments), Roger Ibbotson (Professor, Yale University; Chairman, Zebra Capital Management; & Former CEO, Ibbotson Associates), Scott Powers (CEO, State Street Global Advisors), & Paul Stevens (CEO, Investment Company Institute)

Mr. Roame then thanked the Tiburon CEO Summit XVI sponsors, including Advisor Software, Envestnet Asset Management, Fiserv (Fiserv Investment Services), Foliofn (Foliofn Institutional), JCPR, LPL Financial, Mass Mutual Financial Group, Natixis (Natixis Global Associates), PNC Financial (PNC Global Investment Servicing), Rafferty Holdings (Direxion Funds), State Street Corporation (State Street Global Advisors), TD Ameritrade (TD Ameritrade Institutional), The Bank of New York Mellon Corporation (Pershing Advisor Solutions), & The Charles Schwab Corporation (Schwab Institutional) whose financial support allow the CEO Summits to be held at the Ritz Carlton Hotel and attendance to be open to 100+ CEOs

State of the Financial Services Industry

Year-End 2007 Recollection: Winning Products & Channels

Mr. Roame introduced his presentation with a brief overview of the recent past, discussing such factors as consumer wealth, the retirement issue, leading & growing products, the state of the channels, and a mention of the increasing role of global markets:

The ratio of consumer household financial assets had been relatively stagnant since 2002, with investable assets accounting for two-thirds of all financial assets
Baby boomers were still not saving the traditional way in 2007, maintaining negative saving rates from 2005 & 2006
Life expectancy was becoming a problem, but consumers, and especially baby boomers, had lots of assets in retirement plans & houses that they could liquidate to retire
Mutual funds were the dominant investment product and mutual fund net flows still led those of other investment products
Target date mutual funds had become the industry darling and were gathering assets quickly
Exchange traded funds had become the most significant product development since mutual funds in the 1940s
Hedge funds had gathered over $2.0 trillion assets, more than SMAs & ETFs combined
The wirehouses and retail banks controlled almost two-thirds of all consumer investable assets
And for investment management firms, non-US mutual funds assets under management had surpassed those of US mutual funds

2008-2009 Credit Crisis: Consumer & Industry Impacts

With the table set, Mr. Roame then discussed the events of the last year, presenting some high-level Tiburon research findings:

And then came the credit crisis, with lots of parties to share the blame, including consumers who took out loans they were unable to handle, commercial banks who created sub-prime & no-documentation processes, mortgage brokers who paid huge agent incentives to close any transaction, & investment banks who created & sponsored complex mortgage backed derivative products

The stock markets all declined sharply in 2008, with the indices being down 31% to 41%

And then came the government's help... All five of the larges US government bailouts have been of financial services companies, wiht four happening in 2008, including the Economic Stabilization Act, and the bailouts of Fannie Mae & Freddie Mac, AIG, and Bear Stearns

The average American worker lost one-quarter of his o

r her 401k retirement plan savings in 2008

Consumer households lost $2.0 trillion in real estate equity since 2006, down to $8.9 trillion, with home equity levels falling to 43%, which is the lowest number on record

In aggregate, consumer household net worth fell $11.0 trillion in 2008 to $52.0 trillion

And the number of consumer households with over $1.0 million net worth declined almost 30% in 2008 to 6.7 million

There have been several dramatic financial service industry impacts as a result, including huge AUM drops, 325,000 jobs lost worldwide since 2007, $680 billion of losses & write-offs in US firms alone, and investment manganager margins dropping from 40% to 25%

Actively managed equity mutual funds had net outflows of $238 billion in 2008 after years of positive net flows

Hedge fund assets ended 2008 at $1.3 trillion having peaked at $1.8 trillion mid-year

Financial institutions' capital raises have just offset their losses & write downs

Retail banks have had the highest market capitalization loss by percentage in the financial services industry at negative-63%

Bank of America & Merrill Lynch, Citigroup, AIG, Wells Fargo & Wachovia, and JP Morgan Chase, Washington Mutual, & The Bear Stearns Companies all lost over $100 billion of market capitalization since October 2008

As a result of recent events, consumers are skeptical of the financial services industry, with three-quarters believing that Bernie Madoff type behavior is common

Investors are increasingly going to court to seek resolution, filing 210 class action lawsuits alleging securities fraud, up almost 100% since 2006, half of such against financial institutions

2009 & Beyond: New Industry Trends & Directions

Clearly the industry stands at a crossroads, so Mr. Roame then addressed the future of products & services and the market & distribution channels that will deliver them:

Investment products will likely move from complex, risky, & high fees to more simple, risk averse, & sustainable products. Fading products might include closed-end funds, mortgage related products, & securitized products. Those with unclear futures include credit funds, distressed debt funds, & real estate funds. Those products that look like they might emerge as winners include individual equities & bonds, CDs, 40 act structures, and ETFs & Active ETFs

For example, while ETF assets declined from $608 b

illion to $578 billion in 2008, net flows into ETFs increased to $178 billion, up 20% since 2007

And while 2008 investment returns depressed ten year hedge fund investment returns, those returns are still positive, unlike the long-only world

The most highly ethical and value-added markets & distribution channels are likely to gather the greatest assets. Fading channels might include wirehouses, investment bankers, & investment consultants. Those with inclear futures might include define contribution plans, retail banks, & discount brokers. Those channels that look like they might emerge as winners include online financial services, independent reps, & fee-based financial advisors

On one hand, the major investment banks have gone bankrupt, been acquired, or converted to banks

Goldman Sachs Group's employees have seen their earnings plummet, with an average of $357,000 in 2008, down 50% since 2007

Almost all wirehouse clients say that they intend to take money away from their brokers

Meanwhile, fee-based financial advisors' big three custodians have brought in more new assets since the beginning of 2007 than the big four wirehouses, and The Charles Schwab Corporation's 5,500 fee-based financial advisors have brought in more assets than even Merrill Lynch's 16,690 brokers since the beginning of 2007

Retail banks will be the most aggressive acquirers because they are the largest institutions and financial institutions buyouts are likely to grow significantly from just 13% of all buyouts

Tiburon CEO Summit XVI Kick-Off

Tiburon CEO Summit Guest Speakers Introduction & Agenda Highlights

Tiburon CEO Summit XVI features a Current Events Panel, with panelists including Chuck Baldiswieler (Trust Company of the West), John Cammack (T. Rowe Price Group), Steve Deschenes (Mass Mutual Financial Group), John Murphy (Oppenheimer Funds), & Steve Wallman (Foliofn)

Guest speakers include:

Jud Bergman (Envestnet)

Jessica Bibliowicz (National Financial Partners)

Mark Casady (LPL Financial)

Kip Condron (Axa Financial)

Jeffrey Dunham (Dunham & Associates Investment Counsel)

Ken Fisher (Fisher Investments)

Roger Ibbotson (Yale, Zebra, & Ibbotson)

Scott Powers (State Street Global Advisors)

Paul Stevens (Investment Company Institute)

Other Tiburon CEO Summit XVI highlights include the Ask the Consumers, Ask the Advisors, & Ask the Gatekeepers panel discussions, as well as six break out sessions, including:

Modern Portfolio Theory

Break Away Brokers

Financial Advisor Technology

Retirement Income & the Impace of the Recent Credit Crisis

Alternative Investments

Distribution Insight that Works

A Closing Word: Tiburon CEO Summit XVII & Tiburon's Immediate Needs

Mr. Roame concluded his presentation with a mention of the eight guest speakers for Tiburon CEO Summit XVII, including Jon Baum (The Dreyfus Corporation), John Calamos (Calamos Asset Management), Deena Katz (Chairman, Evensky & Katz), Pete Kight (Fiserv), Steve Lockshin (Convergent Wealth Advisors), Andrew Rudd (Advisor Software & Barra), Steve Wallman (Foliofn), & Jim Weddle (Edward Jones & Company). He also mentioned immediate Tiburon needs, including hiring of principals & summer interns...

Jud Bergman (CEO, Envestnet Asset Management)


		Tiburon CEO Summit XVI Guest Speaker Jud Bergman (CEO, Envestnet Asset Management)

Jud Bergman has served as the CEO of Envestnet Asset Management since 1999, where he is responsible for forming & leading the Envestnet management team, guiding Envestnet's strategic alliances, and managing the implementation of Envestnet's business plan.

After a brief introduction by Chip Roame (Managing Principal, Tiburon Strategic Advisors), Mr. Bergman took some time to introduce Envestnet's TAMP structure, and followed that by discussing the various opportunities for branding that he sees in the wide-open independent channels. Mr. Bergman made the following points:

Broken Trust

Lineup of luminaries that are now fallen is staggering

Broken Industry Reputation

Change of players has been remarkable

Brands will need significant re-tooling

Wirehouses were the Tiffany in 1999

Too Big to Fail (stabilization of firms left standing)

Integration to new fee-based business model

Recovering credibility

Re-allocation of capital on infrastructure

New regulations

Independent brand value not yet fully recognized on Main Street

Securities America & Commonwealth have done very well in pointing to the brand of the independent advisor rather than the custodians

E-Money & Assetmark have done good jobs on branding independent advisors

Broken Portfolios

Risk/Reward comfort level

Time horizon for meeting goals & objectives

Strategic asset allocation

Emotional frontier & current frame of mind

The Benefits of Independence

Objectivity
Alignment
Flexibility

Business Impacts for Product & Platform Providers

Platform providers will become increasingly important much in the same way as cable providers have, but branding will be more closely associated with the independent advisors themselves (cable channels) versus the platform provider (cable providers)

As a product provider, trying to increase performance predictability is a key motivator


		Tiburon CEO Summit XVI Guest Speaker Jessica Bibliowicz (CEO, National Financial Partners)

Jessica Bibliowicz (CEO, National Financial Partners)

Jessica Bibliowicz has served as CEO of National Financial Partners since 1999 and as chairman of the board of directors since 2003.

After a brief introduction by Chip Roame, Ms. Bibliowicz discussed the new challenges of operating as a public company, addressed the opportunities she sees for the firm after its run of acquisitions, and talked about trends across National Financial Partners' three core businesses, including large case life insurance, employee benefits, & investment advice. Ms. Bibliowicz made the following points:

Lower Employment, Compensation, & Contributions

Lower employment affects broker side the most

Compensation is under scrutiny

Potential Health Care Reform

Medical cost inflation continues

Rate increases are passed on to employees

Tighter underwriting

Employers unbundle and price-shop benefits

Employer-based

Plus coverage for 47 million uninsured

Early Recovery Typical of Insurance

People don't want to see volatility, just to see the wealth transfer
Creative product innovation returning vibrancy to the insurance world and post-retirement investing community

Federal Regulation of Insurance

Will allow products to come to market more quickly, rather than having to be approved across the 50 state level

Intra Wirehouse Movement

Brokers are still moving within the wirehouses, but now clients are leaving
There is an opportunity to improve all the wirehouses by working to improve client confidence

Winning Business from the Wirehouses

Open architecture is here to stay

Conserving Cash

Conserve cash by working on networking opportunities with friends in the investment management industry

Helping Firms

Using all assets to help all businesses

Selling all businesses on the fiduciary strengths of the greater firm


		Tiburon CEO Summit XVI Guest Speaker Mark Casady (CEO, LPL Financial)

Mark Casady (CEO, LPL Financial)

Mark Casady has served as CEO of LPL Financial since 2004 and added the chairman title in 2006. He has been instrumental in leading the company to become a multi-faceted organization. He joined the firm in 2002.

After a brief introduction by Tif Joyce (President, Joyce Financial Management), Mr. Casady addressed how both growth in the independent rep market and recent market turmoil have brought about new challenges for this market, including some of the ways in which LPL Financial plans to stay ahead of trends as the nation's largest independent broker/dealer. He focused on scale, branding, & the changing regulatory environment. Mr. Casady made the following points:

Opportunity for the Independent Model Has Never Been Greater

LPL research of today's consumers shows effects of the market decline:

25% trust their full-service brokers less

42% view full-service brokers more negatively

50% are contacted less than monthly or not at all by their full-service brokers

53% now using independent advisors are more satisfied

61% claim advisor relationship is more important than brand

Different Investors Emerging from the Economic Crisis

Scared & uncertain about the future

Serious impact to long-term financial plans

42% concerned about job loss

31% decrease in average net-worth

38% will delay retirement

Importance of Scale

Consolidation leading to greater resources will create more competitiveness, and this cycle will serve to allow certain firms to focus on scale

Changing Regulatory Landscape

Rebuilding trust between Wall Street & Main Street

Single regulatory organization

Protection of assets custody rule

Greater transparency


		Tiburon CEO Summit XVI Guest Speaker Kip Condron (CEO, Axa Financial)

Kip Condron (CEO, Axa Financial)

Kip Condron has served as CEO of Axa Financial and a member of the Axa Group Management Board since 2001. In addition, Mr. Condron is chairman & CEO of Axa Financial's principal insurance subsidiary, Axa Equitable Life Insurance.

After a brief introduction by John Cammack (Head, Third-Party Distribution, T. Rowe Price Group), Mr. Condron discussed how Axa Financial is addressing the challenges presented by the current state of the financial protection & wealth management markets as well as the direction of the new regulatory climate. Mr. Condron made the following points:

Disadvantage for Federal Relief

Axa has been encouraging the implementation of a federal regulator for the insurance industry
When TARP money became available to banks, which were regulated, insurance companies were without access to the funds unless they purchased a bank
The regulation of the insurance industry is antiquated

Public Policy to Create Savings Incentives

The Financial Services Roundtable, which Mr. Condron is currently chairing, is looking to make recommendations on the issue of savings incentives
- 77 million baby boomers lost 40% of their retirement assets over the last year

In-Plan Guarantees

Guarantees within the 401k plan
Axa sees these as the wave of the future
- Started a business in late 2007 to create the model product for in-plan guarantees
Market research shows that 50% of 401k beneficiaries would buy a guarantee, especially after the recent downturn
In a $3 trillion business, that's $1.5 trillion, but capacity is limiting the growth of the business

Life Insurers Consolidation

Acquisitions must currently be marked on the balance sheet, and no companies are currently prepared to mark their balance sheets

Current market capitalization does not allow consolidation

Mr. Condron sees forced marriages by regulators, modeled similarly to the PNC Financial & National City deal

He is concerned by the risks he sees competitors taking due to the fact that they are now operating on borrowed funds


		Tiburon CEO Summit XVI Guest Speaker Jeffrey Dunham (CEO, Dunham & Associates Investment Counsel)

Jeffrey Dunham (CEO, Dunham & Associates Investment Counsel)

Jeffrey Dunham has served as CEO of Dunham & Associates Investment Counsel since its founding in 1985, and also as chairman of Dunham Trust Company. He also serves as a trustee, president, & principal executive officer of Dunham Funds.

After a brief introduction by Sal Capizzi (Chief Marketing Officer, Dunham & Associates Investment Counsel), Mr. Dunham introduced his consumer oriented model, harkening back to the genesis of the concept and identifying the garnering of trust as the main driver of the building of long-term client relationships that are by definition fiduciary in nature. Mr. Dunham made the following points:

Performance (Fulcrum) Fees

Fair value for services received
Adjustment of fees based on performance against the index
Paid based on results is by nature a fiduciary responsibility
Better aligns investors' objectives with industry compensation
Other firms offering performance fees include Vanguard, Janus, Fidelity, Riversource, & USAA, but only Dunham offers 100% performance fees on its funds

Inside Mutual Funds

Measured on a relative basis on investment-to-investment professional relationship
Consumers don't care about relative performance, they only care about dollars gained and/or lost
If fund managers beat the index, the fees go up; if fund underperforms the market, the fees go to zero
Maximum fees vary from 50 to 100 basis points, with measurement based on rolling 12-months
Minimum fees vary from 0 to 25 basis points

Financial Advisor Fees

Can be paid on a fixed fee basis or can be paid on a performance fee basis

Performance fees for financial advisors are based only on absolute return basis

Fees based on a monthly accounting of portfolio balance, with the balance at the beginning of each month resetting the benchmark for absolute returns

Qualified investors must be one of the following:

$1.5 million net worth

$750,000 invested with Dunham

$5 million in assetsa


		Tiburon CEO Summit XVI Guest Speaker Ken Fisher (CEO, Fisher Investments)

Ken Fisher (CEO, Fisher Investments)

Ken Fisher has served as the CEO of Fisher Investments since founding the firm in 1979. His recent research, published in professional and scholarly journals, focuses on the emerging field of behavioral finance. Mr. Fisher is known for his Portfolio Strategy financial investment column featured monthly in Forbes magazine, where his 24-year tenure makes him the fourth longest-running columnist in the magazine's 92-year history. Mr. Fisher has also written five finance & business books including 1984’s best seller, Super Stocks and his 2008 New York Times best seller, The Ten Roads to Riches. Mr. Fisher holds a Berstein Fabozzi/Jacobs Levy Award for outstanding published research, has been on the Forbes 400 list of richest Americans since 2005, and is on Investment Advisor magazine’s IA-25 list of the most influential people in that industry. His firm is the largest direct marketer in asset management.

After a brief introduction by Tif Joyce (President, Joyce Financial Management), Mr. Fisher addressed ways in which Fisher Investments will win market share in the new market conditions. Mr. Fisher made the following points:

Consumer Focus

Mr. Fisher discussed his series of consumer conferences, highlighting key metrics he uses in evaluating clients' needs; he also addressed ways that his firm builds trust by encouraging clients to speak to one another at these conferences
Focus on the woman of the house, for she is likely to play a larger role in the family finance after this latest downturn

Core Focus

Cut programs that cost money and focus on free or cheap programs that increase innovation

Legal Risks

Mr. Fisher spent considerable time addressing the coming wave of lawsuits that he believes will besiege the financial services industry
- Statute is five years
- Most aggressive prosecutors will build up their case files against biggest firms for massive class-action suits
- Now is the time to invite these prosecutors to upcoming CEO Summits to participate in panel discussions on the current landscape

Marketing Effects

Stick to the core, cut costs, and boost budget
Market share is the number one target for Fisher

Service Formalization

Increase service standards in formalized programs for existing and new clients

Reconsider Employees

Cut the less-talented

Mr. Fisher shared a program he uses within Fisher Investments to utilize his human capital to increase firm-wide innovation - by paying bonuses to employees who come up with ideas that management has failed to identify


		Tiburon CEO Summit XVI Guest Speaker Roger Ibbotson (Professor, Yale University; Chairman, Zebra Capital Management; & Former CEO, Ibbotson Associates)

Roger Ibbotson (Professor, Yale University; Chairman, Zebra Capital Management, & Former CEO, Ibbotson Associates)

Roger Ibbotson is Professor in Practice at Yale School of Management and chairman of Zebra Capital Management, a quantitative equity hedge fund manager. He was also the founder & former Chairman of Ibbotson Associates, now a Morningstar Company, where he still serves as an advisor. Professor Ibbotson conducts research on a broad range of financial topics, including investment returns, mutual funds, international markets, portfolio management, & valuation.

After a brief introduction by Patrick Reinkemeyer (President, Morningstar Associates, Morningstar), Mr. Ibbotson addressed long-term economic growth, current unemployment, and the new U.S. administration. He compared the current economic climate to past bear markets and discussed the role hedge funds have played in the past and will continue to play in the future. Mr. Ibbotson made the following points:

Hedge Funds & Alternatives Golden Years Ended in 2007

2008 was second-worst stock return year in United States history (1931)
Hedge funds down 20%
Real estate, private equity, & hedge funds all had high returns & growth in AUM

Ten Year Returns Still Positive

Hedge funds lost about half as much as stock markets in 2008
Beta impacted returns, but equity market neutral has low risk
Ten year returns still positive, with 2008 (-18.4% & -6.2%) driving 1998-2007 at 9.9% & 6.3% down to 1999-2008 at 7.5% & 4.5% for weighted composite & equity market neutral returns, respectively

Economy to Fall in 2009

Continual job losses
A year of negative growth

Stock Market to See High Volatility & High Returns from Lows

Volatility as high as the 1930s
Market will bottom at first sign of improvement
Large positive stock returns will occur before the recession ends

Hedge Funds: More Withdrawals in 2009

Higher return opportunities


		Tiburon CEO Summit XVI Guest Speaker Scott Powers (CEO, State Street Global Advisors)

Scott Powers (CEO, State Street Global Advisors)

Scott Powers has served as CEO of State Street Global Advisors since 2008; State Street Global Advisors is the investment management arm of State Street Corporation. He is also a member of State Street's Operating Group, the company's senior-most strategy and policy-making team.

After a brief introduction by Tony Rochte (Senior Managing Director, Intermediary Business Group, State Street Global Advisors, State Street Corporation), Mr. Powers addressed the ways in which State Street Global Advisors will continue to attract high-net-worth investors. His presentation specifically addressed the challenges of capital preservation in the current market. Mr. Powers made the following points:

Modern Portfolio Theory Questioned

Investors today are seeing absolute negative returns, and the questions are prevalent
But nobody knows what to do next, what the alternatives are
Clients will pay for the floor and give up some of the upside

Liability Driven Investment Strategies Receiving Attention

Much more of a sense of urgency in conversations surrounding this concept
The risk of inflation must be considered
Matching liabilities with overlay strategies with growth pockets that add value over time
Becoming much more prevalent at the large planned sponsor level because unfunded liabilities become a balance sheet obligation

Hedge Funds-of-Funds Disappointed Badly

Managed volatility and absolute return space has not been a shining light of returns recently
How much is skill versus how much is beta that is leveraged?

Demand for Absolute Return Strategies Strong

People are not giving up on hedge funds (uncorrolated sources of return)
Focus is on predictability of return

Many Considering Hiring Fewer Managers with Larger Mandates

Handling multiple asset classes
Handling multiple outcome oriented strategies
Negotiated down to an attractive fee structure
If they can deliver alpha, they will be paid hansomely

Pension Plans Significantly Underfunded

The -40% rate of return in the last year has caused a serious problem
The portfolios have been de-risked as liabilities have been off-loaded, so at this point, there is a requirement for either greater risk or the injection of new capital

Value of Investment Consultants Being Questioned

Nine style box theory (modern portfolio theory) being questioned
Under fire due to their inability (lack of resources) to do adequate research to justify investment decisions


		Tiburon CEO Summit XVI Guest Speaker Paul Stevens (CEO, Investment Company Institute)

Paul Stevens (CEO, Investment Company Institute)

Paul Stevens has served as CEO of the Investment Company Institute since 2004. He also is a director of ICI Mutual Insurance.

After a brief introduction by Tif Joyce (President, Joyce Financial Management), Mr. Stevens addressed the state of the mutual funds market, including a review of the historical success of mutual funds’ role in 401K plans since their introduction in 1981. He specifically addressed the relationship between government & business, and how the current economic landscape presents new & unprecedented challenges in retirement planning. Mr. Stevens made the following points:

Systemic Risk

Washington will implement some kind of device to measure this; the Fed lost credibility as it fell asleep in dealing with the early stages of the subprime crisis
Congress will most likely opt to assemble a coucil of regulators, perhaps led by the Secretary of the Treasury, with a statutory mandate and an independent staff of its own, working outside of the system, but addressing identified risks through operating regulating agencies

Regulatory Gaps

Unregistered pools
- Hedge funds & private equity will have to live with new forms of regulation, with perhaps non-public visibility to the regulators, but there seems to be an appetite to go beyond that even
OTC derivatives
- Credit default swaps will incur public action, by making the market more standardized through regular clearing mechanisms subject to oversight
Broker/dealer & investment advisor regulations
- In Washington, issues with fiduciary responsibility are never resolved to a lesser extent
- Brokers want fee-based business model without having the fiduciary responsibility, but the ICI believes there should be increased harmony between fees & responsibility
- Suitability has been defined as not completely unsuitable, and that is likely to change

Municipal securities

A very substantial market that ought to have a better regulatory framework to improve disclosure, although this issue is highly political

Capital Markets Regulation

SEC must be re-invigorated, with a staff reorganization, relationships with industry revamped, and active management without a requirement for lawyers

Desire to Increase Coverage of 401k Plans

Continued congressional scrutiny
- Adequacy
- Disclosure
- Targe-date funds
- Retirement income
Auto IRA
ICI response
- Highlight success of 401k system & support ways to improve it
- Work with Congress and Department of Labor to implement better disclosure
- Fix social security

Liquidity Standards

Daily & weekly minimum (5% & 20%, respectively)

Portfolio Maturity Limits

Adopt a second WAM calculation

Enhanced Credit Analysis

Prohibit money market funds from investing in second-tier securities

Client Procedures

Understand client requirements
- Liquidity & redemption needs with respect to concentrated client base

Board Suspension of Redemptions

Recommend the SEC authorize fund boards to suspend redemptions under certain circumstances

General Session Panel Discussions

One of the key themes of every Tiburon CEO Summit is the need to more closely listen to clients. In open acknowledgment of the truly unique market conditions created by the 2008 credit crisis, Tiburon CEO Summit XVI included a special general session current events panel in addition to its usual Tiburon CEO Summits' general session panel discussions (Ask the Consumers, Ask the Advisors, & Ask the Gatekeepers). All allowed Tiburon CEO-level clients to hear directly from their constituents in an unvarnished way. This is in sharp contrast to most CEOs' daily activities, where they are forced to rely on interpreting marketing data or listening to anecdotal stories from their sales forces. Addressing these constituents first-hand through questions & answers helps Tiburon clients further consider innovative ideas for serving these different client groups.

Current Events Panel


		Tiburon CEO Summit XVI Current Events Panel Facilitated by Chip Roame (Managing Principal, Tiburon Strategic Advisors)

Tiburon CEO Summit XVI included a special general session panel discussion on the credit crisis. The panel participants included Chuck Baldiswieler (Group Managing Director, Trust Company of the West (TCW)), John Cammack (Head, Third-Party Distribution, T. Rowe Price Group), Steve Deschenes (Chief Marketing Officer, Retirement Income Group, Mass Mutual Financial Group), John Murphy (Chairman, Oppenheimer Funds), & Steve Wallman (CEO, Foliofn), with Chip Roame leading a discussion that focused on current events.

Chip Roame opened the discussion by introducing the two objectives of the panel: firstly, to identify the causes & culprits of the credit crisis and secondly, to address how the world will change moving forward (government regulations, products, channels, and mergers & acquisitions activity moving forward):
- Chuck Baldiswieler addressed on & off balance sheet leverage, derivatives, & lack of oversight as the main culprits driving the crisis, speaking of the 30 to 1 leverage common practices
- John Cammack addressed ample credit, unbridled securitization, lax regulations, disingenuous rating agencies, and misperception of magnitude & globalization of systematic risk. Mr. Cammack blamed the belief system, and said that the entire financial services industry is at fault for allowing the culture to exist
- Steve Deschenes pointed to the separation of loan underwriting from financial impact through securitization, speaking specifically to the lack of accountability that occurred with debt packaging
- John Murphy spoke of freely available credit, government encouragement of Freddie Mac & Fannie Mae, living large (excess ownership & excess speculation), easy securitizations with AAA ratings, & lack of full collateralization
- Steve Wallman addressed regulatory structures, compensation failures (rewarding returns, ignoring risk), regulatory implementation (when the hundred year flood happens everyone is wiped out), poor governmental responses to the initial housing, & then a broader credit crisis
Chip Roame thanked the panelists for answering the first question, then moved on to addressing how the world will change moving forward given the new regulatory environment
- Chuck Baldiswieler talked about the mergers activity that he sees coming, which will involve more active management than blind investing. He addressed the potential for different types of investments that take advantage of the good assets that remain in the markets. He spoke of the equity promise having been broken, corporate pensions, public pensions, endowments & foundations dealing with liquidity issues, saying that RIAs and family offices will win, with long time horizons and self-regulation
- John Cammack spoke to increased regulation to control risk, consolidation & better synchronization of oversight, suitability versus fiduciary standard resolution, and higher industry operating costs a byproduct of these steps. He spoke of a large share of US wealth moves into post work mode, fee-based pricing & open architecture trends to continue, ETFs & indexing growing share, and hedge fund industry consolidation. He also spoke of active management broadening to include absolute returns & overlays, and outcome based products eclipsing the role of standalone funds. He talked of a handful of mega distributors dominating, saying that an X factor is more open-access to consumers and financial advisors via the web
- Steve Deschenes addressed increased regulation, higher taxes, and attempts to reduce the too big to fail issue. He mentioned that existing investment theory (modern portfolio theory) faces pressures with focus on absolute returns, diversification beyond equities, fixed income, & cash, guarantees being more valuable, and tax deferral being more valuable. He spoke of increased focus on transparency, lower fees, & independence. Finally, he mentioned that mergers & acquisitions activity will be based on new regulatory & financial rules
- John Murphy first encouraged all the attendees in the audience to go to Washington DC to prevent adverse legislation to the industry, saying that government officials really want help in understanding what to do. He spoke of a systemic risk regulator with potentially excess 401K regulation. He spoke of a clearinghouse for credit & derivative instruments (with capital requirements, transparency, & real time reporting), and the implementation of money market working group recommendations. He said that financial advisor focus should be on rebuilding confidence with clients with more financial advisors choosing the independent route to move away from the damaged brands. He said that boutiques will continue to emerge as people leave larger firms and private equity will become major players
- Steve Wallman talked about the unprecedented spending by government, saying that by saving the big brokerages and propping up the big banks, the government is ensuring that the behaviors that have dominated will likely continue. He talked of the tax burden and debt burden sure to hang over the country for years to come, and said that for all the spending that has occurred not much is actually happening (citing the AIG compensation blow-up that is now buried somewhere in the Senate)

The panel was extremely frank and the net impression was that regulations are sure to affect the industry in ways that are yet to be determined. There was a common understanding that the culture that has dominated is absurd, and a unanimous opinion that trust between the consumers and the industry should be the main focus of each player in the industry.


		Tiburon CEO Summit XVI Ask the Consumers Panel Facilitated by Tif Joyce (President, Joyce Financial Management)

Ask the Consumers Panel

As has become the tradition at Tiburon CEO Summits, four real and unscripted consumers (Josh, Sonja, Maureen, Keith) were interviewed by facilitator Tif Joyce (President, Joyce Financial Management) for the Ask the Consumers panel. While each provided a unique point of view, a number of common views were shared.

Josh works for Cisco Systems and has been investing with his wife for years. He started his first financial advisor relationship based on a personal relationship he had out of high school. He is an active investor who values trust in his advisor more than anything else. He speaks to communications following mistakes, and says he will always go back to the expectations that were laid down in the beginning. He stopped investing his new assets with his first advisor because the management fees were too high, but fees are not the determining factor in how he values the people who invest for him. Part of the reason Josh moved along was because he couldn't be sure that his advisors could do much better than he could. Josh had a very bad experience with a leading national advisory firm where he had asked for a transfer of funds that was not executed, followed by a dip in the market where he lost money. The firm held several different positions as he pursued resolution, and as the decision was levvied against him, he decided not to ever work with that firm again. Josh then talked about what his ultimate goals are, and said they have nothing to do with how well his advisor is doing compared to his advisor's advisor buddy. Josh then addressed a question out of the audience inquiring how he made decisions to move from advisor to advisor, saying that he typically followed advice of his wife, his brother-in-law, his friends
Sonja started by saying that she emigrated from Sweden in 1973 with no financial experience at all. Her husband had five businesses that he ran in the United States, and as they traveled she began reading the New York Times financials section, becoming interested in stocks. After a sale of one of her family's companies, she researched the stocks she thought were worthwhile, and chose her investments in 1995. In 2001, her portfolio crashed with the stock market, and then her husband died in 2002. She had been responsible for many of the family's original trading practices, but as the complexity of her portfolio increased with trusts and new investment devices, Sonja decided it would be a good idea to seek professional help. She followed an advisor from Merrill Lynch to Morgan Stanley in 2007, and then, in 2008, when the markets collapsed, she stayed with him. She felt that her advisor was paralyzed as he continued to tell her not to sell, that she should buy Freddie Mac & Fannie Mae, and when she did that and her assets plummeted, she decided to move on. Sonja was asked by an audience member how she made her decision to switch advisors, and she too said that she listed to friends. Her decision was based on her desire to have a more diversified portfolio under the management of an advisor who had a broad view of investments
Keith is a financial services industry reporter who has invested for many years, and has chosen to delegate investment responsibilities to advisors based on his desire to maintain a little distance between his own professional interests and his personal financial interests. Keith has invested with several different advisors over time, and began to invest in alternative investments, specifically funds-of-funds and structured notes. Keith is very familiar with financial products and began questioning the wisdom of his financial advisors, and shared his concerns about structured notes with his advisor, specifically about Lehmans structured notes. He continued to question his advisor as the markets worsened. Two weeks before the Lehman bankruptcy, Keith agressively pursued getting out of the structured products notes again. Two major factors were not disclosed to Keith by his advisor: first, he was not told that the structured notes were basically unsecured corporate bonds; second, his advisor never told him that incentives were being provided to sell these structured products. Keith didn't even find out this information from his advisor, but from a lawyer who contacted him looking to sue the large firms. Keith felt wronged by his advisor, but attributes the behavior on a larger scale to the industry on the whole. Keith's trust was broken, and now Keith is looking for a new advisor. He is looking for trust and is therefore seeking referrals from his trusted friends. One of these referrals took him to a new prospect, who in the initial meeting, when hearing about the incentivized structured products sales, asked him - Well, how else are we supposed to make money? Keith has to laugh...
Maureen is a retiree with a 401k, with the kids gone & graduated from university. Suddenly, financial conditions changed for her husband's family, as her father- and mother-in-law both started to behave oddly with their investments. Both in their 90s, and living in an assisted living facility, the elderly couple became convinced that they had no more money left. As it turned out ... the elders were not correct about having no money, but their concern speaks to the future nightmare scenarios surrounding increasing healthcare costs that come with the onset of dementia that is becoming increasingly frequent as age expectancy rises

The panel was extremely frank and the net impression was the most important quality an advisor can have is honesty and clarity of communication. A consumer in today's environment must question the motives and directives of the advisors available, and in response, it is vital that advisors respect their responsibilities to serve their clients' needs above all else.


		Tiburon CEO Summit XVI Ask the Advisors Panel Facilitated by Jenn Connelly (CEO, JCPR)

Ask the Advisors Panel

With a similar goal to the Ask the Consumers panel, four leading financial advisors participated on the Ask the Advisors panel to allow attendees to better understand the businesses and decision-making criteria of financial advisors. Facilitated by Jenn Connelly (CEO, JCPR), the panelists included Tom Lydon (President, ETF Trends), Mark Penske (CEO, United Advisors), Adam Sheer (President, The Roosevelt Group), & Bill Walsh (President, Hennion & Walsh). The financial advisors were selected from different backgrounds and approaches to the industry, providing a wide range of perspectives. Amongst the key points made by the panelists were.

Tom Lydon, of Global Trends, maintains 90 client relationships with high-net-worth individuals and maintains asset management responsibilities with tactical allocation via ETFs, all-the-while maintaining a blog called ETFTrends.Com that has begun to take up much of his time. His average clients size is $800,000. Tom spoke about the importance of client management and sang the praises of his blog, which he says makes his clients happy on a day-to-day basis. He told a story about asking his friend, a recent retiree, to perform a jovial & unstructured survey of his clients, which proved to him that he was in good shape. Tom's clients are almost all in equityETFtrends.com
Mark Penske, of United Advisors, maintains 1,500 client relationships with mass affluent advisors who maintain $500,000 to $2 million in revenues. His firm offers back-office support & compliance to advisors in the asset management, financial planning, & individual insurance space. His average client size is $500,000. Mark, like Tom, also recognizes the importance of personal touch, and by showing facts to his clients about prior market downturns, Mark's firm is able to maintain trust with his clients. He is attempting to pick up wirehouse advisors, and in so doing is trying to focus on the first impression coming from a primary referral call. Mark's value proposition is on providing support & compliance. Mark spoke of the ever-evolving role of business development departments within financial advisory firms
Adam Sheer, of The Roosevelt Investment Group, maintains 10,000 client relationships with high-net-worth individuals, corporations, endowments, foundations, & Taft Hartley plans, and maintains asset management responsibilities. His average client size is $500,000. Adam spoke about maintaining clean lines of communication with custodians, so that that line of communication can be relayed to the end consumers in a way that maintains confidence all the way up & down the supply chain. Responsiveness and flexibility were specifically identified as valuable qualities in custodians. Like Mark, Adam believes very strongly that there are huge numbers of opportunities for idea generation in business development
Bill Walsh, of Hennion & Walsh, maintains 15,000 client relationships with mass affluent, unaware high-net-worth individuals, with responsibilities that include fixed income portfolios, asset management, & mutual funds. His average client size is $500,000. Bill's firm has always managed downside risk very well, with a great sales force and good relative performance, doubling assets over the last year from $1.5 billion to $3.0 billion, and is looking for a great liftout opportunity that include cultural & investment synergies$500,000has shared ownership of his own company since entering into the financial services industry as a former engineer. Since 2000, his business has changed its name seven times as a result of being bought and sold several times over. This has given Mr. Pollock a significant perspective on client retention and on building relationships that last. He manages individual customized portfolios including stocks, with a special attention paid to estate and tax planning. With a 98.5% client retention rate, Mr. Pollock also says that constant communication with the client is the only way to go, and that by using trustworthy products and services, clients are empowered to stay with him. Mr. Pollock also added that by always doing the right thing an advisor will always have good clients

Tiburon CEO Summit attendees valued the opportunity to listen to these advisors candidly discuss some of the strategies they've employed in trying to maintain client relationships and assets under management in these trying times.


		Tiburon CEO Summit XVI Ask the Gatekeepers Panel Facilitated by Bill Salus (Chief Business Development Officer, PNC Global Investment Servicing)

Ask the Gatekeepers Panel

In keeping with the Tiburon CEO Summit tradition of emphasizing the need to listen carefully to one's clients and prospective clients, the Tiburon CEO Summit Ask the Gatekeepers panel is the third part of this series. For many Tiburon clients (e.g., investment, insurance, & technology firms), understanding the workings of distribution firms is crucial to their firm's success in gaining access to an organization's network of financial advisors. Wirehouses such as Merrill Lynch, independent broker/dealers such as LPL Financial, and custodians such as The Charles Schwab Corporation can account for 50% or more of financial product companies' sales. Tiburon's Ask the Gatekeepers panel, facilitated by Bill Salus (Chief Business Development Officer, PNC Global Investment Servicing), allowed these types of distribution organizations to discuss their needs from investment management firms and other product providers through questions & answers. Four major distribution firms provided insights on how they serve financial advisors. Panelists included Bill Crager (President, Envestnet Asset Management), Steve Dunlap (Chief Operating Officer, Pershing Managed Account Solutions), AJ Harper (President, Advisor Port, PNC Global Investment Servicing, PNC Financial), & Brian O'Toole (CEO, Genworth Financial Management Wealth Management, Genworth Financial). Amongst their key points were:

Bill Crager, of Envestnet Asset Management, runs a turnkey asset management platform supporting a financial advisor force of 14,000 advisors with $60.0 billion in assets under management. Product listing philosophy includes open architecture across a broad range of investment product categories. Needs from products companies include extension of service model for advisors. Bill elaborated by expanding on Jud Bergman's earlier general session presentation description of being analagous to a cable platform that allows many different cable channel to run into a houseExtension of service model for advisorsr
Steve Dunlap, of Pershing Managed Account Solutions, runs an open-architecture platform & turnkey asset management provider supporting a financial advisor force of 100,000 advisors with $80.2 billion in assets under management. Product listing philosophy includes comprehensive suite of fee-based and advisory solutions, ranging from firm-directed to fully outsourced. Needs from products companies include transparency, competitive fees, value-added, and consultative sales support. Steve elaborated by indicating that Pershing, being such a ubiquitous firm with so many capabilities, seeks to be involved in gatekeeping across all aspects of the marketplace, specializing on every aspectConsultative sales supportp
AJ Harper, of Advisor Port, runs a customizable or turnkey asset management platform and advisory services business, with a financial advisor force of 20,000 advisors with $81.0 billion in assets under management. Product listing philosophy includes designing and implementing custom, open-architecture managed account solutions including award-winning flexible UMA, SMAs, and Fund/ETF wraps. Needs from products companies include integrated service model for advisor development. AJ elaborated by speaking to opportunities that exist in asset re-allocation through advancing technologies, speaking to his firm's responsibility of getting such technologies to market
Brian O'Toole, of Genworth Financial Wealth Management, runs a turnkey asset management platform and business consulting business supporting a financial advisor force of 6,500 advisors with $15.0 billion in assets under management. Product listing philosophy includes open architecture platforms including Best of Class Investment Managers as determined by Callan and Rocaton. Needs from products companies include accessibility, proven track record, and disciplined philosophy & processes. Brian elaborated by asking - Who is taking care of people like Joe Wurzelbacher? - as in, what is being done to take care of all those directed funds accounts for the non mass affluent & high-net-worth individual investor markets. Gatekeeping in a nimble way is the question

The panel added perfectly to the Tiburon CEO Summit's agenda of focusing the CEO-level attendees on client needs. Across the board, the panelists concluded that the current conditions are shaping an environment in which nimble and open-minded gatekeeping will allow recovery for the marketplace and open up new markets for each firm.


		Tiburon CEO Summit XVI Current Events Panel Facilitated by Chip Roame (Managing Principal, Tiburon Strategic Advisors)

Tiburon CEO Summit XV was held October 14-15, 2008 in San Francisco, CA at the Ritz Carlton Hotel. The Summit started at 7:45am on Tuesday, October 14, included a networking dinner that evening in Tiburon, and concluded at 4:15pm on Wednesday, October 15. Over 100 senior industry executives took two days out of their busy schedules to participate. Chip Roame (Managing Principal, Tiburon Strategic Advisors), Bruce Bond (CEO, Power Shares), Bill Hambrecht (CEO, WR Hambrecht + Company & Former CEO, Hambrecht & Quist), Norm Malo (CEO, National Financial Services Corporation), Joe Mansueto (CEO, Morningstar), & Andrew Rudd (CEO, Advisor Software & Former CEO, Barra) made general session presentations. Four general session panel discussions included a consumers panel, an advisors panel, a manufacturers panel, & a special general session panel discussion addressing the credit crisis.