Tiburon CEO Summits

Tiburon has held 29 prior CEO Summits, with the first Tiburon CEO Summit taking place in 2001. Details of Tiburon CEO Summits XXII, XXIII, XXIV, & XXV are included below; for details of other Tiburon CEO Summits, please click here: Most Recent, 2014-2015, (2012-2013), 2010-2011, 2008-2009, 2006-2007, 2004-2005, & 2001-2003.

 

 

 

 

 

 

 

 

 

Tiburon CEO Summit XXV: October 8-9, 2013

Tiburon CEO Summit XXV was held October 8-9, 2013, at the Ritz Carlton Hotel in San Francisco, CA. Tiburon CEO Summit XXV officially started at 7:45am on Tuesday, October 8, 2013, included a group dinner that night and finished at 1:00pm on Wednesday, October 9, 2013. Senior industry executives took two days out of their busy schedules to participate. There were over twenty sessions. Along with Tiburon's Managing Partner Chip Roame & Tiburon Principal Matt Lynch, Tiburon CEO Summit XXV included panelists Ryan Alfred (President, BrightScope), John Bunch (CEO, The Mutual Fund Store), Mitch Caplan (CEO, Jefferson National Financial), James Carney (CEO, By All Accounts), Ron Carson (CEO, Carson Wealth Management Group), Bill Crager (President, Envestnet), Ben Cukier (Partner, FTV Capital), Joe Duran (CEO, United Capital Financial Partners), Mike Durbin (President, Fidelity Institutional Wealth Services), Ric Edelman (CEO, The Edelman Financial Group), Ed Forst (CEO, Lincoln Investment Planning), Mark Goldberg (President, Carey Financial), Dan Goldie (CEO, Dan Goldie Financial Services), Mark Gormley (Partner, Lee Equity Partners), Pete Hess (CEO, Advent Software), Anton Honikman (CEO, MyVest Corporation), Mark Hurley (CEO, Fiduciary Network), Steve Janachowski (CEO, Brouwer & Janachowski), Rob Klapprodt (President, Vestmark), Paul Koontz (General Partner, Foundation Capital), Steve Lockshin (Chairman, Convergent Wealth Advisors), Jeff Maggioncalda (CEO, Financial Engines), John Michel (CEO, CircleBlack), Blake Mohr (CEO, Capitas Financial), Robert Moore (President, LPL Financial), John Rafal (CEO, Essex Financial Services), Rich Rosenbaum (Principal, Aquiline Capital Partners), Simon Roy (President, Jemstep), Greg Tschider (CEO, Verisight), Hardeep Walia (CEO, Motif Investing), Michelle Watson (Chief Investment Officer, First Republic Investment Management), Elliot Weissbluth (CEO, HighTower), Chuck Widger (Chairman, Brinker Capital), Chris Wolfe (Chief Investment Officer, Private Banking & Investment Group, Merrill Lynch Wealth Management), & Mike Woods (CEO, DWS Investments Distributors). Tiburon CEO Summit XXV also featured the firm's traditional client-centric panel discussions and two networking-based social events.

Keynote Presentation

Tiburon CEO Summit XXV featured a keynote presentation by Tiburon Managing Partner Chip Roame regarding the state of the financial services industry, with a specific focus on the growing wealth management market. This presentation served as the backdrop and overview of the entire Tiburon CEO Summit.

 

 

 



Tiburon CEO Summit XXV
Keynote Presentation
Chip Roame
Managing Partner
Tiburon Strategic Advisors

 

 

 

 

 

 

Chip Roame (Managing Partner, Tiburon Strategic Advisors)

Tiburon Strategic Advisors is pleased to provide a summary of the content of its Tiburon CEO Summit XXV keynote presentation. Chip Roame (Managing Partner, Tiburon Strategic Advisors) kicked off Tiburon CEO Summit XXV with a presentation broadly addressing the state of the financial services industry, with a specific focus on the growing wealth management market.

Charles ("Chip") Roame is the Managing Partner of Tiburon Strategic Advisors and a leading strategic consultant to CEOs, other senior executives, & boards of directors in the banking, insurance, brokerage, & investment management markets. Prior to forming Tiburon in 1998, Mr. Roame served in similar capacities, first as a management consultant at McKinsey & Company, and later as a business strategist at The Charles Schwab Corporation. Mr. Roame is quoted daily throughout the media and, due to Tiburon's widely shared research, he may be the most frequently demanded board advisor. His particular expertise is that of corporate strategy for larger financial services firms, designing broad multi-faceted strategies and making trade-offs between alternative businesses, products, & markets.

At Tiburon, Mr. Roame has responsibility for all of the firm's consulting, research, & marketing activities which keeps him on the leading-edge of strategic initiatives in the industry's fastest growing businesses -- mutual funds, exchange traded funds, hedge funds & other alternative investments, financial planning, wealth management services, life insurance, annuities, family office services, online financial services, and the growing independent advisor markets. He has also taken a substantial interest in financial services industry venture capital & private equity opportunities and mergers & acquisitions transactions. At Tiburon, Mr. Roame has led over 1,600 client engagements for over 400 corporate clients since 1998.

Mr. Roame has won numerous awards throughout the consulting and financial services industries, including being named one of the power 25 elite by Investment News, one of the 25 most influential individuals in the advisor business by Investment Advisor magazine, & one of the five experts with the answers by Boomer Market Advisor. Tiburon has also been named one of the fastest growing companies by the San Francisco Business Times in multiple years.

Mr. Roame is frequently sought as a board member by Tiburon client company boards. He presently serves as a board member at Envestnet (NYSE: ENV), as a board member of the parent company of The Edelman Financial Group (Ric Edelman’s business backed by Lee Equity Partners), and as a trustee of the SA mutual funds family which is sponsored by Loring Ward and employs Dimensional Fund Advisors as its sole sub-advisor.

Overview of Tiburon CEO Summit XXV Keynote Presentation

Mr. Roame addressed the state of the financial services industry, with a specific focus on the growing wealth management market, including the most important news stories in the past six months, recent Tiburon research findings, third-party research findings, and strategic developments at dozens of Tiburon clients. Mr. Roame expressed that his objectives were fourfold, including focusing on corporate client strategies not just industry trends; processing views like a private equity firm; setting an agenda for Tiburon CEO Summit XXV; and offering two methods of summarizing a broad set of industry views.

Mr. Roame began with the broad market environment, including thoughts on the economy & markets; financial industry stumbles; and consumer wealth, baby boomers, and consumer attitudinal & behavioral changes. Mr. Roame then outlined the future of wealth management, including rapidly evolving investment approaches & products; retail financial advice trends; and institutional & international opportunities. Mr. Roame also addressed other thoughts, including the legislative & regulatory agenda and the 2014 elections; the rapid institutionalization of business tactics; and potential strategic activity. Mr. Roame concluded with 50 underlying trends and four fundamental bets.

Broad Market Environment

Mr. Roame began the analysis portion of his presentation with a few economy & markets points as they pertain to business issues. He explained that Tiburon generally does not comment on the economy & markets, but the issues are transcending investments issues and impacting business issues. For perspective, Mr. Roame noted that GDP is up 1.6%, corporate profits are strong, unemployment is down to 7.3% but with lots of footnotes (e.g., the labor participation rate, long-term unemployed, under-employed), inflation is 1.7%, and many world events have had an impact on the economy. Mr. Roame explained that the Federal Reserve’s expected tapering will cause rates to go up and prices of low rate existing bonds to come down. He predicted that tapering will begin in 4Q/13 or 1Q/14 when Fed targets of 2.00% inflation rate and 6.50% unemployment rate are reached. Mr. Roame posed the question: Will the Fed defer past December to new chairman in February?

Mr. Roame continued to discuss the economy & markets by reviewing the bond markets. He began by highlighting what we know: continuing Fed purchases are holding down interest rates, the 30-year bull market treasuries is over, the ten-year treasury note is at 2.6%, and 30-year fixed mortgages are at 4.2%. He added what attendees think is true for the bond markets: 3.18% by April 2014, up 20 bps in six months, and as an aside, attendees from Tiburon CEO Summit XXIV voted that 3.00% would not be reached until 2015 or beyond.

Mr. Roame continued to discuss the economy & markets by reviewing the stock markets. He began by highlighting what we know: stock market indices are above highs, five solid years of returns, five years since the Lehman Brothers melt down, and 25 years since Black Monday. He added that the Tiburon centric view is that the stock markets are back above levels of Tiburon CEO Summit XIII (October 2006) (6 years ago) and the DJIA is up 80% since Tiburon CEO Summit XVI (April 2008) (five years ago). He added what attendees think is true for the stock markets: 15,475 by April 2014 (up 2.30% in six months).

Mr. Roame described the various financial services industry stumbles beginning first with a semi-annual list of old stumbles including Madoff, Stanford, Goldman Sachs Group, and others. He also outlined new stumbles including JP Morgan Chase & Company, SAC Capital Advisors, and Harbinger Capital among others. Mr. Roame remarked that Bank of America Corporation has paid the largest settlement amounts of $11.6 billion, but added that JP Morgan Chase & Company’s rumored settlement could set the record.

The majority of Tiburon CEO Summit XXV attendees voted that the Madoff Investments scandal was the worst ethical offense of recent years and in the words of attendee Jeffrey Dunham of Dunham & Associates Investment Counsel, “the Madoff Investments scandal scared investor confidence in our industry for decades.” Mr. Roame also shared that Tiburon CEO Summit XXV attendees voted that Anthony Weiner (former New York Congressman) was the biggest idiot of recent years.

The second section of Mr. Roame’s presentation focused on consumer wealth, baby boomer issues, and consumer attitudinal & behavioral changes:

  • Investable assets, retirement plan assets, & financial assets are all up 30%-40% on a relatively steady pace since 2008
  • Personal assets, residential real estate, & private business valuations are now all up closer to 10% since 2008
  • Consumers’ real estate equity is up 35% (with over 100% of that recovery since 2011) so this wealth realization is just now working its way through consumer sentiment
  • In aggregate, consumer household assets are up over 20% since 2008
  • Consumer household debt is down 5% since 2008
  • Consumer net worth reached a new peak of $74.8 trillion versus $57.2 trillion in 2008

Mr. Roame spent a minute on the well known consumer wealth concentration, saying that, “consumer households with less than $500,000 investable assets make up 91% of all consumer households but control just 23% of financial assets.” Meanwhile, the affluent market comprises just 8% of consumer households but controls 77% of consumer household financial assets.

Mr. Roame believes that baby boomers continue to face seven major financial issues, including their lengthening life expectancies, financial & personal asset declines in the period of 2008-2013, inheritances that are not materializing, increasing healthcare costs, the twin thoughts of boomerang children and parents needing elder care, capitalized Social Security benefits as the largest asset for many but with no understanding of how to optimize, plus the ever present risk of inflation. Mr. Roame predicted that, "baby boomers will liquidate their retirement plans, homes, & small businesses over the next two decades, driving continual flow of assets to the investable assets business."

Mr. Roame also addressed the resulting consumer attitudinal & behavioral changes, including those driven by the widening wealth gap. He addressed consumer confidence, consumer sentiment, and the substantial financial services industry trust gap. He also addressed behavioral changes, including consumers’ reduced spending, some deleveraging, some increased savings, net flows out of equity mutual funds, and the renewed growth in the self-serve channels. He revealed another Tiburon CEO Summit XXV attendee survey result which stated that attendees expect do it your self consumers and diversifying across providers to be the most impactful consumer behavior changes on their businesses.

The Future of Wealth Management

Mr. Roame addressed the rapid evolution of investment approaches, including managed accounts winning, rep as advisor & portfolio manager programs showing mixed results, a return to equities, goals-based investing continues to slowly take over, numerous retirement income strategies, tactical and/or thematic investing, and downside protection strategies. Mr. Roame related the results of another Tiburon CEO Summit attendee survey in which attendees voted that the most impactful investment strategy trends are the retirement income orientation & tactical asset allocation trends. Mr. Roame continued to summarize many facts:

  • Tactical strategies are now used by almost half of financial advisors (tactical asset allocation 8% & strategic allocation with tactical overlay 37%)
  • As a general rule, tactical does not work; even balanced mutual funds outperform tactical allocation mutual funds at 6.4% versus 5.5%
  • The total managed accounts market, including packaged programs and RIAs, has reached $5.5 trillion
  • The RIA market & packaged managed account programs are about equal in size, and the RIA market will likely become the larger market in 2013
  • Financial advisor directed managed accounts are now over $1.2 trillion assets under management
  • Equity mutual funds have $93 billion net flows, positive for the first time since before the financial crisis
  • Meanwhile, fixed income mutual funds, which had gathered over $1.0 trillion since 2009, have slowed to just $14 billion net flows

Mr. Roame explained that investment products are rapidly evolving as well. He noted that packaged investment products represent $623 billion in net flows with mutual funds & ETFs net flows about equivalent and SMAs net flows 15% of those of either mutual funds or ETFs. Mr. Roame noted that “people underestimate the longevity of open-end mutual funds.” He then addressed registered investment companies supported by various facts:

  • Registered investment companies have 776 fund sponsors, 16,380 registered investment companies, $14.7 trillion assets under management, and open-end mutual funds dominate assets under management and net flows
  • Open-end mutual funds have 8,752 funds, 264.1 million accounts, and $13.0 trillion assets under management
  • There are 602 closed-end mutual funds with a total of $265 billion assets under management
  • There are 5,787 unit investment trusts with a total of $72 billion assets under management

Mr. Roame then described the state of comingled trust funds & separately managed accounts stating that there are 475 comingled trust funds representing $2.1 trillion assets under management with 15% of all assets in Thrift Savings Plan. He added that the advantages of separately managed accounts are eroding and some of the rest is a sale pitch. Mr. Roame explained that “the separately managed account business remains a dog.”

Mr. Roame stated that “the index and ETF trend is alive and well” and outlined indexing & ETFs summarized stating that indexing is 40% institutional & 29% retail assets under management now, that 50% of mutual funds beat the index in a good year, that investors demand low cost beta, and index mutual funds account for $821 billion assets under management. He went on to explain that there are 1,337 ETFs with $187 billion net flows and referred to some of the players in this field such as PIMCO’s entry, Vanguard’s share gains, Schwab ETF OneSource, the Fidelity Investments-BlackRock alliance, and more. Mr. Roame then defined three ETF supporting trends including managed ETF programs, alternatives in ETFs, and active ETFs. He added that the real story is found by taking another slice of the data and posed the question of post mutual fund or post active management world.

Mr. Roame outlined the state of alternative investments, diving into five areas including the democratization of alternatives, hedge funds, private equity & venture capital, real estate, and other alternatives. He went on to relate that Tiburon CEO Summit XXV attendees voted that alternative investments will realize the most growth in their traditional limited partnership structure and structured as exchange traded funds.

Mr. Roame completed his analysis of investment approaches & products by outlining financial planning & insurance. He touched on ten aspects of financial planning & insurance including financial planning, 529 college savings plans, impact investing, variable annuities, fixed annuities, long-term care insurance, reverse mortgages, estate planning, life insurance, and life settlements. He added that Tiburon CEO Summit XXV attendees voted that estate planning & college savings plans will have the highest financial planning & insurance usage over the next five years.

Moving beyond products to retail financial advice trends, Mr. Roame framed the financial advisor channels with seven key points including that fact that wirehouses still dominate, custodians & independent broker/dealers are slowly catching the wirehouses, some financial advisors are struggling (some regional broker/dealers, insurance broker/dealers, bank broker/dealers, private banks, second tier independent broker/dealers), custodians are doing well, there has been a restructuring of the independent broker/dealer market, the break-away broker trend has not yet substantiated numbers but huge assets for the independent channels to capture, and the increasing dominance of high-end financial advisors.

Mr. Roame summarized the status of the wirehouses, regional broker/dealers, insurance reps, and bank reps markets. He noted that, “The Charles Schwab Corporation, TD Ameritrade, & Fidelity Investments are the leading fee-based financial advisor custodians in terms of number of fee-based financial advisor clients and control about half of the industry’s assets. He also explained that “wirehouse advisors are looking more like RIAs, they are doing it themselves.” He related the following facts:

  • There are 320,000 financial advisors across all channels, down from 338,909 in 2005
  • Primerica, Morgan Stanley, Merrill Lynch, & Wells Fargo Corporation have the most financial advisors at 22,000, 18,043, 15,880, & 15,188 respectively
  • Ignoring traditional channels, the wirehouses still lead in assets under management & administration but Schwab’s $724 billion has almost caught UBS’s $794 billion
  • Morgan Stanley leads the wirehouses in number of financial advisors (17,156) and assets under administration ($1.6 trillion)
  • Half of existing wirehouse retention deals will expire by 2016
  • The regional broker/dealers, in size collectively, are about the equivalent of a fifth wirehouse, with Edward Jones & Company representing $600 billion assets under administration
  • The insurance reps market is dominated by Primerica, a low end firm with 21,700 insurance reps and Allstate, a property & casualty firm with 7,115 insurance reps, not the traditional life insurance firms
  • Bank reps are dominated by those at JP Morgan Chase & Company with 3,201 bank reps and Wells Fargo Corporation with 2,750 bank reps
  • Third-party bank reps are led by those at LPL Financial with 2,238 third-party bank reps, Cetera Financial Institutions with 1,413 third-party bank reps, & Invest Financial with 1,157 third-party bank reps
  • There are 11,888 Securities & Exchange Commission registered fee-based financial advisors, an increase of 40% since 2004
  • Fee-based financial advisors have gathered $3.0 trillion assets under management, up 250% since 2001
  • The Charles Schwab Corporation & Fidelity Investments are the leading fee-based financial advisor custodians in terms of assets under administration, with $762 billion & $586 billion, respectively

Mr. Roame then described the status of do it yourself models with nine main points including three drivers (comfort of younger generation with technology, loss of confidence in some financial advisors and their firms, amazing amount of financial noise that technology can screen & organize), discount brokerage firms second round of B2C in three varieties (investment managers, financial planners, traditional financial advisors with online offers), two exits from second round already, pioneers versus settlers to win, issues, vastly underestimating, will B2C model catch momentum, and Walt Mossberg out at All Things Digital. He went on to explain that almost three-quarters of wealth investors utilize Facebook and almost one-third of wealthy investors utilize LinkedIn. Mr. Roame related that there are 52 online brokerage firms, up from six in 1991 but down from the peak of 77 in 2002. He also explained that the discount brokerage firm channels are growing steadily with assets under administration at $4.6 trillion in 2012.

Mr. Roame completed his talk on do it yourself models by explaining that B2C round two is really made up of three models: investment management models (Financial Engines, Personal Capital Corporation, Betterment, Wealth Front), Financial Planning Models & Non-Discretionary Advice (Mint.Com, LearnVest, Jemstep), & Financial Advisor Online Models (Edelman Online, Savant Capital Management, Searcy Financial Services). He also related that Tiburon CEO Summit XXV attendees voted that Edelman Online, Morningstar, & Personal Capital Corporation have the most impressive B2C models.

Mr. Roame also discussed institutional & international market opportunities. As for the institutional markets, Mr. Roame first framed the opportunity, which includes about equal size defined contribution and defined benefit plan markets; defined contribution plans market increasingly dominant & evolving quickly; corporate, union, and state & local government defined benefit plans; foundations & endowments lead in investment strategies but little else, corporate cash, & sovereign wealth funds.

He pointed out that Tiburon CEO Summit XXV attendees voted that 401K plans & other defined contribution plans will have the highest institutional distribution channels growth over the next five years. Mr. Roame also provided some facts:

  • Corporate defined benefit plan funding levels are at 82%, up from a decade low of 74%
  • The Oklahoma teachers pension fund is the top public pension fund with 17.4% return
  • The foundations market is $660 billion, up 20% since 2001 but still down from its peak of $682 billion in 2007
  • The largest foundation is the Bill & Melinda Gates Foundation with $37.4 billion assets under administration
  • The endowments market is $406 billion, relatively consistent since 2008 and up 35% since 2009
  • The largest university endowments, including Harvard, Texas, Stanford, Yale, & Princeton have $15-$30 billion assets under administration

Mr. Roame then discussed international market opportunities and key trends. Specifically, he defined five huge opportunities referencing 37% of the world population lives in China & India, 48% of mutual fund flows outside of the US, emerging market asset flows, ETFs circling the globe, and globalization of the independent advisor model. Mr. Roame then defined six key trends:

  • Australia employers contribute mandated 9.25% of salaries to tax advantaged retirement plans (employees manage) (goes to 12.0% by 2020)
  • Australia & the United Kingdom banned product company payments to brokerage firms starting in 2012 & 2013 respectively
  • United Kingdom fund industry partnering with government to promote investing
  • United Kingdom eliminated mortgage interest deduction
  • France targeting off shore UBS accounts
  • Asia Pacific demands alternatives (China lets in hedge funds)

Mr. Roame explained that Tiburon CEO Summit XXV attendees anticipate that Asia Pacific Markets & English speaking countries markets will have the most impact over the next five years. He also related that global mutual funds have gathered $23.8 trillion assets under management, up over 100% since 1999 but down from its peak of $24.6 trillion in 2007. Mr. Roame added that over half of the mutual fund market is now outside of the United States.

Other Thoughts

Mr. Roame then shared thoughts on the legislative & regulatory agenda and the 2014 elections, rapid institutionalization of business tactics, and potential strategic activity. He began by outlining the Federal budget deficit which is currently at $755 billion and, amazingly, a surplus is possible in three-to-four years. He added that 44% of Americans are on Social Security & Medicare and that we need entitlement reform specifically for Baby Boomers. Mr. Roame went on to explain that Tiburon CEO Summit XXV attendees are expecting a band-aid agreement.

Mr. Roame then explained that with respect to the debt ceiling the US government debt as a share of GDP is in line with that of the United Kingdom, Germany, & France, and lower than that in Japan. He stated that “if you thought the annual budget was a pathetic process, watch this and remember what the market downturn caused in 2011.” He then explained that tax rates are still low relative to history and European levels.

Mr. Roame touched on the Affordable Care Act (ObamaCare), relating that despite greater than 50% of Americans opposing the Affordable Care Act, the health exchanges are being introduced, leaving Republicans struggling for an answer. He also addressed Dodd Frank which is just one-third complete and has addressed a few points (SEC & CFTC redundancy and CFPB putting pressure on bank margins). Mr. Roame continued with the discussion of Dodd Frank, relating points including too big to fail is bigger now, TARP still 22% outstanding, bank stress tests for solvency, Volcker rule, GSE reform, and shadow banking.

Mr. Roame shared a few views and Tiburon CEO Summit XXV attendee votes as it pertains to governance & regulatory issues:

  • 71% voted that Dodd Frank will never be implemented
  • The ultimate money market fund rule will be floating NAVs for all (33% of attendees) or some money market funds (20% of attendees)
  • 71% believe that a uniform fiduciary standard for retail advice will not be implemented in 2014

Mr. Roame discussed politics looking ahead to 2014 with four main points as a backdrop for the discussion including Republican soul searching, Obama approval rate falling, Republican benefits, and Republicans blow it shutting government down trying to renegotiate ObamaCare. He expressed that Tiburon CEO Summit XXV attendees expect no changes in 2014 and provided the results of another Tiburon CEO Summit XXV attendee survey related to election outcomes:

  • Republicans retain control in the 2014 house election
  • Democrats retain control in 2014 senate election
  • A Democrat will win the 2016 presidential election
  • Hillary Clinton will win the 2016 presidential election

Mr. Roame also addressed the rapid institutionalization of business tactics including client service, target markets, sales & marketing, staffing & compensation, and technology & outsourcing. He began by explaining that in client service two timing is common, 30% withhold information from financial advisors, service is number one, and there is 4% attrition. Mr. Roame added that consumers put more than 90% of their assets with one provider.

With respect to target markets, Mr. Roame broke the issue into two main topics including big data affording a renewed look at some old basics and delivering on the needs of emerging segments. He provided various data points:

  • The Forbes 400 have $2.0 trillion of consumer household assets, up 100% since 2003-2004
  • 91 members of the Forbes 400 live in California
  • Women account for 12% of the members of the Forbes 400, with 2% of the list (eight women) being self made
  • California leads all states in terms of number of $1.0 million net worth households by far, with 859,000
  • Almost half of millenials consider themselves conservative investors
  • Almost half of millenials believe that they spend a lot of time researching alternatives before making major purchase decisions
  • Almost half of millenials need to fully understand all the different options & outcomes before feeling in control of a situation
  • More than one-quarter of millenials would get a second opinion before taking their financial advisor’s advice
  • Tiburon CEO Summit XXV attendees anticipate that female consumers will have the most impact over the next five years
  • Union members make up an increasingly smaller percentage of total employment at just 12%, down from 20% in 1983

Mr. Roame then addressed sales & marketing within two categories including traditional (advertising, stadiums, radio, and books) and leading edge approaches (public relations, big data & predictive analytics, and digital marketing). He explained that The Edelman Financial Group’s Edelman Financial Services conducted 500 seminars in 2013, up from 75 in 2012. Mr. Roame added that digital advertising expenditure reached $118 billion in 2013 and represented 24% of total advertising spend.

Mr. Roame also discussed staffing & compensation with five key points including light being shined on boards, a couple of non-FIG shockers, key executive changes, American Funds expands sales, and incentives that attract & retain talent. He explained that amongst public companies that have implemented majority voting in uncontested election, the vast majority have adopted mandatory resignation policies. He then related that 88% of women report that unconscious bias among leadership is primary barrier to advancement. Mr. Roame then pointed out that Tiburon CEO Summit XXV attendees believe that financial services industry compensation will increase over the next five years.

With regard to technology & outsourcing, Mr. Roame focus on four points including platform consolidation; platforms also supporting individual financial advisors; social, mobile, & the cloud driving technology spending; and technology also increasingly available to consumers. He explained that one-third of financial advisors believe that technology will be the primary force that drives industry innovation. Mr. Roame described that Tiburon CEO Summit XXV attendees voted that big data & mobile technology will be the most impactful technological issues for their firms.

Mr. Roame also addressed potential strategic activity focusing on six areas including FIG profitability, FIG valuations, the role of wealth & asset management, recent & potential strategic activity, and FSI PE & VC facts. He began by explaining that FIG profitability has 8.3% ROE, is up moderately, depends on interest rates, and is 26% of corporate profits. He also explained that Tiburon CEO Summit XXV attendees anticipate that financial services firms profitability will increase over the next five years. Mr. Roame then discussed FIG valuations saying that financial services firms are 22% of the DJIA, FIG stocks are up, and Envestnet hit $1.0 billion market capitalization. He explained the role of wealth & asset management in terms of the history and the news.

Mr. Roame addressed recent & potential strategic activity including regulatory reform & capital needs requiring divestitures, mergers & acquisitions activity likely to pick up because values are up so sellers are willing, low interest rates for borrowing not necessarily driving much activity, diversification moves (Legg Mason looking for international manager), product deals limited, service & technology firms consolidating, captive & independent brokerage forces combining for scale, financial advisors facing significant succession planning issue, other financial advisors building national firms, continued emergence of financial advisor aggregators, private equity continues to bet on independent financial advisor distribution, venture capital firms betting on online advice, most recent IPOs (Envestnet and Financial Engines).

Conclusions

Mr. Roame concluded his presentation by reviewing the 50 underlying trends and the four fundamental bets.

50 Underlying Trends:

 

  • Economy mixed with solid corporate profits but high unemployment, differing consumer segment recoveries, municipal bankruptcies, & troubling world affairs
  • Financial services industry continues to stumble upon itself (JP Morgan Chase & Company, SAC Capital Advisors) plus several idiots (Weiner, Spitzer, Filner)
  • Consumer assets & net worth now both above 2007 peaks (in aggregate)
  • Differing underlying components explain varying levels of consumer sentiment (e.g., growth in investable assets versus personal assets)
  • Wealth gap widening on numerous measures
  • Consumers fundamentally changed (more conservative; more involved; lost generation?)
  • Lack of retirement readiness crisis creeping closer & closer for many Baby Boomers
  • Obamacare is here…
  • Dodd Frank stalling at 30% complete
  • Private investment funds to start advertising
  • Money markets fund NAVs to float
  • Fiduciary rule… Why is there even a debate?
  • FINRA… Scrawny point guard…
  • Core investment strategies evolving (managed accounts; rep driven; retirement income; tactical & possibly thematic investing?; guarantees)
  • ETFs continue to take share while three firms continue to dominate flows and margins are pushed even lower
  • Active ETFs are a wild card
  • Managed ETFs are a big deal
  • Alts for better or worse
  • Financial advisor channels are the largest and fastest growing (institutional channels still talk big game though)
  • Wirehouse broker productivity is very impressive
  • Break-away broker movement relatively quiet (has bull market slowed and/or have wirehouses found a response in compensation plans?)
  • FINRA broker bonus disclosure rules could fire up the break-away broker trend
  • Independent advisors slowly taking share
  • Independent advisors even more fragmented than other areas of financial services
  • Custodians doing well (even beyond the big four firms)
  • Independent broker/dealers focused on hybrids and repositioning as custodians, TAMPs, and/or producer groups (NFP; LPL-Fortigent)
  • Discount brokers doing well (with new revenue models)
  • B2C models re-emerging in three flavors (financial planners; investment managers; & financial advisors with online presence) (LearnVest; Personal Capital; Edelman Online) (spot light on account aggregation)

 

  • Complicated 401K business ripe for innovation (Tiburon wants a low cost ETF 401K plan direct)
  • Defined benefit plans remain underfunded ($ trillions)
  • Foundation & endowment markets (with snazzy investment strategies) turn in weak performance
  • Corporate America awash with cash
  • International consumer markets present wild card
  • Financial advisor target market models succeeding (Hanson & McClain; Lenox Wealth Management; Regent Atlantic Capital)
  • Women’s issues finally getting some attention (more risk averse but shorter careers; longer lives) as baby boomers age (85 Broads) (“I married two of them”)
  • Gen X & Gen Y generations leading to marketing, staffing, & client service changes
  • Big data driving better decisions across multiple marketing methods
  • Digital marketing (SEO; blogging; social media; & email marketing) rivaling traditional marketing efforts
  • Some prominent executive job changes suggesting new industry directions (Jessica Bibliowicz; Paul Hatch; Sallie Krawcheck; Danny Ludeman; Larry Roth)
  • Platform consolidation key (e.g., managed account programs)
  • Social, mobile, & cloud driving technology spending
  • Divestitures driving financial services mergers & acquisitions activity
  • IBD market continues to restructure (RCAP-First Allied-Hatteras Funds-Investors Capital)
  • Financial advisors with a growing succession planning issue
  • Banks likely to be buyers of traditional asset managers and wealth managers (after selling private fund businesses)
  • Another rich price paid for a high-end financial advisor (Bel Air)
  • Financial advisor scale models emerging (The Edelman Financial Group; The Mutual Fund Store; United Capital Financial Partners)
  • Private equity betting on financial advisor channels (The Edelman Financial Group; The Mutual Fund Store)
  • Venture capital betting on self-serve channels (Personal Capital Corporation; Motif Investing; Jemstep)
  • Detroit dead; Twinkie alive

 

 

 

 

 

 

 

 

Four Fundamental Bets:

  • Bet #1: Distribution will increasingly take economics from product manufacturing (sometimes manufacturing will be embedded into distribution though)
  • Bet #2: Financial advisor and do it yourself channels are probably better bets than the institutional or international channels
  • Bet #3: Financial advisor channel smart bets include scale, aggregation, & outsourcing
  • Bet #4: Do it yourself channel smart bets are probably those combining delivery mechanisms

Mr. Roame advised that, "private equity should generally bet on channel businesses over product businesses, in part because the firms closest to the clients always win when margins compress."

General Session Presenter

Matt Lynch

(Principal, Tiburon Strategic Advisors)

 

 

CEO Summit XXV
General Session Presenter

Matt Lynch
(Principal, Tiburon Strategic Advisors)

 

 

 

 

 

 

 

 

 

Tiburon CEO Summit XXV featured a general session presentation by Tiburon Principal Matt Lynch. With over 25 years of financial services experience, most recently as CEO of a leading independent broker/dealer & RIA, Mr. Lynch is viewed as a thought leader and change agent known for his innovative approach to the financial services business as a senior executive and as a consultant. Mr. Lynch is among an elite group of industry experts who can leverage experience as a successful executive with consulting expertise. He is sought after for his ability to link strategy with the art of the possible in terms of implementing change. Mr. Lynch accomplishes this through his extensive knowledge of financial advisors, product design & pricing, regulatory requirements & trends, and the benefit of a couple of decades in the trenches. At Tiburon, Mr. Lynch has led corporate strategy engagements for leading banks, insurance companies, broker/dealers, public accounting firms, investment companies, RIAs, & venture capital firms.

Mr. Lynch addressed the three core themes that make up the focus of the Tiburon CEO Summit, including challenging conventional wisdom, focusing on the consumer, and taking responsibility & giving back. Mr. Lynch provided case study examples of these themes as practiced by past Tiburon CEO Summit award winners.

Mr. Lynch's comments on what we have learned from Tiburon CEO Summit Award recipients included:

  • "Award recipients were influenced by their mentors, foundations as youths, & first experiences with financial products or services"
  • "As business leaders, award recipients utilize ethical dilemmas, lessons along the way, and both failures and success as learning experiences"
  • "Focusing on corporate culture philosophy matters"


Mr. Lynch's comments on the expectations & questions of award recipients included:

  • “Recipients expect that financial services companies will develop products & services that meet rapidly evolving consumer needs"
  • "Recipients expect that the industry will successfully engage with the growing 35 and under demographic"
  • "Recipients expect that CEOs will find better ways to create opportunities that enable consumers to make wise financial decisions"
  • "Recipients question how the industry will be able to close the trust gap to develop programs to support the next generation of advisors and clients"

When providing selected highlights of past award winners, Mr. Lynch quoted John Bogle, Bob Reynolds, David Booth, & Ken Fisher:

  • John Bogle (Founder, The Vanguard Group): "You run money not in your own interest, but in the interest of the client. The client is first; client first should be the rule. Remember that and act on it"
  • Bob Reynolds (CEO, Putnam Investments): "Client service, quality, constant improvement. If you are doing the same thing today that you did yesterday, you are not improving you or the business"
  • David Booth (Co-CEO, Dimensional Fund Advisors): "We are obsessed with lowering costs, and figuring out how to help consumers make money by lowering their costs and giving them a fair deal"
  • Ken Fisher (CEO, Fisher Investments): "Mean well, try hard, and put the customers' interests first"

When discussing recognizing new business models in which companies & consumers win, Mr. Lynch quoted Charles Schwab, Walt Bettinger, Al West, & Mark Casady:

  • Charles Schwab (Chairman, The Charles Schwab Corporation): "Wall Street, in my view, has always been constructed on a platform of: how do we make money for ourselves? And in our case, we ask: how can we do a better job for the consumer?"
  • Walt Bettinger (CEO, The Charles Schwab Corporation): "Too many financial services models - busines models and economic models - are designed in such a way that what is good for the company is not what is good for the consumer"
  • Al West (CEO, SEI Investments): "Innovation and progress are just learning from your mistakes; you have to be willing to go out and fail. We try to fail fast"
  • Mark Casady (CEO, LPL Financial): "We have really worked hard to be very transparent with our employees and very transparent with our customers about the things that we are looking at, and the ways that we are thinking about things so that we can all be connected together"

When discussing the industry's moral compass, Mr. Lynch quoted Harry Markowitz:

  • Harry Markowitz (President, Harry Markowitz Associates & Nobel Prize Winner in Economic Sciences): "The purpose of the financial services business is to do good. We exist to serve others, not just ourselves"

When discussing focusing on consumers, Mr. Lynch quoted past award recipients Bill Sharpe, Joe Mansueto, and Don Phillips:

  • Bill Sharpe (Founder, Financial Engines, Professor Emeritus, Stanford University & Nobel Prize Winner in Economics): “I started turning all my academic research and writing towards the individual. The goal of Financial Engines is to put the proper advisory tools in the hands of these investors"
  • Joe Mansueto (CEO, Morningstar): "The culture of our organization is to think in terms of innovation. If you do not innovate, if you cannot find investment methodoligies, research insights that lead to concrete, better outcomes for investors, why should they pay you?"
  • Don Phillips (President, Fund Research, Morningstar): "What do the best firms have in common? They created funds that people would want to buy. They did not try to ram products down people's throats. In the fund industry what you have seen is that those people that serve investors better did better"

When discussing focusing on the long-term, Mr. Lynch quoted past award recipients Rob Arnott:

  • Rob Arnott (CEO, Research Affiliates): If you try do well by helping others achieve their goals - do well by doing good - this is a business that offers wonderful personal rewards, financially and in personal satisfaction to those who are patient. Those who are impatient, the immediate rewards can be much greater but the long-term rewards are not"

Mr. Lynch also relayed common viewpoints of Tiburon CEO Summit Award recipients:

  • "The old model includes a focus on profits first, layers of hidden fees, & the old guard status quo"
  • "The new model includes a focus on the consumer first, transparency, and a culture of innovation"

In closing, Mr. Lynch predicted outcomes for financial services 2030:

  • "The status quo will lead to permanent damage from the trust gap and growth of consumer and government participation, as financial institutions' influence wanes"
  • "The innovation economy will lead to a renewed focus on consumers, increased transparency, and better outcome for all"

 

 

Speakers & Panelists

Tiburon CEO Summit XXV also featured speakers & panelists, including Ryan Alfred (President, BrightScope), John Bunch (CEO, The Mutual Fund Store), Mitch Caplan (CEO, Jefferson National Financial), James Carney (CEO, By All Accounts), Ron Carson (CEO, Carson Wealth Management Group), Bill Crager (President, Envestnet), Ben Cukier (Partner, FTV Capital), Joe Duran (CEO, United Capital Financial Partners), Mike Durbin (President, Fidelity Institutional Wealth Services), Ric Edelman (CEO, The Edelman Financial Group), Ed Forst (CEO, Lincoln Investment Planning), Mark Goldberg (President, Carey Financial), Dan Goldie (CEO, Dan Goldie Financial Services), Mark Gormley (Partner, Lee Equity Partners), Pete Hess (CEO, Advent Software), Anton Honikman (CEO, MyVest Corporation), Mark Hurley (CEO, Fiduciary Network), Steve Janachowski (CEO, Brouwer & Janachowski), Rob Klapprodt (President, Vestmark), Paul Koontz (General Partner, Foundation Capital), Steve Lockshin (Chairman, Convergent Wealth Advisors), Jeff Maggioncalda (CEO, Financial Engines), John Michel (CEO, CircleBlack), Blake Mohr (CEO, Capitas Financial), Robert Moore (President, LPL Financial), John Rafal (CEO, Essex Financial Services), Rich Rosenbaum (Principal, Aquiline Capital Partners), Simon Roy (President, Jemstep), Greg Tschider (CEO, Verisight), Hardeep Walia (CEO, Motif Investing), Michelle Watson (Chief Investment Officer, First Republic Investment Management), Elliot Weissbluth (CEO, HighTower), Chuck Widger (Chairman, Brinker Capital), Chris Wolfe (Chief Investment Officer, Private Banking & Investment Group, Merrill Lynch Wealth Management), & Mike Woods (CEO, DWS Investments Distributors).

Ryan Alfred
(President, BrightScope)

 

 

CEO Summit XXV
Panelist

Ryan Alfred
(President, BrightScope)

 

 

 

 

 

 

 

 

Ryan Alfred is President of BrightScope, responsible for the day-to-day operations of the company. Mr. Alfred frequently speaks on financial industry regulation and is actively engaged in the debate in Washington, DC about issues relating to retirement. Mr. Alfred has been named to Forbes’ Top 30 under 30 in Finance and to the Smart Money Power 30. Previously, Mr. Alfred was a co-founder of Alfred Capital Management, an independent registered investment firm located in La Jolla, CA.

Mr. Alfred's comments included:

  • "Index funds, once selected as retirement plans, tend not to get replaced. It is hard as a fiduciary to make a case for replacing"
  • "Everyone has hit the pause button on big data because most are not sure they have a clear understanding of their own data in the first place. It is a matter of data cleansing first"
  • "Plan sponsors and advisors are going to be looking for more data, better metrics to select and monitor their target-date funds... they are looking for new ways to do it"
  • "It feels like overnight they (T. Rowe Price) have become the primary retirement investment for millions of American workers"
  • "It does not make any sense that a money market fund should charge three times more than a large cap index fund"

 

John Bunch
(CEO, The Mutual Fund Store)

 

 

CEO Summit XXV
Panelist

John Bunch
(CEO, The Mutual Fund Store)

 

 

 

 

 

 

 

 

John Bunch is CEO of The Mutual Fund Store, responsible for the day-to-day stewardship of the company, its direction and overall business strategy. He took this position in 2011, after arriving from TD Ameritrade, where he was president of retail distribution and served in multiple executive capacities over his seven years there. Prior to that, Mr. Bunch held several leadership positions at The Charles Schwab Corporation.

Mr. Bunch's comments included:

  • “We believe the mass affluent market has historically been underserved. Our mission is to provide them with the same high-quality fee-only experience that has previously been reserved for the HNW market”
  • “The Mutual Fund Store strives to deliver a consistent client experience that can be tailored based on an individual’s needs and goals”
  • "We are pursuing a national presence, not a national brand"
  • "We are after scalable infrastructure, market by market expansion, consistent experience, investment philosophy, & value proposition, and some name brand recognition"
  • "We are not after expanding into markets where ROI projections are not attractive, 'just to be national'"

 

Mitch Caplan
(CEO, Jefferson National Financial)

 

 

CEO Summit XXV
Panelist

Mitch Caplan
(CEO, Jefferson National Financial)

 

 

 

 

 

 

 

 

Mitch Caplan is CEO of Jefferson National Financial, where he is the key strategist behind the company’s successful expansion and ongoing growth strategy. Under Mr. Caplan’s leadership, Jefferson National has been recognized as the industry’s first flat-fee variable annuity for RIAs and fee-based advisors. Previously, he served as an executive advisor to Aquiline Capital Partners, CEO of E*Trade Financial, & CEO of Telebanc Financial Corporation. Throughout his career, Mr. Caplan has been an advocate for innovation and has been committed to creating superior customer value.

Mr. Caplan's comments included:

  • "The key is the transition of the Fed"
  • "Companies are doing better primarily as a result of financial engineering not necessarily by innovating for the future"
  • "Bernanke has been too media driven trying to keep the market from overreacting.  In a sense, the Fed has boxed themselves in to sending the wrong signals"
  • "You can not assume that profit margins can not expand"
  • "You need to figure out how to charge for intellectual capital while lowering operating cost"

James Carney
(CEO, By All Accounts)

 

 

CEO Summit XXV
Panelist

James Carney
(CEO, By All Accounts)

 

 

 

 

 

 

 

 

James Carney is CEO and co-founder of By All Accounts. He and his teams are responsible for building, marketing, & selling highly scalable, complex solutions, on time and within budget. Prior to co-founding By All Accounts, Mr. Carney was CEO and co-founder of Bidder’s Edge, the largest online auction portal servicing more than 500,000 users monthly with information available on over eight million items on a near real time basis. Company revenue grew in excess of 100% each year with expanding profit margins. Prior to Bidder's Edge, Mr. Carney was CEO and co-founder of Workgroup Technology Corporation, which developed product information management systems for the engineering and manufacturing environments. The company had a successful IPO on the NASDAQ exchange. Previously, Mr. Carney was CEO and co-founder of WSI, a UNIX based system integrator that developed solutions for the engineering market, which was acquired by BOM Nesbitt Burns. He also ran the Northeast operations for Computervision, the worldwide leading provider of CAD/CAM systems.

Mr. Carney's comments included:

  • "Advisors want technology to work like a refrigerator. They want to open the door and get a cold drink. The do not care how it works"
  • "Where there is change, there is room for technology disrupt"
  • “Data has become a strategic asset to financial firms. The firms with the best data workflow will have the richest analytics, reporting, & insights. This shift is why we are seeing increased demand from global financial institutions to use aggregation technology to streamline the flow of data within their organizations – taking it from one internal system and delivering it to another – so all stakeholders have efficient access to the information, reports, & insights that they need”
  • “Adding new technology can be a huge step for financial advisors, whether they are installing or upgrading a portfolio management system, CRM, planning tool, rebalancing software, client portal, or any other application. And yet, for all the bells and whistles, the applications themselves are not the guarantors of success. Rather, it is the smooth, seamless flow of data through an organization – from system to system – that makes for an effective and well oiled operation”
  • "One of the top trends will be a change in advisor/client interaction as a result of mobile, social, and information technologies"

Ron Carson
(CEO, Carson Wealth Management Group)

 

 

CEO Summit XXV
Panelist

Ron Carson
(CEO, Carson Wealth Management Group)

 

 

 

 

 

 

 

 

Ron Carson is CEO of Carson Wealth Management Group. He is the firm’s founder and has worked extensively in the field of financial management since 1983. Mr. Carson also founded PEAK, a coaching program for financial advisors, both based in Omaha, Nebraska. Mr. Carson has been honored as one of Barron's Top 100 financial advisors and was named by Registered Rep Magazine as the top independent advisor. He has been selected by Worth Magazine as one of The Best 250 Financial Advisors in the country, as well as being selected by Medical Economics as one of The Nation’s Top 120 Financial Advisors for Doctors. Mr. Carson is a regular guest on CNBC’s Squawk on the Street and CNBC’s On the Money, as well as a frequent guest on KMTV3`s Mid-Day Business Report. Mr. Carson was also the founder & past president of the Heartland Chapter of the Financial Planning Association, past president & board member of the Child Savings Institute, and past president of the American Charitable Foundation. Mr. Carson has shared his success principles, as documented in his book, Tested in the Trenches, with audiences worldwide. Most recently, Mr. Carson co-authored the New York Times best selling book, Avalanche.

Mr. Carson's comments included:

  • "The number of advisors that have a fully executed succession plan is less than 5%. The plan should be a required part of the ADV, then let the market decide whether the plan is acceptable"
  • "I think the financial services industry has taken a lot of comfort in the false notion that clients will always want to do business with an advisor. I do not believe that will be the case"
  • "There is a big need for regulating succession and part of being a fiduciary is having a plan"
  • "Advisors really do not know what they are paying. They have to be forensic accountants to dig in and really see what they are paying"
  • "The financial services industry needs to have the soul of a social worker, otherwise the financial advisor will go the way of the travel agent”

 

Bill Crager
(President, Envestnet)

 

 

CEO Summit XXV
Panelist

Bill Crager
(President, Envestnet)

 

 

 

 

 

 

 

 

Bill Crager is President of Envestnet and has been with the company since its founding in 2000. Mr. Crager leads Envestnet's platform, product, and relationship management efforts. Prior to joining Envestnet, Mr. Crager served as managing director at Nuveen Investments beginning in 1997 and prior to that for Rittenhouse Financial Services beginning in 1994. Mr. Crager is frequently cited in industry publications and research regarding innovation and trends in the investment advisory marketplace.

Mr. Crager's comments included:

  • "I think advisors are going to want something more end-to-end — from back-end [software] to thousands of separate account managers and connections to custodians. That complete suite will be highly valued. We think that is a competitive difference"
  • "What impresses me about Tamarac: they have a great service model. They know the RIA business really well"
  • "Advisors who equip themselves with the most advanced wealth management tools and technology are positioned to make better decisions, implement them more effectively, and communicate them in the way that best fits a client’s needs"
  • "We are listening to the advisers and building what they want and the custodians are our partners in so many ways, it really depends on the profile of the adviser as to what they will want and we fully expect that some will be a better fit for the custodial models and others our offerings"
  • "It has been our belief that full integration of advisors’ practices would significantly enhance not only their ability to increase their book of business, but also create depth to their services as well as operational efficiencies"

Ben Cukier
(Partner, FTV Capital)

 

 

CEO Summit XXV
Panelist

Ben Cukier
(Partner, FTV Capital)

 

 

 

 

 

 

 

 

Ben Cukier is a Partner at FTV Capital. Mr. Cukier leads investments in asset management, lending, & banking. Mr. Cukier was previously with the Telecommunications & Media Team at Madison Dearborn Partners in Chicago. Prior to joining Madison Dearborn Partners, Mr. Cukier was with McKinsey & Company in New York, where he consulted to clients in the telecommunications, internet, and healthcare industries.

Mr. Cukier's comments included:

  • "Some folks will build great, large, registered investment advisory firms. We are just not sure that they will be worth more than the capital invested to build them"
  • "It is hard to innovate and it is hard to grow a large company"
  • "Active ETFs are just starting to take root"
  • "It has never been easy to be in this business, but the challenges have changed. It used to be that advisers didn’t know what ETFs were, but now there are thousands of ETFs out there and the challenge is how to get the advisors’ attention"
  • "You can have a great product but if you do not understand distribution you will have $100 million in assets and low profitability"

Joe Duran
(CEO, United Capital Financial Partners)

 

 

CEO Summit XXV
Panelist

Joe Duran
(CEO, United Capital Financial Partners)

 

 

 

 

 

 

 

 

Joe Duran is CEO and a founding partner of United Capital Financial Partners, one of the fastest growing wealth counselling firms in the nation. Mr. Duran was previously president of GE Private Asset Management (formerly Centurion Capital Management). Mr. Duran has raised $45 million of capital from three private equity funds (Grail Partners, Putnam Lovell Partners, & Bessemer Venture Partners). Mr. Duran was listed in the Ten to Watch List in 2012 by Registered Rep, is the bestselling author of three nationally published books, and is a frequent contributor to a wide variety of media outlets.

Mr. Duran's comments included:

  • “We think there is space for three to five national firms. We think The Edelman Financial Group, The Mutual Fund Store, & Fisher Investments will be among those”
  • "Brand is more than a name, it is about how you deliver on a promise"
  • “All clients are concerned about three basic risks: lifestyle risk, income risk, & surprise risk. We speak to the simple issues instead of things like standard deviation”
  • “We have invested millions of dollars in our client experience and we think the future of the industry is like Starbucks rather than lots of little mom-and-pop coffee shops. There will be a couple of dominant national brands that people come to trust and respect, unlike the big wirehouses that are out there today”
  • “We are creating a category that does not exist, and it's very hard for people to wrap their brains around it because up to now it has either been the pushed-down model of the full-service brokerage firm or the do-it-all-yourself model of the stand-alone advisor”

Mike Durbin
(President, Fidelity Institutional Wealth Services)

 

 

CEO Summit XXV
Panelist

Mike Durbin
(President, Fidelity Institutional Wealth Services)

 

 

 

 

 

 

 

 

Mike Durbin is President of Fidelity Institutional Wealth Services. Prior to his employment with Fidelity, Mr. Durbin held various leadership positions at Morgan Stanley including chief operating officer of the national sales division for Morgan Stanley Global Wealth Management.

Mr. Durbin's comments included:

  • "The blurring of business models has caused confusion in the eyes of consumers"
  • "Millionaire investors’ outlook has been consistently pragmatic about current market conditions and pervasively optimistic about a future recovery"
  • "We are not in a business where we want to end up with the most number of clients. We want to have the largest clients with the most assets. We are going after the largest teams and getting them"
  • "I think Fidelity Investments has done the best job of speaking the language of the breakaway brokers"
  • "The just-below-the-surface, but pervasive, black market for information is worse than the in-your-face overt Madoff”

Ric Edelman
(CEO, The Edelman Financial Group)

 

 

CEO Summit XXV
Panelist

Ric Edelman
(CEO, The Edelman Financial Group)

 

 

 

 

 

 

 

 

Ric Edelman is CEO of The Edelman Financial Group. Mr. Edelman has been ranked by Barron’s among America’s top 100 financial advisors nine times, including being ranked as the number one independent financial advisor in 2009, 2010, & 2012. In 2012, RIA Biz named Mr. Edelman the most influential financial advisor in America. Mr. Edelman has also been ranked as a top financial advisor by Research Magazine, Registered Rep, Financial Advisor, & other publications. Mr. Edelman is also an author, syndicated columnist, & host of weekly television and radio shows on personal finance.

Mr. Edelman's comments included:

  • "The Internet leads to financial transactions being free. It is advice on what transactions to implement that creates value. There is not an algorithm in the world  that can today replace the human advisor"
  • "All the big brokerage firms and banks have chosen not to serve the $5,000 client, but they will over time out of necessity"
  • "Pioneers get shot in the back with arrows, settlers benefit from the path the pioneers created. I view some/most of the recent start-up firms as pioneers, none are sustainable in their present form so we will see the rapidly evolve"
  • "Well meaning, ethical, thoughtful firms like Personal Capital Corporation are tripping on themselves over unintended consequences of having aggregated customer data, which creates a trust issue"
  • "The odds are that if you are alive in 2030, then you will live forever"

Ed Forst
(CEO, Lincoln Investment Planning)

 

 

CEO Summit XXV
Panelist

Ed Forst
(CEO, Lincoln Investment Planning)

 

 

 

 

 

 

 

 

Ed Forst is CEO of Lincoln Investment Planning, responsible for the activities of 800 licensed advisors and over 200 full-time operations and support personnel. The Lincoln Investment Companies include a full-service broker-dealer and registered investment advisors serving the diverse and changing financial needs of more than 250,000 individual investors, representing over $19 billion in assets.

Mr. Forst's comments included:

  • "Keep an eye on Detroit for guidance as to what may happen with other underfunded public employee pension plans"
  • "Lincoln's success stems from helping financial representatives grow their business"
  • "The size, strength, and high net-worth focus of Capital Analysts complements Lincoln Investment’s leadership in the retirement plans segment of the mass-affluent market"
  • "By fully embracing the regulatory changes and the new 403(b) requirements, school districts across the country may be able to transform a regulatory compliance challenge into an opportunity to attract and retain higher quality employees by promoting their 403(b) plan as one of the top three benefits available to school employees"
  • "With the cost of compliance and technology continuing to rise, firms need to bulk up and gain scale to remain viable"

Mark Goldberg
(President, Carey Financial)

 

 

CEO Summit XXV
Panelist

Mark Goldberg
(President, Carey Financial)

 

 

 

 

 

 

 

 

Mr. Goldberg is President of Carey Financial, W.P. Carey’s broker-dealer subsidiary, and is a managing director of W.P. Carey. Mr. Goldberg previously served as CEO and president of Royal Alliance Associates, an independent broker-dealer that is part of one of the nation's largest networks of independent advisors. Prior to his CEO position at Royal Alliance, Mr. Goldberg served as executive vice president of SunAmerica Financial Network, a subsidiary of SunAmerica, and the parent company for six national broker-dealers. Mr. Goldberg also served as president of a Tokyo-based securities firm, which was an affiliate of the SunAmerica Financial Network. Mr. Goldberg currently serves on the board of directors of the Investment Program Association and Saint Mary’s Healthcare System for Children. Mr. Goldberg was also a founding member and former director of Financial Services Institute.

Mr. Goldberg's comments included:

  • “Efficient-market theory suggests that if assets are easily bought, sold, researched, and managed, your ability to extract superior investment performance is highly unlikely. However, in assets that are less commoditized, less traded, and less followed, superior research, management, investment prowess, and patience will produce superior results”
  • “A private equity ETF is not investing in private equity, it is made up of securities that are modeled after private equity returns”
  • “The difference between investing using a derivative versus investing in a business is comparable to the difference between starting a football team and betting on the outcome
    of the Super Bowl”
  • "The IPA is endorsing the institutional approach to producing value, which is NAV. We need a standard approach that will create greater confidence for investors and improve their experiences"
  • “Derivatives are an essential part of many portfolios and an important tool for many businesses. But they are undoubtedly a zero-sum game, where for every long position, there is a short position. None of the capital is committed to raw goods or equipment. There is a winner and a loser. There is only wealth transfer, no wealth creation”

Dan Goldie
(CEO, Dan Goldie Financial Services)

 

 

CEO Summit XXV
Panelist

Dan Goldie
(CEO, Dan Goldie Financial Services)

 

 

 

 

 

 

 

 

Dan Goldie is CEO of Dan Goldie Financial Services. He is a fee-only, independent financial advisor and financial planner. Mr. Goldie has co-authored two investment books including the New York Times bestseller, The Investment Answer. He has been recognized by the San Francisco Business Times as one of the top 25 Bay Area independent advisors, and by Barron's Magazine as one of the top 100 independent financial advisors in the United States. Mr. Goldie's media appearances include ABC News, Fox Business News, National Public Radio, Yahoo! Finance, & CBS Moneywatch, and he has been quoted in the New York Times, Wall Street Journal, San Jose Mercury News, San Francisco Examiner, & many other business and financial publications. 

Mr. Goldie's comments included:

  • "My mission is to make sure my clients do not go through the challenges I went through"
  • "I was proud to work on Wall Street until the move toward profits and away from investors"
  • "The financial services industry is not doing a good job for individuals. There is too much sales pressure & product pushing, not enough education orientation. Consumers rely on us to teach them"
  • "Communication in the financial services industry is too complicated. The best educators I have had took complex concepts and made them simple, this is what the financial services industry needs"
  • “Retirement is an important date because it is the end of your earned income or a reduction in your earned income, but it is not the end of your life. You still need to keep investing as long as you are alive”

Mark Gormley
(Partner, Lee Equity Partners)

 

 

CEO Summit XXV
Panelist

Mark Gormley
(Partner, Lee Equity Partners)

 

 

 

 

 

 

 

 

Mark Gormley is a Partner at Lee Equity Partners. Prior to co-founding Lee Equity in 2006, Mr. Gormley was a partner at Capital Z Financial Services Partners. Mr. Gormley co-founded Capital Z Financial Services Partners in 1998 and shared responsibility for the oversight of all of the firm's investment and monitoring activities. Prior to founding Capital Z Financial Services Partners, Mr. Gormley served as a managing director at Donaldson, Lufkin & Jenrette, specializing in the insurance and asset management industries. While at Donaldson, Lufkin & Jenrette, Mr. Gormley worked on corporate finance and merger and acquisition assignments, as well as on principal related activities on behalf of Donaldson, Lufkin & Jenrette Merchant Banking. Prior to joining Donaldson, Lufkin & Jenrette in 1989, he was a founding member of the Insurance Group at Merrill Lynch in 1985.

Mr. Gormley's comments included:

  • "There are a lot of great companies and a lot of change going on, which means many opportunities to be had"
  • "We invest with the trends. Various risks tend not to be as significant compared to investing against the flow"
  • "Financial planning is a key opportunity of relative white space in the mass affluent market"
  • "We like to think about building great businesses over time"
  • "At least half of the return today has to come from enhancements to the operating processes of the company"

Pete Hess
(CEO, Advent Software)

 

 

CEO Summit XXV
Panelist

Pete Hess
(CEO, Advent Software)

 

 

 

 

 

 

 

 

Pete Hess is CEO of Advent Software. Mr. Hess is responsible for vision, strategy, & execution across the firm’s global business. Prior to his appointment to CEO, Mr. Hess served as the company's president for three and a half years, with responsibility for strategy, sales, marketing, services, & product teams worldwide. Mr. Hess has been with Advent Software since 1994 and has held a variety of positions in the company, including executive vice president and general manager of the company's largest businesses, and, previously, vice president of sales and vice president of marketing.

Mr. Hess' comments included:

  • "We have seen movement away from internally developed technology toward outsourced solutions. Among wirehouses this has been an interesting trend"
  • “The client space has certainly been evolving a lot more quickly in the last five years than it had previously. If you look at the buy side and go back ten or fifteen years ago, you had mostly traditional asset managers who serviced high net worth institutional clients around the globe. What you see today is a lot more specialization in the buy-side landscape. You have dedicated hedge funds, dedicated, traditional asset managers, & people who manage mutual funds and long-only investment portfolios”
  • “From the 1990s until about 2009, we saw a lot of firms that were single product specialists. Since the market crisis, it seems that a lot of those firms are now diversifying into other products, which has created an opportunity for Advent Software”
  • "We did not want to force the wrong system on the wrong client. That decision was the right decision long-term. And we feel really good about the fit of the products that we are rolling out to our clients"
  • “I am really thrilled. We had to earn the trust of the marketplace back and we are making good progress"

Anton Honikman
(CEO, MyVest Corporation)

 

 

CEO Summit XXV
Panelist

Anton Honikman
(CEO, MyVest Corporation)

 

 

 

 

 

 

 

 

Anton Honikman is CEO of MyVest. Mr. Honikman has almost twenty years of experience in leading cross-functional teams in investment management and financial technology. Prior to MyVest, Mr. Honikman served as president of Ada Investment Management, a boutique alternative investment manager. Prior to Ada Investment Management, Mr. Honikman spent five years at Barclays Global Investors, the large, quantitatively oriented investment manager acquired by Blackrock in 2009. Mr. Honikman established and ran Barclays Global Investors strategic ventures group, spearheading strategic investments and partnerships with innovative private financial services firms. Before the strategic ventures group, Mr. Honikman was as a senior investment strategist at Barclays Global Investors, with primary responsibility for designing and promoting defined contribution and retirement income products. Prior to Barclays Global Investors, Mr. Honikman spent ten years in a variety of product management and business strategy roles at Barra (now MSCI), the market leader in portfolio risk analytics. Most recently, as Barra’s vice president of product strategy, Mr. Honikman was responsible for the conception and commercialization of BarraOne, Barra’s flagship web-based multi-asset class portfolio analytics platform. BarraOne is now used by almost every pension fund in the top 50 of the Pensions & Investments rankings. Prior to building BarraOne, Mr. Honikman was responsible for Cosmos, Barra’s global fixed income product line.

Mr. Honikman's comments included:

  • "The key is making data more easily accessible with fewer key strokes to accurate, timely, certain data"
  • "Firms increasingly want to simplify, reduce cost & complexity, and standardize"
  • "The vision of digital channel adoption is that increased client-advisor collaboration leads to better outcomes"
  • "The proliferation of passwords is raising critical security and privacy issues in financial services, especially for the large diversified institutions we serve"
  • "The pros of transitioning to the cloud are cost, convenience, & compliance"

Mark Hurley
(CEO, Fiduciary Network)

 

 

CEO Summit XXV
Panelist

Mark Hurley
(CEO, Fiduciary Network)

 

 

 

 

 

 

 

 

Mark Hurley is CEO of Fiduciary Network. He oversees the Fiduciary Network team and its transactions and works closely with each of its partner firms. Prior to helping start Fiduciary Network, he was CEO of Undiscovered Managers, a mutual fund company he founded in 1998 and sold to JP Morgan Chase & Company in 2004. Mr. Hurley was previously a managing director at Merrill Lynch., a vice president at Goldman Sachs Group, and served as a presidential appointee at a bureau of the United States Treasury Department from 1990 to 1992.

Mr. Hurley's comments included:

  • "The industry has the tallest mindset contest, we want to work with the tallest minds"
  • "When you get a triple digit return on your capital year after year you tend to be pretty patient"
  • “Most owners of wealth management firms recognize that the business is becoming significantly more challenging. New clients are harder to find, operating costs (employee compensation in particular) are increasing, and regulators are becoming more hostile. Additionally, looming over all of these changes is a much greater, immutable force, old age. The founders of the advisory business, with an average age of 59, are reaching an age at which personal needs and objectives shift in preparation for retirement”
  • "Best metric for the financial services firms is to look at client retention during troubling times"
  • “This thing called the Internet is going to be big because it allows creation of a national presence for small firms"

Steve Janachowski
(CEO, Brouwer & Janachowski)

 

 

CEO Summit XXV
Panelist

Steve Janachowski
(CEO, Brouwer & Janachowski)

 

 

 

 

 

 

 

 

Steve Janachowski is CEO of Brouwer & Janachowski. Together with Kurt Brouwer, he pioneered the firm's investment strategy of investing in a portfolio of superior no-load mutual funds. Mr. Janachowski oversees the firm's investment research process. He concentrates on working with clients, researching investments, and managing portfolios. He is a member of the firm's board of directors and its investment committee. Prior to forming Brouwer & Janachowski, Mr. Janachowski was an officer in two New York Stock Exchange member firms and he began his career with Holt & Collins, and then moved to Merrill Lynch, both in San Francisco. Mr. Janachowski is the co-author of Mutual Fund Mastery and has written for The San Francisco Examiner and other publications.

Mr. Janachowski's comments included:

  • "I do not think of Build America Bond advisors as entrepreneurs. I see them as missionaries. We rejected the financial product distribution models in favor of working on behalf of our clients"
  • "Some clients that I have been dealing with for 25 years are now unable to make decisions for themselves. More and more, we find ourselves facilitating that transition of oversight for the parents' affairs to the children. If there is more than one child, the transition can be tricky"
  • "The three biggest industry trends are consolidation, profitability compression, & the rising cost of client acquisition"
  • "It is not just a financial transaction... partnerships are harder than marriages"
  • "RIA owners have pride. These people started the company and they have got relationships with their clients and they need to know that their firm isn’t going to get damaged. They really have to be reassured that there’s a genuine match"

Rob Klapprodt
(President, Vestmark)

 

 

CEO Summit XXV
Panelist

Rob Klapprodt
(President, Vestmark)

 

 

 

 

 

 

 

 

Rob Klapprodt is President of Vestmark. As one of the firm’s co-founders, Mr. Klapprodt has helped grow the assets managed on the Vestmark platform from zero to over $250 billion. Prior to joining Vestmark, Mr. Klapprodt was at Vignette Corporation, where he was responsible for the firm’s web site analysis and personalization solutions which were used by hundreds of companies across all industries. Mr. Klapprodt joined Vignette through its acquisition of DataSage, an eCRM software provider, in 2000. At DataSage, Mr. Klapprodt held various positions in sales, consulting, & product management, including the construction of the initial eCRM prototype which became DataSage's flagship product. Prior to DataSage, Mr. Klapprodt worked at Oracle Corporation, where he focused on the firm’s data warehousing and business intelligence solutions for large enterprises.

Mr. Klapprodt's comments included:

  • “Technology does not replace relationships, but it will serve to enhance the relationship through customized communication”
  • “Over $100 billion in assets flowed into financial advisor directed programs last year, with advisor as manager programs seeing 30% year over year growth”
  • “Many existing UMA programs have not met their growth potential because they have failed to incorporate the financial advisor into the investment process. If you completely
    take away tasks an advisor has been performing for years, they will not adopt the new program”
  • “Due to unique scalability & functionality requirements, broker/dealers, banks, RIAs, & other wealth managers have had limited compliance capabilities across their fee-based business lines”
  • “Given demographic trends and evolving expectations of consumers used to accessing anything and everything on-demand, the need to offer timely portfolio information and analytics to investors will only increase”

Paul Koontz
(General Partner, Foundation Capital)

 

 

CEO Summit XXV
Panelist

Paul Koontz
(General Partner, Foundation Capital)

 

 

 

 

 

 

 

 

Paul Koontz is General Partner of Foundation Capital. His primary focus is on financial services & internet technologies. Mr. Koontz currently serves as chairman of Financial Engines and is on the boards of Envestnet, eBates, and Refactored Materials.

Mr. Koontz' comments included:

  • "We define financial services much more broadly after decades of dominance by a handful of large firms. It is now filled with entreprenuerial opportunities"
  • "The financial services industry is considered very viable for entreprenuerial talent"
  • "I would expect crowd funding to have a lasting effect on the industry when the markets are good. When the markets are down, crowd funding is like cockroaches that leave when the lights go on"
  • "There is no doubt in my mind that 10 years from now, our notion of the corporate data center is going to be gone, and the way that large companies use technology like software is going to be completely redefined"
  • "Global power grids make up the largest networks in the world. In most cases, the technology on which they are based is essentially 100 years old. The opportunity to reinvent how energy is produced, distributed and consumed is extraordinarily large and is critical in the battle against climate change"

Steve Lockshin
(Chairman, Convergent Wealth Advisors)

 

 

CEO Summit XXV
Panelist

Steve Lockshin
(Chairman, Convergent Wealth Advisors)

 

 

 

 

 

 

 

 

Steve Lockshin is Chairman of Convergent Wealth Advisors. Mr. Lockshin served as CEO of the firm for eighteen years. He helped pioneer the open architecture approach to investing and was an early adopter of asset allocation strategies for the ultra-high net worth client, employing a mathematical process to determine appropriate client portfolios based on cash flow needs. With Mr. Lockshin’s oversight, Convergent Wealth Advisors became an innovator in the use & analysis of risk & reward parameters for alternative portfolios, equity risk management for concentrated portfolio holdings, and other strategies now employed industry-wide. Mr. Lockshin has been ranked by Barron’s as the top advisor in California in 2013 and one of the top three ranked advisors in each of the last three years on Barron’s list of Top 100 Financial Advisors. Washingtonian magazine also named Mr. Lockshin as one of the Top Financial Advisors in the Washington, DC area. He is a champion for the fiduciary standard and recently wrote the book, Get Wise to Your Advisor.

Mr. Lockshin's comments included:

  • “Most consumers are paying premium prices for commoditized services in our industry"
  • "Fees cap out at a certain point, hence assets under account versus assets under management"
  • "There are many online solutions. Consumers can go online and for no money get asset allocation"
  • "Technology could compress margins for the financial services industry"
  • "The suitability versus fiduciary argument is an absolute embarassment for the financial services industry. It is simple, do the right thing for your client"

Jeff Maggioncalda
(CEO, Financial Engines)

 

 

CEO Summit XXV
Panelist

Jeff Maggioncalda
(CEO, Financial Engines)

 

 

 

 

 

 

 

 

Jeff Maggioncalda is CEO of Financial Engines, a role he has held since 1996. He has also been a director since 1997. He is responsible for the overall management of the firm and has over ten years of experience in the financial services industry. Mr. Maggioncalda has led Financial Engines through five successful rounds of funding, raising $140 million, and building an organization committed to creating powerful and innovative financial technology solutions. Previously, Mr. Maggioncalda worked at McKinsey & Company in their high technology practice and at Cornerstone Research conducting securities and software litigation consulting. He also developed case studies for a business strategy course taught by Intel Chairman Andy Grove. 

Mr. Maggioncalda's comments included:

  • "There is a way to create a real business via an online service that serves low-balance accounts. For all the economics to work you need low cost acquisition, a low cost service model, & a relationship with the end client"
  • “We have a whole generation of people approaching an important point in their lives where they need to think about retirement, at a time when public policy has shifted all responsibility for retirement onto their shoulders”
  • “Financial Engines’ long term vision is predicated on demographics. That is far more enduring and inevitable than any kind of technology trend”
  • “The decision to manage money is key. What is interesting about this is that it is the same underlying technology in terms of engines; it is the same target customer, which is the employee 401K plan; it is the same distribution strategy, which is through the workplace. It actually is all the same, but previously we just did not have the killer app that everybody wanted”
  • “The way we came up with managed accounts is that we were scratching our heads saying, ‘why is there not more people using online advice?’ We went out and started interviewing people and basically found that they do not want to go online and do this. So we wondered what if we take all the same engines, methodology, and everything else, but create a vision of the service where we will take care of this for our customers”

John Michel
(CEO, CircleBlack)

 

 

CEO Summit XXV
Panelist

John Michel
(CEO, CircleBlack)

 

 

 

 

 

 

 

 

John Michel is CEO of CircleBlack.

Mr. Michel's comments included:

  • "The price question is the wrong question"
  • "The financial services industry needs to figure out how to be a fiduciary but not undress the client during the first meeting"
  • "Why is it that Jon Corzine does not go to jail when he clearly approved the use of customer funds?"
  • "Bloomberg has never dropped it's price, instead they continually focus on how to create more value"
  • "The value of tactical allocation is in its timeliness"

Blake Mohr
(CEO, Capitas Financial)

 

 

CEO Summit XXV
Panelist

Blake Mohr
(CEO, Capitas Financial)

 

 

 

 

 

 

 

 

Blake Mohr is CEO of Capitas Financial. Previously, Mr. Mohr held several senior management positions for ReliaStar Life Insurance including Chief Financial Officer for the worksite Financial Services business unit. During his time at ReliaStar Life Insurance Mr. Mohr was responsible for managing the company’s 401k business. Prior to ReliaStar Life Insurance, Mr. Mohr was a member of the audit staff for Coopers & Lybrand.

Mr. Mohr's comments included:

  • "The difference in ways that various types of firms use insurance in financial plans is incredible and speaks to the inconsistency of advice in the financial services industry"
  • “Most financial advisors cannot be all things to all people”
  • “Half of the revenue that Northwestern Mutual insurance agents earn comes from investments”
  • "We provide the insurance advice, and we're basically the virtual insurance department for a stockbroker, bank, CPA, or independent advisor. Capitas Financial works with people who are not insurance experts. We become their insurance department"
  • "Northwestern Mutual insurance agents that were once our competitors are now customers because they are less familiar with how to handle the complicated insurance needs of their higher-net-worth clients"

Robert Moore
(President, LPL Financial)

 

 

CEO Summit XXV
Panelist

Robert Moore
(President, LPL Financial)

 

 

 

 

 

 

 

 

Robert Moore is President of LPL Financial. After joining the company in 2008 to lead financial operations, he transitioned in 2012 to the role of president, with a focus on identifying and enhancing revenue opportunities, both through new business ventures and through the delivery of services that support the growth of its customers. His role was further expanded in 2013 to include oversight of several distinct business lines, including Independent Advisor Services, Institution Services, & Retirement Partners, in addition to continuing his previous responsibilities for investment platform solutions, investment & planning solutions, high net worth solutions (including Fortigent and The Private Trust Company), research, LPL Insurance Associates, and marketing. Prior to LPL Financial, from 2006-2008, Mr. Moore served as CEO at ABN AMRO North America and LaSalle Bank Corporation. Before this role, Mr. Moore worked for Diageo, Europe and Great Britain, in a number of finance management positions, ultimately serving as chief financial officer.

Mr. Moore's comments included:

  • "The vast majority of Dodd Frank is meant to regulate good behavior"
  • “The way advice is provided will change, but the need for advice will not change”
  • "When it comes to demographics, the financial services industry is looking through the rear view mirror not the windshield"
  • “The issue of recruiting & training new advisors is become more critical every day”
  • “In the past few years successful advisors have been able to re-engage with their clients and successfully deliver on their plans”
  • “We would love to see harmonization, but that would mean regulation for registered investment advisors”

John Rafal
(CEO, Essex Financial Services)

 

 

CEO Summit XXV
Panelist

John Rafal
(CEO, Essex Financial Services)

 

 

 

 

 

 

 

 

John Rafal is CEO of Essex Financial Services, a Connecticut financial services firm with more than $3.9 billion in assets under management. Mr. Rafal has more than 30 years of experience in financial advisory services and has received numerous industry awards in the field of investment management. Mr. Rafal was named the top independent financial advisor in the country by Barron’s Magazine for 2007 & 2008. Mr. Rafal was named as one of the best 100 financial advisers in the United States by Barron’s Magazine in 2004-2013. Most recently, Mr. Rafal was named as the State of Connecticut’s top financial advisor by Barron’s in its 2013 special report on the top 1,000 financial advisors.

Mr. Rafal's comments included:

  • "Live where the client lives and nurture relationships"
  • "Keeping clients out of trouble is a lot of what we do today"
  • "Most of our clients are sophisticated, long-term investors, and the latest IPOs are not something that they are seeking”
  • “The gravitation toward hot products and hedge funds, which come and go, is not what we are about"
  • "There is a Red Sea of advsory firms, all very fragmented. Very few are building enterprise value"

Rich Rosenbaum
(Principal, Aquiline Capital Partners)

 

 

CEO Summit XXV
Panelist

Rich Rosenbaum
(Principal, Aquiline Capital Partners)

 

 

 

 

 

 

 

 

Rich Rosenbaum is a Principal of Aquiline Capital Partners.

Mr. Rosenbaum's comments included:

  • "You want to be in the business of selling picks & shovels to the miners, not worrying about which miner is going to strike gold”
  • “We like investments in which we can be in a position of influence and where we can bring more to the deal than just money"
  • "Technology-enabled businesses are interesting. It is helpful to hear about what these firms are doing"
  • "One of the cardinal rules of private equity is thou shall not lose capital"
  • "Investors need solutions, not products"

Simon Roy
(President, Jemstep)

 

 

CEO Summit XXV
Panelist

Simon Roy
(President, Jemstep)

 

 

 

 

 

 

 

 

Simon Roy is President of Jemstep. Mr. Roy is an experienced entrepreneur and executive and has been involved as an investor, consultant, & CEO in several successful Silicon Valley companies. Mr. Roy served as CEO of successful enterprise start-up Accrue Software, which was subsequently listed on the NASDAQ. Previously, he was a senior consultant with McKinsey & Company for several years, serving financial institutions in New York.

Mr. Roy's comments included:

  • “I think structure is an area where algorithms have a difficult time”
  • “Consumers are in a trust-but-verify mode which translates to increased self-directed activity”
  • “The challenge for online financial services is in linking timely, relevant advice with the low cost implementation model”
  • “A key challenge for online financial services is preparing clients for the next 2008”
  • "One of the things the financial services industry can do to create a more informed investor is to improve financial literacy through learning-by-doing"

Greg Tschider
(CEO, Verisight)

 

 

CEO Summit XXV
Panelist

Greg Tschider
(CEO, Verisight)

 

 

 

 

 

 

 

 

Greg Tschider is CEO of Verisight. Originally founded in 1985 as Pension Specialists, Verisight was rebranded under Mr. Tschider’s leadership in 2011 following the successful integration of NextStep Defined Contribution and the Human Capital Services division of RSM McGladrey. Previously, Mr. Tschider served as president of Wilmington Trust Company & Pension Specialists and its predecessor company AST Capital Trust Conpany of
Delaware. Prior to AST Capital Trust Company of Delaware Mr. Tschider served as general counsel and a member of the interim management team of Security Trust Company.

Mr. Tschider's comments included:

  • "Banks are beginning to understand that for most people, their first interaction with investments is a 401K plan"
  • "Clients are demanding lower fees and more services. Everyone is struggling to meet this challenge, custodians, plan administrators, investment managers, & advisors"
  • “The middle market has historically been underserved. We are just now seeing services that have been offered for the upper part of the market migrating down”
  • “Fee disclosure will enable 401K participants to make better decisions. They will be able to ask ‘what is the value of that active fund versus the index fund, and is that value worth the additional price’”
  • "Today, the providers that focus on the middle market are starting to change their models, and some are pricing per participant"

Hardeep Walia
(CEO, Motif Investing)

 

 

CEO Summit XXV
Panelist

Hardeep Walia
(CEO, Motif Investing)

 

 

 

 

 

 

 

 

Hardeep Walia is CEO of Motif Investing. Mr. Walia co-founded Motif Investing to create an intuitive way to invest in real-world ideas. He started Motif after spending more than six years in executive positions at Microsoft, including serving as general manager of Microsoft's $2.0 billion enterprise services business. He was also director of corporate development and strategy, helping to oversee Microsoft's investments and acquisitions. Mr. Walia began his career as a consultant with the Boston Consulting Group.

Mr. Walia's comments included:

  • "Never underestimate the power of algorithms"
  • "We do not think you can pick stocks successfully, but you can do well by investing based upon focusing on the right ideas"
  • "Fees have not dropped anywhere near as much as they could drop"
  • "The online start-up businesses are going to change the role of the advisor. These new models can be an advisor's best friend"
  • “Madoff would not have happened if every fund vehicle had a social network around it”

Michelle Watson
(Chief Investment Officer, First Republic Investment Management)

 

 

CEO Summit XXV
Panelist

Michelle Watson
(Chief Investment Officer, First Republic Investment Management)

 

 

 

 

 

 

 

 

Michelle Watson is Chief Investment Officer of First Republic Investment Management. Ms. Watson is responsible for setting the strategic vision of the firm’s investment process and platform. She maintains oversight of an open architecture investment process that includes internally developed investment solutions as well as an external, third-party manager platform. Ms. Watson also chairs the firm’s asset allocation and investment approval committees. Previously, Ms. Watson worked for U.S. Trust Company as a key contributor in the development and growth of its multi-strategy, open architecture program. Prior to US Trust Company, Ms. Watson worked in investment consulting & manager research at CTC Consulting.

Ms. Watson's comments included:

  • "We are going to have to change the way we think about wealth management given technology.  It is necessary to provide significantly more customized services if we expect to get paid"
  • "We do ourselves a disservice in the way we talk to clients on a quarterly basis. It serves us, not the client"
  • "Traditional investment advice is becoming commoditized"
  • "With the Internet and online investment tools, it is very easy for consumers to do it themselves"
  • "Customization will be the key to getting paid" 
  • "Impact investing will become more important"

Elliot Weissbluth
(CEO, HighTower)

 

 

CEO Summit XXV
Panelist

Elliot Weissbluth
(CEO, HighTower)

 

 

 

 

 

 

 

 

Elliot Weissbluth is CEO of HighTower, a national advisor-owned financial services company serving high net worth and institutional clients. Prior to HighTower, Mr. Weissbluth was the president of US Fiduciary, a boutique broker dealer, and director of marketing & research at Rogers Casey, one of the nation's leading investment research and institutional registered investment advisory firms. Mr. Weissbluth serves on a number of for profit and non-profit boards, notably as a Trustee of Interlochen, Center for Performing Arts in Michigan.

Mr. Weissbluth's comments included:

  • "A week does not go without some idiot doing something to give the financial services industry a black eye. We intend to work toward restoration of trust"
  • "The broker/dealer is not full of toxic components. We believe that the broker/dealer is a necessary part of the right model"
  • "Culture and brand are major drivers as to why advisors seek out new firms"
  • “The old dialogue which was ‘independent good; Wall Street bad,’ was never an intellectually honest discussion”
  • “The optimal financial services firm leverages the competitive spirit of Wall Street, bringing the cream to the top, and does that inside an independent fiduciary service model, which is optimal to the individual investor”

Chuck Widger
(Chairman, Brinker Capital)

 

 

CEO Summit XXV
Panelist

Chuck Widger
(Chairman, Brinker Capital)

 

 

 

 

 

 

 

 

Chuck Widger is Chairman of Brinker Capital. Mr. Widger is the founder of Brinker Capital and has over 30 years of experience working with investors in strategic investment planning, and manager search & monitoring. He is a past chairman of the board of trustees for Gettysburg College and is chairman emeritus of the Money Management Institute, the $2.1 trillion managed account industry’s association. He is also the chairman of the Villanova University School of Law Board of Consultors. He was previously CEO of the Mutual Benefit Capital Companies, first vice president with Van Kampen, Morris Stone, and a vice president at CIGNA. Earlier in his career, he practiced law in Pennsylvania in private practice and as an assistant attorney general for the Pennsylvania Department of Justice. Mr. Widger has been featured on CNN’s Money Line and quoted in Barron’s and other financial publications. He is a frequent market and industry commentator, with his thoughts having appeared in top outlets such as The Wall Street Journal, Associated Press, Dow Jones, Investment Advisor, Fund Action, and many other media outlets. Mr. Widger also served as a Lieutenant in the United States Navy.

Mr. Widger's comments included:

  • “The problem with historical benchmarks is that they do not work. When the volatility hits the fan, if you are investing in the Standard & Poors 500, you wind up running for cash. Then when the market recovers you lose out on the recovery. It does not work”
  • “The industry needs to redefine its value proposition. I think the value proposition needs to be personally oriented rather than provider oriented”
  • "What makes me especially proud is that our growth has been entirely organic, something that remains quite unusual in the asset management business"
  • "We have helped to incubate and foster the growth of many regional money managers who got their start by meeting the standards required to earn a place on our platform. We have also launched ideas such as fee-based clearing that not only spawned new firms but changed the business models at traditional clearing firms"
  • "The market environment of 2008 taught the investment industry many decisive lessons, not the least of which is the importance of being able to adjust portfolios quickly and nimbly in response to unanticipated market conditions"

Chris Wolfe
(Chief Investment Officer, Private Banking & Investment Group, Merrill Lynch Wealth Management)

 

 

CEO Summit XXV
Panelist

Chris Wolfe
(Chief Investment Officer, Private Banking & Investment Group, Merrill Lynch Wealth Management)

 

 

 

 

 

 

 

 

Chris Wolfe is Chief Investment Officer of Private Banking & Investment Group, Merrill Lynch Wealth Management. He also serves as head of global customized solutions with responsibility for coordinating strategies with the Merrill Lynch investment teams in Europe, the Middle East, Africa, Latin America, & Asia. Previously, Mr. Wolfe was head of investment strategy for Rockefeller & Company. Mr. Wolfe is the author of the monthly CIO Outlook.

Mr. Wolfe's comments included:

  • “We see the euro providing social good, not just as a monetary instrument
  • "CEOs have done a very good job protecting their margins; we expect them to continue doing that. C corp earnings will be sustained"
  • "We have seen a huge transformation in thinking"
  • "Doom & gloom need to understand that they are expecting a change in CEO thinking”
  • "Our rush to simplify has made the conversations about performance disengenuous. We need to educate consumers about money as a means to an end"

Mike Woods
(CEO, DWS Investments Distributors)

 

 

CEO Summit XXV
Panelist

Mike Woods
(CEO, DWS Investments Distributors)

 

 

 

 

 

 

 

 

Mike Woods is CEO of DWS Investments Distributors and Head of Americas, Global Client Group, Deutsche Asset & Wealth Management. Mr. Woods has almost two decades of experience covering the US investment market. Previously, Mr. Woods served as head of the financial intermediaries & investments group at Evergreen Investments. Prior to Evergreen Investments, Mr. Woods was CEO of XTF Global Asset Management, a New York-based quantitative exchange traded fund asset manager, and spent more than six years as US head of sub-advisory and interest-only business at Citigroup Asset Management.

Mr. Woods' comments included:

  • "The asset management industry is all about understanding what the client wants and solving for those needs. You always start with the client and work backwards"
  • "Retail clients continue to desire access to alternative products, preferably within a 40 act wrapper"
  • "There are two types of players in the ETF market, those who provide undifferentiated and cheap beta, and those who innovate to meet client needs"
  • "The Deutsche Bank footprint is the most powerful engine that Deutsche Asset & Wealth Management has. Institutional clients value capital markets expertise, depth & breadth of product, and strong firm level client relationships"
  • "Distribution at Deutsche Asset & Wealth Management is about introducing clients to the breadth of organizational solutions through generalist sales, supported by product specialists with deep product level knowledge"

 

 

Attendees


Tiburon was pleased to welcome 186 Tiburon client attendees to Tiburon CEO Summit XXV, including:

 

  • Chip Roame (Managing Partner, Tiburon Strategic Advisors)
  • Rick Adler (Co-Founder, Convergent Capital Management)
  • Sonia Ahuja (Executive Vice President, Business Development & Strategy, BrightScope)
  • Mike Alfred (CEO, BrightScope)
  • Ryan Alfred (President, BrightScope)
  • Mike Apker (Business Head, Reporting & Data Aggregation Services, Envestnet)
  • Daniel Applegarth (Chief Financial Officer, NorthStar Financial Services Group)
  • Carla Avila (Business Head, Financial Institutions, Baron Capital Group)
  • Chuck Baldiswieler (CEO, TCW Funds)
  • David Barry (CEO, Trust Company of America)
  • Tony Batman (CEO, 1st Global Capital Corporation)
  • David Baum (Partner, Investment Products & Services Group, Alston & Bird)
  • Noreen Beaman (CEO, Brinker Capital)
  • Craig Birk (Chief Investment Officer, Personal Capital Corporation)
  • Mag Black (CEO, Beverly Hills Wealth Management)
  • Catherine Bonneau (CEO, Cetera Financial Institutions)
  • Joe Bottazzi (Executive Vice President, Business Development, Edelman Financial Services)
  • Peter Boyle (President, Clifford Swan Investment Counsel)
  • Kurt Brouwer (Chairman, Brouwer & Janachowski)
  • Todd Brunskill (Chief Marketing Officer, First Rate Investment Systems)
  • John Bunch (CEO, The Mutual Fund Store)
  • Caleb Burchenal (Partner, Berkshire Capital Securities)
  • Brad Burgess (Chief Technical Officer, Orion Advisor Services)
  • Derek Burke (President, First Investors Management Company)
  • Dewey Bushaw (Executive Vice President, Retirement Solutions Division, Pacific Life Insurance Company)
  • Jessica Campbell (Executive Vice President, Client Success, BrightScope)
  • Chris Candelaria (Business Head, MyVest Advisors)
  • David Canter (Executive Vice President, Practice Management & Consulting, Fidelity Institutional Wealth Services)
  • Mike Capelle (Executive Vice President, United Capital Financial Partners)
  • Mitch Caplan (CEO, Jefferson National Financial)
  • John Carey (Chief Operating Officer, FolioDynamix)
  • James Carney (CEO, By All Accounts)
  • Ron Carson (CEO, Carson Wealth Management Group)
  • Sasank Chary (Principal, Sageview Capital)
  • Kevin Cimring (CEO, Jemstep)
  • Bernie Clark (Executive Vice President, Advisor Services, The Charles Schwab Corporation)
  • Eric Clarke (President, Orion Advisor Services)
  • Mike Clinton (Chief Operating Officer, Loring Ward Group)
  • David Conover (President, Wealth Management & Brokerage, EverBank Financial)
  • Ron Cordes (Co-Chairman, Genworth Financial Wealth Management)
  • Brian Corkery (Business Head, National Accounts, North America, Wealth Management Services, Citi Open Wealth, Citi Investor Services)
  • Jim Cox (Chief Financial Officer, Advent Software)
  • John Coyne (Vice Chairman, Brinker Capital)
  • Bernie Clark (Executive Vice President, Advisor Services, The Charles Schwab Corporation)
  • Bill Crager (President, Envestnet)
  • Ben Cukier (Partner, FTV Capital)
  • Linda Davis Taylor (CEO, Clifford Swan Investment Counsel)
  • Stuart DePina (President, Envestnet Tamarac)
  • John DeVincent (Executive Vice President, Marketing, eMoney Advisor)
  • Rich Dion (President, Placemark Investments)
  • Steve Dorval (Business Head, Defined Contribution Investments, NYLIM Retirement Plan Services, New York Life Investment Management)
  • Jeffrey Dunham (CEO, Dunham & Associates Investment Counsel)
  • Joe Duran (CEO, United Capital Financial Partners)
  • Mike Durbin (President, Fidelity Institutional Wealth Services)
  • Ric Edelman (CEO, The Edelman Financial Group)
  • Pete Engelken (President, Pathway Strategic Advisors)
  • Mike Everett (Chief Business Development Officer, MyVest Corporation)
  • Michelle Farmer (General Counsel, Advisor Software)
  • Carrie Fleisher (Chief Risk & Compliance Officer, M Holdings Securities)
  • Ed Forst (CEO, Lincoln Investment Planning)
  • Chris Frieden (Partner, Financial Services & Products, Alston & Bird)
  • Matt Frymier (President, Corrum Capital Management)
  • Mark Goldberg (President, Carey Financial)
  • Dan Goldie (CEO, Dan Goldie Financial Services)
  • Ted Gooden (Partner, Berkshire Capital Securities)
  • Craig Gordon (Business Head, RBC Correspondent & Advisor Services)
  • Mark Gormley (Partner, Lee Equity Partners)
  • Scott Graflund (Partner, FallLine Strategic Advisors)
  • Gail Graham (Business Head, Strategy & Execution, United Capital Financial Partners)
  • Larry Greenberg (President, Jefferson National Financial)
  • Oscar Hackett (Chief Financial Officer, BrightScope)
  • Charlie Haims (Chief Marketing Officer, MyVest Corporation)
  • David Hansen (Business Head, Advisory Services, San Francisco Sentry Investment Group)
  • Scott Hanson (Co-CEO, Hanson McClain)
  • Lori Hardwick (Executive Vice President, Enterprise & National Sales, Envestnet)
  • Neesha Hathi (Chief Operating Officer, Schwab Performance Technologies)
  • Craig Hawley (General Counsel, Jefferson National Financial)
  • Brooks Herman (Business Head, Research, BrightScope)
  • Bob Herrmann (CEO, Discovery Data)
  • Pete Hess (CEO, Advent Software)
  • Kyle Hiatt (Executive Vice President, Orion Advisor Services)
  • Steve Hill (Chief Financial Officer, By All Accounts)
  • Gary Holland (Publisher, Barron’s)
  • Anton Honikman (CEO, MyVest Corporation)
  • Kara Hoogensen (Business Head, Defined Contribution Investment Only Business, Principal Funds)
  • Bob Huebscher (CEO, Advisor Perspectives)
  • Bob Huret (Founding Partner, FTV Capital)
  • Mark Hurley (CEO, Fiduciary Network)
  • Tom Idzorek (President, Morningstar Investment Management)
  • Steve Janachowski (CEO, Brouwer & Janachowski)
  • Peter Jantzen (Executive Vice President, Global Sales, Vestmark)
  • Kunal Kapoor (President, Global Client Solutions Group, Morningstar)
  • Zack Karabell (President, River Twice Capital Advisors)
  • Joe Kelly (Business Head, Sales, National Financial Services)
  • Dan Kern (President, Advisor Partners)
  • Michael Kim (Business Head, Business & Sales Channel, Genworth Wealth Management)
  • Rob Klapprodt (President, Vestmark)
  • David Knoch (President, 1st Global Capital Corporation)

 

  • Paul Koontz (General Partner, Foundation Capital)
  • Dan Krems (Executive Vice President, Corporate Strategy, LPL Financial)
  • Boaz Lahovitsky (Business Head, Wealth Manager Services, Wealth & Asset Manager Services, Securities & Fund Services, Citigroup Global Transaction Services)
  • Randy Lambert (Chief Operating Officer, Orion Advisor Services)
  • John Lame (CEO, Lenox Wealth Management)
  • Stephen Langlois (Chief Administrative Officer, National Financial Services)
  • David Lau (Chief Operating Officer, Jefferson National Financial)
  • Chuck Lewis (Vice Chairman, MyVest Corporation)
  • John Linnehan (Chief Financial Officer, Guggenheim Investments)
  • Steve Lockshin (Chairman, Convergent Wealth Advisors)
  • Matt Lynch (Principal, Tiburon Strategic Advisors)
  • Jeff Maggioncalda (CEO, Financial Engines)
  • Frank Maiorano (Business Head, RIA Business, Baron Capital Management)
  • Peter Mangan (CEO, Shareholder Services Group)
  • Pat McClain (Co-CEO, Hanson McClain)
  • Jim McCool (Executive Vice President, Institutional Services, The Charles Schwab Corporation)
  • Matt McGinness (Senior Managing Director, Advisory Consulting Services, First Allied Securities)
  • Bob Meeder (CEO, Meeder Investment Management)
  • Bob Mehringer (Executive Vice President, Advisory Services, FolioDynamix)
  • John Michel (President, Bloomberg Personal Wealth)
  • Sanjiv Mirchandani (President, National Financial Services)
  • Blake Mohr (CEO, Capitas Financial)
  • Viggy Mokkarala (Executive Vice President, Strategic Development, Envestnet)
  • Randy Moore (Partner, Financial Services & Products Group, Alston & Bird)
  • Robert Moore (President, LPL Financial)
  • Hans Morris (Managing Director, Global Financial Services Sector, General Atlantic Partners)
  • Joe Mrak (CEO, FolioDynamix)
  • Tim Murphy (CEO, Investors Capital Corporation)
  • Roger Ochs (President, HD Vest Financial Services)
  • Bill O’Conor (Leader, Financial Services Group Media, Penton Media)
  • Tom Oliver (CEO, United Planners Financial Services of America)
  • Harry O’Mealia (CEO, Legg Mason Investment Counsel)
  • Curt Overway (President, Managed Portfolio Advisors, Natixis Global Associates, Natixis Global Asset Management)
  • Damian Peter (President, Larkin Point Investment Advisors)
  • John Phillips (Executive Vice President, Strategic & Global Sales, National Financial Services)
  • Jose Pierre (CEO, Marketware)
  • Michael Pinsker (CEO, Docupace Technologies)
  • Mark Piquette (Chief Marketing Officer, Trust Company of America)
  • Alex Potts (CEO, Loring Ward Group)
  • Andy Putterman (CEO, Fortigent)
  • John Rafal (CEO, Essex Financial Services)
  • George Riedel (Business Head, Intermediary Distribution, Third-Party Distribution, T. Rowe Price Group)
  • Neal Ringquist (President, Advisor Software)
  • Lisa Roberts (Business Head, Northern California, Citi Private Bank, Citigroup)
  • John Rooney (Managing Principal, Commonwealth Financial Network)
  • Rich Rosenbaum (Principal, Aquiline Capital Partners)
  • Jeremy Ross (Executive Vice President, Sales, BrightScope)
  • Gary Roth (Chief Financial Officer, United Capital Financial Partners)
  • Simon Roy (President, Jemstep)
  • Andrew Rudd (CEO, Advisor Software)
  • Kyle Ryan (Executive Vice President, Advisory Services, Personal Capital Corporation)
  • Rick Sanchez (Managing Partner, Seacrest Investment Management)
  • Paul Sari (Business Head, Institutional Client Development, BNY Mellon Wealth Management)
  • Jon Schepke (CEO , SIM Partners)
  • Jeff Schnitz (Business Head, Silicon Valley Bank Investments)
  • Aaron Schumm (Chief Customer Officer, FolioDynamix)
  • Skip Schweiss (President, TD Ameritrade Trust Company)
  • Jay Shah (Chief Operations Officer, Personal Capital Corporation)
  • Sterling Shea (Business Head, Advisory Programs, Barron’s)
  • Babu Sivadasan (Executive Vice President, Engineering & Product Development, Envestnet)
  • David Smith (Founding Publisher, Financial Advisor & Private Wealth Magazines, Charter Financial)
  • Milo Sprague (Chief Technology Officer, Silicon Valley Bank)
  • Chris Stanley (General Counsel, Loring Ward Group)
  • Leslie Swid (Executive Vice President, Impact Communications)
  • Marie Swift (CEO, Impact Communications)
  • Jim Tanner (Business Head, Global Business Development & Sales, Morningstar)
  • Frank Trotter (President, EverBank Direct)
  • Greg Tschider (CEO, Verisight)
  • Tony Turner (Principa, Financial Tracking)
  • John VanDerHeyden (Chief Operating Officer, NFP Advisor Services Group)
  • Joe Vap (Chief Financial Officer, Jefferson National Financial)
  • Greg Vigrass (CEO, Folio Institutional)
  • Hardeep Walia (CEO, Motif Investing)
  • Rich Walker (CEO, Efficient Technology)
  • Kathy Wallman (Co-Founder, Foliofn)
  • Steve Wallman (CEO, Foliofn)
  • Steve Warren (Chief Operating Officer, MyVest Corporation)
  • Michelle Watson (Chief Investment Officer, First Republic Investment Management)
  • Elliot Weissbluth (CEO, HighTower)
  • Chuck Widger (Chairman, Brinker Capital)
  • Craig Wietz (President, First Rate Investment Systems)
  • Jane Williams (CEO, Sand Hill Global Advisors)
  • Marty Willis (Chief Marketing Officer, Oppenheimer Funds)
  • Matt Wilson (President, Brokerage, Scottrade)
  • Michael Winchell (CEO, Larkin Point Investment Advisors)
  • Chris Wolfe (Chief Investment Officer, Private Banking & Investment Group, Merrill Lynch Wealth Management)
  • Mike Woods (CEO, DWS Investments Distributors)
  • Mike Zebrowski (Chief Operating Officer, eMoney Advisor)

 

 

 

Media Representatives

Tiburon was also pleased to welcome five journalists who registered to attend specific sessions at Tiburon CEO Summit XXV:

  • Dave Armstrong (Managing Editor, Wealth Management.Com)
  • Dan Jamieson (Senior Editor, Investment News)
  • Janet Levaux (Managing Editor, Research Magazine)
  • Collin Micah (Video Producer, Impact Productions Group)
  • Brooke Southall (Editor-in-Chief, RIA Biz)

Tiburon CEO Summit Video Highlights

  • Tiburon CEO Summit XXV Videos Coming Soon

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tiburon CEO Summit XXIV: April 9-10, 2013

Tiburon CEO Summit XXIV was held April 9-10, 2013, at the Ritz Carlton Hotel in New York, NY. Tiburon CEO Summit XXIV officially started at 7:45am on Tuesday, April 9, 2013, included a group dinner that night and finished at 1:00pm on Wednesday, April 10, 2013. There were 225 senior industry executives who took two days out of their busy schedules to participate. There were over twenty sessions. Along with Tiburon's Managing Partner Chip Roame & Tiburon Principal Matt Lynch, Tiburon CEO Summit XXIV included economy & markets presentations by Rich Bernstein (CEO, Richard Bernstein Advisors) & Bob Doll (Chief Equity Strategist, Nuveen Asset Management), and speakers & panelists, including Jud Bergman (CEO, Envestnet), Tom Bradley (President, Retail Distribution, TD Ameritrade), Dale Brown (CEO, Financial Services Institute), Valerie Brown (CEO, Cetera Financial Group), David Bugen (Founding Principal, Regent Atlantic Capital), Ric Edelman (CEO, The Edelman Financial Group), Harold Evensky (President, Evensky & Katz), George Gatch (CEO, JP Morgan Funds Management), Bill Harris (CEO, Personal Capital Corporation), Paul Hatch (Vice Chairman, Morgan Stanley Wealth Management), Chet Helck (CEO, Global Private Client Group, Raymond James Financial), Jim Jessee (President, MFS Fund Distributors), Jonathan Korngold (Managing Director, General Atlantic Partners), Sallie Krawcheck (Former President, Global Wealth & Investment Management, Bank of America Corporation), Steve Lockshin (Chairman, Convergent Wealth Advisors), Don Phillips (President, Research, Morningstar), Scott Powers (CEO, State Street Global Advisors), Larry Roth (CEO, Advisor Group, American International Group (AIG)), Esther Stearns (CEO, NestWise), Mark Tibergien (CEO, Pershing Advisor Solutions), David Tittsworth (Executive Director, Investment Adviser Association), & Fred Tomczyk (CEO, TD Ameritrade). Tiburon CEO Summit XXIV also featured the firm's traditional client-centric panel discussions, three less formal break-out sessions, & two networking-based social events.

Keynote Presentation

Tiburon CEO Summit XXIV featured a keynote presentation by Tiburon Managing Partner Chip Roame regarding the state of the financial services industry, with a specific focus on the growing wealth management market. This presentation served as the backdrop and overview of the entire Tiburon CEO Summit.

 

 

 



Summit XXIV
Keynote Presentation
Chip Roame
Managing Partner
Tiburon Strategic Advisors

 

 

 

 

 

 

Chip Roame (Managing Partner, Tiburon Strategic Advisors)

Tiburon Strategic Advisors is pleased to provide a summary of the content of its Tiburon CEO Summit XXIV keynote presentation. Chip Roame (Managing Partner, Tiburon Strategic Advisors) kicked off Tiburon CEO Summit XXIV with a presentation broadly addressing the state of the financial services industry, with a specific focus on the growing wealth management market.

 

Charles ("Chip") Roame is the Managing Partner of Tiburon Strategic Advisors and a leading strategic consultant to CEOs, other senior executives, & boards of directors in the banking, insurance, brokerage, & investments markets. Prior to forming Tiburon in 1998, Mr. Roame served in similar capacities, first as a management consultant at McKinsey & Company, and later as a business strategist at The Charles Schwab Corporation. Mr. Roame is quoted daily throughout the media and, due to Tiburon's widely shared research, he may be the most frequently demanded board advisor. His particular expertise is that of corporate strategy for larger financial services firms, designing broad multi-faceted strategies and making trade-offs between alternative businesses, products, & markets.

 

At Tiburon, Mr. Roame has responsibility for all of the firm's consulting, research, & marketing activities which keeps him on the leading-edge of strategic initiatives in the industry's fastest growing businesses -- mutual funds, exchange traded funds, hedge funds & other alternative investments, financial planning, wealth management services, life insurance, annuities, family office services, online financial services, and the growing independent advisor markets. He has also taken a substantial interest in financial services industry venture capital & private equity opportunities and mergers & acquisitions transactions. At Tiburon, Mr. Roame has led over 1,500 client engagements for over 350 corporate clients since 1998.

 

Mr. Roame has won numerous awards throughout the consulting and financial services industries, including being named one of the power 25 elite by Investment News, one of the 25 most influential individuals in the advisor business by Investment Advisor magazine, & one of the five experts with the answers by Boomer Market Advisor. Tiburon has also been named one of the fastest growing companies by the San Francisco Business Times in multiple years.

 

Mr. Roame is frequently sought as a board member by Tiburon client company boards. He presently serves as a board member at Envestnet (NYSE: ENV) and as a trustee for the SA mutual funds family which is sponsored by Loring Ward and employs Dimensional Fund Advisors as its sole sub-advisor.

 

Overview of Tiburon CEO Summit XXIV Keynote Presentation

 

Mr. Roame addressed the state of the financial services industry, with a specific focus on the growing wealth management market, including the most important news stories in the past six months, recent Tiburon research findings, third-party research findings, and strategic developments at dozens of Tiburon clients. Mr. Roame expressed that his objectives were fourfold, including not simply reporting existing trends but attempting to predict future trends; digging below trends to identify successful corporate strategies; reviewing all opportunities in a relative way akin to the process at private equity firms; and setting an agenda for Tiburon CEO Summit XXIV.

 

Before presenting 177 PowerPoint charts supporting Tiburon’s views, Mr. Roame outlined what he labeled as the 35 fundamental trends. A comprehensive list of these 35 trends is included below as part of Mr. Roame’s conclusions.

 

After reviewing the 35 fundamental trends, Mr. Roame began with some opening notes, including a few additional thoughts on the economy & markets, followed by a “know your market” test, which traditionally stumps most Tiburon CEO Summit attendees. The “test” included facts about consumers and industry competitors. Mr. Roame then outlined the future of wealth management, including rapidly evolving investment approaches & products; the independent advisors & consumer empowerment movements; and institutional & international opportunities. Mr. Roame also addressed two potential game changers, including governance & regulatory issues, and potential strategic activity.

 

Opening Notes

 

Mr. Roame began the analysis portion of his presentation with a few additional economy & markets points as they pertain to business issues. For perspective, he noted that the Dow Jones Industrial Average is back to the level of Tiburon CEO Summit XIII (October 2006 or 6 years ago) and is up 80% since Tiburon CEO Summit XVI (April 2008 or five years ago). He also posed some questions, including whether investors have grasped that the stock markets have been up for the past four years, and the likely impact of industry executives having low market expectations. He revealed that Tiburon CEO Summit XXIV attendees on average expect the Dow Jones Industrial Average to reach just 14,723 by October 2013 for Tiburon CEO Summit XXV. Mr. Roame also encouraged attendees to consider how firms will generate revenues if interest rates remain low for several more years. Again, revealing the results of a survey of Tiburon CEO Summit XXIV attendees, he noted that the ten year treasury rate is not expected to reach 3.00% until 2015 or beyond. Mr. Roame also wrapped up this section of his presentation reminding the group that the industry had yet another semi-annual period with one stumble after another, including with the SAC Capital Advisors settlement, Raj Rajaratnam conviction, and both Jerome Kervel (SocGen) and Kweku Adoboli (UBS) being sent to prison.

 

The second section of Mr. Roame’s presentation was his traditional “know your market” test. He updated the Tiburon CEO Summit XXIV attendees on the latest Federal Reserve Flow of Funds data and tried to impress upon them some key points buried in the data:

  • Consumer household net worth at the end of 2012 reached the 2007 peak level of $66.1 trillion
  • Common perception is that consumers were slow to re-enter the stock markets but the bulk of investable assets sits in individual securities that were not liquidated and/or with high net worth households and in defined contribution plans, so investable assets are up substantially more than talking heads imply. Specifically, investable assets, retirement plan assets, & financial assets all up ~10% since 2007 (“industry view”)
  • Meanwhile, personal assets, real estate assets, real estate equity, & private business valuations all still down 15%-20% since their 2005-2006 peaks
  • In aggregate, consumer household assets are down 10% since 2007
  • Consumer household debt is down 5% since 2007 (also down from 14.0% to 10.5% debt to disposable income)
  • Consumer household net worth ended 2012 at the same level as 2007 ($66.1 trillion) (six years of no growth)

Mr. Roame stated, "consumers have the same net worth now that they had at the end of 2007 ($66.1 trillion)," but that, "underlying this aggregate fact are some impactful points; consumers have more financial assets and less debt but also less personal assets (due to depressed housing prices)." As a result, he concluded that, "consumers looking through a personal assets lens (e.g., the value of their homes) still feel and are poor," while "the shift from personal assets to financial assets has disproportionally benefited the 8% of households who own most of the financial assets."

Mr. Roame spent a minute on the well known consumer wealth concentration, saying that, “consumer households with less than $500,000 investable assets make up 91% of all consumer households but control just 23% of financial assets.” Meanwhile, the affluent market comprises just 8% of consumer households but controls 77% of financial assets.

Mr. Roame believes that baby boomers continue to face four major financial issues, including their own aging, their lengthening life expectancies, inheritances that are not materializing, and now the twin thoughts of boomerang children and parents needing elder care. Mr. Roame predicted that, "baby boomers will liquidate their retirement plans, homes, & small businesses over the next two decades, driving continual flow of assets to the investable assets business."

Mr. Roame also addressed the resulting consumer attitudinal & behavioral changes, including those driven by the widening wealth gap. He addressed consumer confidence, consumer sentiment, and the substantial financial services industry trust gap. He also addressed behavioral changes, including consumers’ reduced spending, some deleveraging, some increased savings, net flows out of equity mutual funds, and the renewed growth in the self-serve channels. He revealed another Tiburon CEO Summit XXIV attendee survey result which was that attendees expect consumer household home mortgage debt to stabilize or increase in 2013, ending the deleveraging.

Mr. Roame also tested attendees knowledge of their competitors, saying that, "no product or distribution firm has any significant market share." He pointed to the still dominant market position of the wirehouses, and yet predicted that, “Schwab Institutional will catch UBS in assets under administration in 2013.” He also noted the dominance of BlackRock, which has $3.8 trillion assets under management.

The Future of Wealth Management

Mr. Roame addressed the rapid evolution of investment approaches, including the shifting of fundamental investment strategies, the defensive bias driving fixed income & cash allocations, evolving retirement income & guarantees strategies, and the growing dominance of rep as advisor & portfolio manager programs. Mr. Roame said, "buy & hold was the best investment strategy in the past four years after many industry experts were calling for more tactical asset allocation," and that, “rep as advisor & rep as portfolio manager programs are collecting all of the assets but their returns are often weaker than consumer direct.” Mr. Roame summarized many facts:

  • Packaged fee-account programs gathered more net flows than either ETFs or mutual funds in 2012
  • Advisor managed portfolios increasingly include mutual funds & ETFs
  • Packaged product flows were up over 100% in 2012, suggesting good results for many investment products
  • ETFs and mutual funds had similar net flows in 2012, both far ahead of separately managed accounts
  • Fixed income, balanced, & alternative mutual funds all had positive net flows in 2012 while money market and equity funds had outflows
  • Over the past five years, bond mutual funds have had $1.1 trillion net flows, while equity ETFs have collected $0.6 trillion, and fixed income ETFs have collected $0.2 trillion. Meanwhile, equity mutual funds had $0.5 trillion of net outflows
  • Index mutual funds have gathered $821 billion assets under management, up over 100% since 1999
  • Exchange traded funds have gathered $1.3 trillion assets under management, up from $1.0 billion in 1993
  • Exchange traded funds have net flows of $187 billion, up 500% since 2001, and above their prior peak of $177 billion in 2008
  • Passive equity assets (index mutual funds & ETFs) now comprise 29% of equity mutual fund & ETF assets
  • Institutional mutual funds & ETFs have now surpassed no transaction fee mutual funds in assets under management
  • Tiburon CEO Summit attendees believe that ETFs will not surpass mutual fund assets under management until 2020 or beyond, if ever

After he concluded with views on a variety of other products, Mr. Roame returned to two key points, reminding the attendees that, “mutual funds and ETFs had nearly identical flows in 2012" and that, "equity mutual funds had negative net flows for five years but positive in the first quarter of 2013."

Moving beyond products to address channels, Mr. Roame framed the financial advisor channels as, “both the largest and fastest growing channel.” He shared that attendees predict that the financial advisor (56%) or self-serve (28%) channels will be the fastest growing channels over the next five years. He then outlined the independent advisor & consumer empowerment movements, starting by noting that, "independent advisor channels are picking up share of financial advisors more rapidly than of assets." He noted that, “the wirehouses continue to dominate assets under administration because their financial advisors are substantially more productive, averaging $92.6 million assets under administration per financial advisor.”

Mr. Roame then summarized the status of the wirehouses, regional broker/dealers, insurance reps, and bank reps markets. He noted that, “The Charles Schwab Corporation, TD Ameritrade, & Fidelity Investments are the leading fee-based financial advisor custodians in terms of number of fee-based financial advisor clients and control about half of the industry’s assets.”

Mr. Roame also addresses a wide variety of related issues to independent advisors, including the break-away brokers movement, fee-based financial advisors who are reaching scale, and technology & outsourcing strategies. He argued that the break-away broker trend ($92.9 billion assets in 2012) is not fully started and that the wirehouses could shut this trend down with higher retention payments and/or half-way house strategies. He called out the substantial business building skills of a few independent advisors, including Ric Edelman whose firm serves 20,000 clients. He took note of the rapid growth in outsourcing models like Orion Advisor Services which serves 575,000 accounts, and he predicted a substantial restructuring of the independent broker/dealers market. Mr. Roame stated, "independent broker/dealers are evolving to look more like custodians, TAMPs, and/or producer groups."

He also discussed the continued evolution of the consumer empowerment movement, starting by clarifying that, "the retail direct business is growing faster than the financial advisor channels" and that, “many financial advisors remain in the dark about their clients’ self-directed accounts.” Mr. Roame argued that when nobody has been watching, the self-serve trend has come back to life, including through the discount brokerage firms ($4.6 trillion assets) and the emergence of online only or online plus financial advisor models (Betterment; Covestor; Learnvest; Mint; Motif Investing; NestWise; Personal Capital Corporation; SigFig; & Wealthfront; etc.). Mr. Roame made a very edgy prediction that the number of discount brokerage offices will skyrocket while the number of bank branches will plummet.

Mr. Roame also discussed institutional & international market opportunities. As for the institutional markets, Mr. Roame first framed the opportunity, which includes about equal size defined contribution and defined benefit plan markets, and much smaller foundation and endowment markets. He also pointed to the substantial underfunded status of defined benefit plans and to the heavier use of alternative investments by endowments & foundations, with weaker resulting investment performance. In the international markets, he noted that 37% of the world’s population lives in China & India, that 48% of mutual fund flows are outside of the US, that the ETF trend is circling the globe, and that both the United Kingdom and Australia have banned commissions on investment product sales. In conclusion, he said that, “changes in the defined contribution plans market and the emergence of the international middle class are re-opening both of these opportunities."

Potential Game Changers

Mr. Roame then shared that he believes that there are two potential game changers, including governance & regulatory issues, and potential strategic activity.

Mr. Roame shared a few views and Tiburon CEO Summit XXIV attendee votes as it pertains to governance & regulatory issues:

  • Social Security & Medicare account for 44% of federal spending
  • The top ten financial institutions control 75% of financial assets
  • Dodd Frank is only one-third complete
  • Tiburon CEO Summit XXIV attendees were divided on their views about how money market funds will be regulated, with the greatest share believing that there will be no incremental regulation, while 33% expect floating NAVs, and 29% expect capital requirements
  • Tiburon CEO Summit XXIV attendees primarily believe that a uniform fiduciary standard will not be implemented for retail advice in the next two years
  • Tiburon CEO Summit XXIV attendees increasingly expect the SEC to continue as the RIA regulator

Mr. Roame also addressed recent & potential strategic activity, and concluded with a private equity view of the industry. He noted that regulatory reform and capital needs are requiring many divestitures, including those driven by Dodd Frank, TARP payoffs & other capital needs, and insurance companies consolidating risks. Mr. Roame noted that M&A activity is up as valuations are increasing, and he pointed to recent transaction such as:

  • The Carlyle Group acquiring TCW
  • GTCR acquiring Aligned Asset Managers
  • Orix Corporation acquiring Robeco Group
  • Nationwide acquiring Highmark
  • Hennessey Funds acquiring FBR Funds
  • Morgan Stanley acquiring the remainder of Smith Barney
  • Raymond James acquiring Morgan Keegan
  • Julius Baer acquiring Merrill Lynch (international)
  • Ladenburg Thalmann acquiring Securities America
  • Cetera Financial Group acquiring GEIAN
  • Advisors Group acquiring Woodbury
  • Envestnet acquiring Tamarac

Mr. Roame also noted dozens of private equity investments, including:

  • Independent broker/dealers: LPL Financial; Cetera Financial Group; HD Vest Financial Services; First Allied Securities; National Financial Partners
  • RIAs: The Edelman Financial Group; The Mutual Fund Store; United Capital Financial Partners; Mercer Advisors; Avalon Advisors; Kanaly Trust Company

Mr. Roame left the group with the highlights of a conversation he seemingly has weekly with a variety of private equity firms exploring the financial services markets:

  • Bet #1: Bet on products or channels? Channels for many reasons, including that the growth in passive investment products will shift profits from manufacturers to distributors
  • Bet #2: Bet on which channels? Financial advisors and/or self-serve channels over institutional or international channels for many reasons, including growth rates
  • Bet #3: Bet on which financial advisor channels? Fee-based financial advisors scale and/or outsourcing, even though isolated successes in many other areas
  • Bet #4: Bet on which self-serve channels? This is a crap shoot, so pick a handful of strong management teams amongst Betterment, Covestor, Learnvest, Motif Investing, Personal Capital Corporation, SigFig, & Wealthfront

Mr. Roame advised that, "private equity should generally bet on channel businesses over product businesses, in part because the firms closest to the clients always win when margins compress."

The 35 Fundamental Trends

Mr. Roame ended his presentation by reviewing the 35 fundamental industry trends:

  • Economy still weak (anemic recovery) (unemployment; housing; Washington DC gridlock; municipal bankruptcies; world affairs remain issues)
  • Stock markets back above highs (Stockman: possibly artificially due to Federal Reserve action)
  • Interest rates still low
  • Continued risks in big banks (another $100 billion may exist in claims for LIBOR, mortgages, etc.)
  • Consumer net worth equal to 2007 peak (but differing underlying components explain consumer sentiment)
  • Consumers fundamentally changed (conservative; self-reliant; lost generation)?
  • Core investment strategies evolving (tactical; cash; retirement income)
  • Fee-account flows shifting to rep driven programs and managed ETF programs (but rep as portfolio manager performance worse than consumer direct)
  • ETFs continue to take share (ETF OneSource; Fidelity-BlackRock)
  • Index mutual funds & active institutional share class mutual funds also doing well
  • Active retail class mutual funds getting clobbered (DoA if DC market flows excluded)
  • Active ETFs are a wild card
  • Hedge funds are also a wild card (promise versus reality) (gross versus net) (liquid alts?)
  • Jefferson National reinventing annuities business
  • Financial advisor channels dominate (institutional channels still talk big game though)
  • Financial advisor models multiplying
  • Independent advisors slowly taking share
  • Wirehouse broker productivity is very impressive though

 

  • Break-away broker trend motoring along (slowly)
  • Custodians doing well (even second tier players)
  • Financial advisor scale models emerging (The Edelman Financial Group, United Capital Financial Partners)
  • Financial advisor target market models succeeding (Hanson & McClain; Lenox Wealth Management; Regent Atlantic Capital)
  • Independent broker/dealers repositioning as custodians, TAMPs, and/or producer groups
  • Discount brokers doing well (with new revenue models)
  • B2C models re-emerging in three forms (investment managers; financial planners; & financial advisors with online presence)
  • Digital marketing trend (big data; SEO; blogging; social media; & email marketing) emerging to rival traditional marketing efforts
  • Women’s issues finally getting some attention (more risk averse but shorter careers; longer lives)
  • Gen X & Y generations leading to marketing, staffing, & client service changes
  • 401K plan allocations, performance, & advice being evaluated (DoL hires BrightScope)
  • Defined benefit plans remain underfunded
  • Foundation & endowment markets (with snazzy investment strategies) turn in weak performance
  • International consumer markets present wild card
  • Retail bank M&A activity up as is other M&A activity as market values recover
  • Financial advisor channels and self-serve channels rapidly emerge as places for private equity bets
  • San Francisco Giants; San Francisco 49ers; University of Michigan Football; & University of Michigan Basketball all remain powerhouses

General Session Presenter

Matt Lynch

(Principal, Tiburon Strategic Advisors)