--- JUNE 8, 2007 ---

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TIBURON CEO SUMMIT XII --
GENERAL SESSION PANEL DISCUSSION SUMMARIES

Tiburon releases summary highlights of the three popular general session panel discussions at its recently held CEO Summit XII. The general session panel discussions (Ask the Consumers, Ask the Advisors, & Ask the Distributors) were selected to reinforce the CEO Summits' focus on listening to clients. Each panel included extensive time for questions & answers from the CEO-level attendees

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Tiburon Strategic Advisors held its Tiburon CEO Summit XII six weeks ago in San Francisco, CA. Over 100 senior industry executives attended and participated. Chip Roame (Managing Principal, Tiburon Strategic Advisors), John DesPrez (CEO, John Hancock Financial Services, Manulife Financial), Ed Haldeman (CEO, Putnam Investments, Marsh & McLennan), Steve Lockshin (CEO, Lydian Wealth Management, Lydian Trust Company), Jim Riepe (Retired Vice Chairman & Senior Advisor, T. Rowe Price Group), and Paul Stevens (President & CEO, Investment Company Institute) made general session presentations. Other sessions included the popular Ask the Consumers, Ask the Advisors, and Ask the Distributors general session panel discussions. Tiburon's CEO Summits have become a unique forum for industry CEOs and leading strategy officers to gather and debate the future of the brokerage, investments, advice, and wealth management businesses. Tiburon's research serves as the foundation of the CEO Summits and all participants share views openly. To facilitate further information sharing, Tiburon provides a series of summaries like this one after each CEO Summit.

Tiburon CEO Summit XII - Ask the Consumers general sesison panel discussion

Tiburon CEO Summit XII General Session Panel Discussions

One of the key themes of every Tiburon CEO Summit is the need to more closely listen to clients. Tiburon CEO Summits' general session panel discussions (Ask the Consumers, Ask the Advisors, & Ask the Distributors) all allow Tiburon CEO-level clients to hear directly from their constituents in an unvarnished way. This is in sharp contrast to most CEOs' daily activities, where they are forced to rely on interpreting marketing data or listening to anecdotal stories from their sales forces. Addressing these clients first-hand through questions & answers helps Tiburon clients further consider innovative ideas for serving these different client groups.

Ask the Consumers

As has become tradition at Tiburon CEO Summits, off-the-street consumers (Carolyn H., John P., Diane S., & Ron V.) in the thick of making retirement planning & other related decisions joined facilitator Tif Joyce (President, Joyce Financial Management) on the Ask the Consumers panel. The panel is the most direct way of hearing from and questioning consumers. The consumers were a 62 year old retired marketing executive, a 75 year old retired not-for-profit president, and a 50 year old sculptor and his 48 year old engineer wife. The panelists told about their experiences with brokers, bankers, insurance agents, independent advisors, and do-it-yourself approaches, making numerous key points:

Consumer Carolyn H. describes her investment philosophy of only investing in companies she knows well and uses their product - like Harley Davidson!

  • Ron V. the 62 year old retired marketing director, claimed to have, “average investment experience in real estate, stocks, and mutual funds.” He needs banking, brokerage, wrap accounts, and long-term care insurance, but he and his wife specifically turned to a financial advisor for, “help in monitoring their retirement plan.”
  • Carolyn H., the 75 year old retired non-profit president managed her own accounts, “until she was 70.” She had, “served on the board of a bank” and invested in companies she knew (like Harley Davidson) and accumulated a large nest egg. In describing her investment philosophy, she talked about one stock that she knew because of one of her children. This particular stock traded as low as $10 and as high as $50. She said, “I bought it when it got to $10 and sold it when it got to $50.” The group concluded that it was an interesting idea, but not necessarily repeatable. The group saw her as a smart investor who made her own decisions. But she was recently widowed, had needs in, “financial, tax, & estate planning”, and sought out a certified financial planner to, “coordinate with her certified public accountant, attorney, and bank board.”
  • The married couple (sculptor and engineer) also directed their own investments, rehabbing houses. Unlike the other panelists, they like their situation and see no need for a financial advisor. She is an engineer and her company gave her stock options. Earlier in her career, someone offered her the advice that dramatically impacted their financial future – “keep the stocks and only sell them when the proceeds could change their lives.”

The contrast between those consumers who want to take advice and those who want to make their own decisions was quite visible across the panel. The attendees enjoyed the opportunity to hear direct from consumers on the Ask the Consumers panel; Kevin Malone (President, Greenrock Research) said that, “we all need to look to the end users to direct what we do.” Tiburon's Managing Principal Chip Roame agreed, saying, "unlike consumer goods, the financial service industry has never had a productive consumer research orientation."

Ask the Advisors

Tiburon CEO Summit XI Guest Speaker & Tiburon CEO Summit XII Ask the Advisors panelist Ken Fisher (CEO, Fisher Investments) describes his firm's investment philosophies - coming to a mailbox near you.

With a similar goal to the Ask the Consumers panel, four leading financial advisors participated on the Ask the Advisors panel to allow attendees to better understand financial advisor businesses and decision-making. Facilitated by Dennis Clark (CEO, Advisor Partners), the panelists included Steve Hohenrieder (Partner, Think Wealth Management, Think Equity Partners, Panmure Gordon & Company), Ken Fisher (CEO, Fisher Investments), Jeff Lancaster (Managing Principal, Bingham, Osborn, & Scarborough, Boston Private Financial Holdings), and Alan Spiegelman (Wealth Management Advisor, Northwestern Mutual). The financial advisors were selected from various different backgrounds – financial planning, investment banking, insurance, and money management businesses - to provide a wide range of perspectives. Three of those panelists - Steve Hohenrieder, Jeff Lancaster, and Alan Spiegelman - represent successful, and yet far different approaches. The fourth panelist, Ken Fisher, who was a guest speaker at Tiburon CEO Summit XI, added valuable insights, including addressing Fisher Investments' unique (and well-known to us all) direct mail marketing strategy, as well as its investment management & recruiting strategies, which have helped the firm accumulate over $35 billion in assets under management. Amongst the key points made by the panelists were:

  • The panelists had some similarities and other differences. All are quite successful but their assets under management ranged from a successful solo practitioner model with 6 employees and $225 million (Northwestern Mutual) to a firm with 950 employees and $38 billion assets under management (Fisher Investments)
  • Three of the four (Bingham, Osborn, & Scarborough, Fisher Investments, and Northwestern Mutual have similar average client relationship sizes between $2.0 - $2.5 million, while Think Wealth Management's average client size is almost double that at $4.0 million
  • All four panelist serve mostly individual clients, with institutional clients making up one-third or less of their client bases
  • Three of the four (Bingham, Osborn, & Scarborough, Northwestern Mutual, and Think Wealth Management)  primarily rely on mutual funds and exchange traded funds, while Fisher Investments utilizes mostly individual stocks & bonds (90%)
  • The audience was treated to an in-depth discussion of each organization's sales & marketing strategies, use of technology, views regarding succession planning, and their needs from product companies and other vendors. Their answers were as varied as the firms themselves
  • However, there was complete agreement that the investment advisory business is truly a cottage industry. As evidenced by Tiburon research, unlike many sectors of the economy, there is no one firm or group of companies with significant market share. According to Ken Fisher, "the industry is so fragmented that one could have a whole specialization advertising to Americans in Mexico."
  • Consumer orientation is an often repeated theme at the CEO Summits. Randy Merk (President, Financial Products, The Charles Schwab Corporation) asked how client satisfaction was measured. All the financial advisors agreed that their very low termination rates (1%-3%) was the most telling statistic.
  • Tiburon CEO Summit attendees valued the opportunity to listen to these successful advisors discuss their businesses. Tif Joyce (President, Joyce Financial Management) predicted that, "the market will continue to bifurcate with some financial advisors being more client centric, allowing for a better accommodation of lifestyle needs for financial advisors like himself, while others would be more business focused and would continue to grow share." Tiburon's Managing Principal Chip Roame agreed, saying that, "there is an inaccurate message going around that small financial advisors' existing client bases are under threat; this simply is not supported. They may not grow as fast as others but I am not sure that their client bases are under any threat."

Ask the Distributors

Panelists Ron Cordes (Chairman, Asset Mark Investment Services, Genworth Financial), Bill Dwyer (President, LPL Independent Advisor Services, LPL Financial Services), John Iachello (Chief Operating Officer, Pershing Advisor Solutions, Pershing, The Bank of New York Mellon Corporation), and Skip Schweiss (Executive Vice President, Fiserv Investment Support Services, Fiserv) & panel facilitator Kevin Malone (President, Greenrock Research) gave valuable tips for accessing their networks of financial advisors

In keeping with the Tiburon CEO Summit tradition of emphasizing the need to listen carefully to one's clients and prospective clients, Tiburon CEO Summit's inaugural Ask the Distributors panel delivered the goods. For many Tiburon clients, understanding distribution firms is crucial to their firm's success. Gaining access to an organization's network of financial advisors can be crucial to a firm's success. Wirehouses such as Merrill Lynch, independent broker/dealers such as LPL Financial Services, and custodians such as The Charles Schwab Corporation can account for 50% or more of financial product companies' sales. Tiburon's Ask the Distributors panel allowed these distribution organizations to discuss their needs from investment management firms through questions & answers. Four major distribution firms provided insights on how they serve their constituents and how they would be receptive to hearing from the product manufacturers in the financial services business. Panelists included Ron Cordes (Chairman, Asset Mark Investment Services, Genworth Financial), Bill Dwyer (President, LPL Independent Advisor Services, LPL Financial Services), John Iachello (Chief Operating Officer, Pershing Advisor Solutions, Pershing, The Bank of New York Mellon Corporation), and Skip Schweiss (Executive Vice President, Fiserv Investment Support Services, Fiserv). The Ask the Distributors panel was facilitated by Kevin Malone (President, Greenrock Research). Amongst the key points were:

Panelists Bill Dwyer (President, LPL Independent Advisor Services, LPL Financial Services)

  • The panelists represented a huge source of assets in the market, including 37,500 financial advisors and $263 billion assets under management
  • Their financial advisors rely heavily upon mutual funds, exchange traded funds, & separate accounts, with these three products accounting for the vast majority of assets as Asset Mark, LPL, and Fiserv, and 50% at Pershing
  • Product needs that were expressed included lower cost mutual funds, access to closed separately managed account strategies, retirement income planning vehicles, and better technology
  • Most panelists said that access would be granted to manufacturers with innovative product offerings that address financial advisor needs’, and/or those which pay to be on platforms or by sponsoring conferences
  • Some financial advisor wholesaling strategies recommended included consultative training sessions, break-out sessions at conferences, online educational web demonstrations, and trade publication advertising
  • Ron Cordes described how for the first time his firm engaged a professional survey firm to interview investors across America. The findings proved to be valuable for the financial advisors using Asset Mark in that they found investors are very concerned about their financial advisors ability to offer and implement solutions which would safeguard them from outliving their savings (Asset Mark moved to solve this need)
  • Both Bill Dwyer and John Iachello emphatically made the observation that what financial advisors are looking for are solutions - solutions for their business practices and solutions for their clients' wealth management needs. All of the panelist agreed that, as platforms and custodians, they are in a unique position to offer the solutions because they have the capital and collective clientele to make such solutions available
  • Skip Schweiss made a provocative observation that, "the need for transparency is bunk; clients' don't care . . . they want to feel comfortable that their financial advisors know what is in their prospectuses." He also made a point that all the panelists agreed upon and that was contrary to popular press; that was that most financial advisors are still using mutual funds and very few use new products like hedge funds

The panel added perfectly to the Tiburon CEO Summit's agenda of focusing the CEO-level attendees on client needs. Dennis Clark (CEO, Advisor Partners) summarized the panel saying that, "these guys know what financial advisors want; we need to see them as our clients too." Tiburon's Managing Principal Chip Roame agreed saying, that "the Ask the Distributors panel fit in just as hoped, to get all Tiburon CEO-level clients to see that this industry has three levels of clients - the end clients themselves, their financial advisors, and the firms with which these financial advisors affiliate."

Upcoming Tiburon CEO Summit XIII: October 9-10, 2007

Tiburon CEO Summit XIII will be held October 9-10, 2007 in San Francisco, CA at the Ritz Carlton Hotel. The meeting will start at 7:45am on Tuesday, October 9, include a group dinner that night in Tiburon, and finish at 2:00pm on Wednesday, October 10. There are almost twenty planned sessions. Along with Tiburon's Managing Principal Chip Roame, guest speakers will include Stephanie DiMarco (CEO, Advent Software), Mike Fraizer (CEO, Genworth Financial), George Gatch (CEO, JP Morgan Funds Management, JP Morgan Chase), Ron Peyton (CEO, Callan Associates), and others to be announced soon. Click here for more details on the upcoming Tiburon CEO Summit XIII. Follow on links will include the tentative attendee list, tentative meeting agenda, and details on hotels & other logistics.

2008-2009 Tiburon CEO Summits

Tiburon will continue to hold semi-annual CEO Summits in 2008-2009. Dates are April 10-11, 2008, October 14-15, 2008, April 9-10, 2009, and October 7-8, 2009.

Spring 2008 speakers will include Walt Bettinger (President, The Charles Schwab Corporation), John Hailer (CEO, IXIS Asset Management Advisors, Groupe Caisse D'Epargne), John Murphy (CEO, Oppenheimer Funds, Mass Mutual Financial Group), and others to be announced soon.

Starting in 2008, Tiburon will hold its Spring CEO Summits at the Ritz Carlton Hotel in New York, NY in an effort to help the firm's predominately east coast & European clientele attend more easily.

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Tiburon Strategic Advisors

Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:

  • The firm has served over 300 corporate clients and completed almost 1,000 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, and various international markets.
  • Tiburon holds a series of CEO Summits semi-annually for its executive-level clients. The next CEO Summit is scheduled for October 9-10, 2007 at the Ritz Carlton Hotel in San Francisco, CA. 2008-2009 dates are April 10-11, 2008 (New York, NY), October 14-15, 2008 (San Francisco, CA), April 9-10, 2009 (New York, NY), and October 7-8, 2009 (San Francisco, CA). Attendance is by invitation only and attendance at each Summit is limited to 100 senior industry executives. Visit the CEO Summits section of Tiburon's web site for details on current and past CEO Summits, including attendee lists, meeting agendas, and highlights. Please contact Tiburon’s Managing Principal Chip Roame at CRoame@TiburonAdvisors.Com or (415) 789-2541 if you are a Tiburon client and have an interest in attending a future Tiburon CEO Summit.
  • Tiburon offers thirteen online business benchmarking tools that are available to all types of financial advisors in an effort to help them benchmark their business practices and build more successful businesses. The sites include www.BrokerBestPractice.Com for wirehouse & regional brokers, www.FABestPractices.Com for fee-only financial advisors, www.IndependentRepBestPractices.Com for independent reps, and www.PrivateBankerBestPractices.Com for private bankers. Almost 5,000 advisors have used these tools. By completing one of the online surveys, financial advisors can access a FREE copy of the relevant comprehensive Tiburon research report, which summarizes and analyzes the collective results.
  • Tiburon has published twenty-six ~300-400+ page research reports, which offer detailed analyses of growing business segments; each is available for $5,000; these reports can be ordered by contacting Brian Cotter at BCotter@TiburonAdvisors.Com or (415) 789-2546.
  • Tiburon’s weekly research releases, like this one, are emailed for free to interested industry executives, media representatives, conference planners, and individual financial advisors. Over 40,000 industry executives now receive these releases. Feel free to sign up to receive future research releases at Tiburon’s web site (www.TiburonAdvisors.Com) if this release was passed to you by a colleague and you would like to receive them directly in the future.
  • Tiburon plans to expand its workforce in 2007 and 2008. New research managers will develop proprietary research content for Tiburon research reports and client projects and new marketing managers will enhance the firm's web site, weekly research releases program, and the firm's relationships with media representatives, conference planners, and its clients & executive program members. The firm is also seeking to add a research president, principal candidates, and possibly a chief consulting officer in 2007 or 2008.
  • Tiburon has built three executive programs (CEOs-in-Residence, Financial Advisor Roundtable, and Consulting Fellows) in an effort to bring the experiences of additional senior level industry executives to Tiburon clients. Feel free to contact any of the members of Tiburon’s executive programs directly or ask that they be included in any ongoing Tiburon project.

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