Tiburon CEO Summit XXI was held October 12-13, 2011 at the Ritz Carlton Hotel in San Francisco CA. Tiburon CEO Summit XXI started at 7:45am on Wednesday, October 13, 2011, included a group dinner that evening in Tiburon, & concluded at 12:00pm on Thursday, October 13, 2011. Over 140 senior industry executives took two days out of their busy schedules to participate. Along with Tiburon's Managing Partner Chip Roame and award recipients Rob Arnott (CEO, Research Affiliates) & Bill Sharpe (Professor Emeritus, Stanford University), guest speakers included Pete Kight (Managing Partner, The ComVest Group), Michael Sapir (CEO, ProShares), & Paul Steiger (CEO, Pro Publica). Tiburon CEO Summit XXI also featured the firm's traditional client-centric panel discussions, an innovation panel featuring four Tiburon clients, five less formal break-out sessions, & two networking-based social events.
Opening Keynote Presentation Highlights
Tiburon CEO Summit XXI featured a general session keynote opening presentation by Tiburon's Managing Partner Chip Roame regarding the state of the financial services industry. This presentation served as the backdrop and overview of the entire CEO Summit.
Tiburon Strategic Advisors is pleased to provide a summary of the content of its Tiburon CEO Summit XXI opening keynote presentation. Chip Roame (Managing Partner, Tiburon Strategic Advisors) kicked off Tiburon CEO Summit XXI with his presentation broadly addressing the state of the financial services industry. Though Mr. Roame is included on lists of key industry voices and influencers regularly, he commented that given Tiburon's unique mission, he sees himself as, "an observer of the industry, not in the industry". Tiburon Strategic Advisors focuses on corporate level strategy consulting and research across all of the channel, product, & strategic areas, within the financial services industry.
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 brokerage, investments, banking, & insurance 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 and conference speaker. 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, separately managed accounts, 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 investment banking transactions. At Tiburon, Mr. Roame has led over 1,400 client engagements for over 300 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 twenty-five most influential people in financial planning 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). In the past, he has served on a variety of other boards, including those for start-up ventures Anira Advisory Group, One Harbor, & Prima Capital Holdings, the SA Funds mutual fund family, and the Institute of Investment Management Consultants trade group.
Overview
Mr. Roame addressed the state of the financial services industry, including the most important news stories in the past six months, recent Tiburon research findings, and strategic developments at dozens of Tiburon clients. His outline included the broad market environment, including world events, the economy & markets, financial services industry stumbles, consumer wealth, growing baby boomer issues, consumers' attitudinal & behavioral issues, and the regulatory environment. His outline went on to include the resulting product trends, distribution channel trends, and strategic activity. And Mr. Roame closed by offering a take-away which was the top dozen fundamental trends impacting all financial services firms.
Broad Market Environment
As it pertains to the broad market environment, Mr. Roame sought to put recent world events into perspective for the financial services CEOs who attended Tiburon CEO Summit XXI, saying that, "we got the bad guy" regarding Bin Laden's demise, and touching on less certain but still relevant issues of continued turbulence in the Middle East, natural disasters on the US East Coast, and politically charged issues like the Solyndra bankruptcy. He addressed the potential outcomes from various economic & market scenarios, touching on the fact that, "bank failures are down to just 88 in 2011", questioning the idea that "..that is good?", and that, "while we like to "blame the European Debt Crisis for our woes in the US, that in fact our high unemployment and sluggish economy are more products of internal and political problems here at home. Mr. Roame highlighted the continued slump in housing as a key factor impacting prospective retirees as we now have the, "inverse of the 1990s Wealth Effect, where all three (investable assets, principal residences, & small business values) went up".
Mr. Roame went on to highlight Federal Reserve Flow of Funds data showing the unequal consumer wealth recovery, and making the keen observation that, "this is why you are seeing Occupy Wall Street happening". And taken together with some of the industry's stumbles & scandals (Mr. Roame listed Galleon Group, Berkshire Hathaway, UBS, etc.), led him to suggest that consumer attitudes may have changed enough so that, "the end result may be a self-serve revolution" as opposed to investors working with an industry that keeps stumbling all over itself".
Finally in this opening section of his presentation, Mr. Roame offered a top down recap of the complicated regulatory and political environment, revealing attendee survey data pointing to FINRA being named as the RIA Regulator, and that the US would have a Republican president in 2012. His own bold outlook is that Obama will be re-elected after, "seeing Romney get the Republican nomination and then Obama replacing Biden with Hillary (Clinton)" in 2012, but that they will continue to be working with a Republican Congress, suggesting no meaningful change to either the legislative or executive branches of government.
Distribution Trends
Mr. Roame made predictions for the growth of leading distribution channels, including the RIA market ("fastest growing channel"), the IBD market, where he give context to the discussion of the "break away broker trend" by pointing out that 90% of those leaving the wirehouses "have been fired", suggesting to the group, "that you want to call the guy a breakaway broker, go ahead, but I think he was broken away!". He also discussed the continued evolution of self-serve channels (e.g., discount brokers) saying there are, "fifty firms but only five that matter", and highlighting the new Schwab independent business operator (IBO) strategy as, "exactly the spirit of the original Schwab model", and touched on several other, "pretty nifty products in this space such as the recently introduced Personal Capital Corporation".
Product & Service Trends
Mr. Roame made similar predictions for product trends, including those for mutual funds, which, "have mroe assets that all other financial products added together", exchange traded funds (ETFs), which are, "almost synonymous with indexing", a part of the fastest growing product trend that he sees, "continuing", but that it will be a "slow takeover" (in relation to active management, still at 80% of assets). Mr. Roame also highlighted the other rapidly growing trend, alternative investments, and the, "polarization" (the parallel growth in indexing & alternatives) paradigm which he highlighted ten years ago, saying "we were right, and I would gamble that this will still be right ten years from now". He commented on the emergence of active ETFs ("not a big deal yet"), variable annuities ("the product that is always about to win and never does"), and within alternatives he discuss hedge funds, noting that while many have emerged, most of the assets are still flowing to the larger funds, saying that, "big hedge funds are getting super big".
Strategic Activity
Lastly in this section, Mr. Roame addressed recent strategic activity like the purchase of Securities America by Ladenburg Thalmann, and venture capital and private equity trends in financial services, including recent transactions like Lovell Minnick acquiring First Allied, Parthenon's investment in HD Vest Financial Services, and investments in leading RIAs like The Mutual Fund Store. Mr. Roame noted that, " as a general rule, the private equity business is dormant, but in financial services, its active".
The Top Dozen Fundamental Industry Trends
In an effort to offer an outsider's view of the key points, Mr. Roame offered that there are a dozen fundamental trends driving the financial services industry. These trends include: 1) fee-based pricing; 2) indexing & ETFs; 3) alternative investments; 4) retirement income & longevity insurance; 5) product simplicity; 6) tactical asset allocation; 7) financial advisor independence; 8) the dominance of high-end financial advisors; 9) the re-emergence of the self-serve channels; 10) fundamental shifts in defined contribution business; 11) growth in all types of outsourcing; & 12) financial advisor aggregation.
Award Recipients
Tiburon Strategic Advisors is pleased to announce the most recent recipients of its Tiburon CEO Summit Awards. Rob Arnott (CEO, Research Affiliates) & Bill Sharpe (Professor Emeritus, Stanford University) were recognized as Tiburon CEO Summit award winners at Tiburon CEO Summit XXI on October 12-13, 2011 because they exemplify three central themes; Focusing on Consumer (and Other Client) Needs, Challenging Conventional Industry Wisdom (Innovation), & Taking Responsibility. The award recipients are chosen by a running tally of the votes of thousands of prior Tiburon CEO Summit attendees.
CEO Summit XXI
Award Recipient
Rob Arnott
CEO
Research Affiliates
Rob Arnott (CEO, Research Affiliates)
Rob Arnott founded Research Affiliates in 2002 as a research-intensive asset management firm focused on innovative products, especially as they pertain to quantitative investing. Today, the firm manages over $50 billion in assets and continues to explore novel approaches to active asset allocation, optimal portfolio construction, & more efficient forms of indexation. Research Affiliates distributes investment products globally in partnership with leading financial institutions.
Mr. Arnott was previously chairman of First Quadrant, which he built out of the former internal money management operations of Crum & Foster. Prior to this, he was global equity strategist at Salomon Brothers (now part of Citigroup), the founding CEO of TSA Capital Management (now part of Analytic Investors), and a vice president at The Boston Company. In recognition of his achievements as a financial writer, Mr. Arnott has received five Graham & Dodd Scrolls, awarded annually by the CFA Institute for best articles of the year. He has also received two Bernstein-Fabozzi/Jacobs-Levy awards from the Journal of Portfolio Management and Institutional Investor magazine.
As it pertains to the Tiburon CEO Summit award criteria, some of Mr. Arnott's accomplishments include:
Challenging Conventional Industry Wisdom (Innovation): Mr. Arnott has pioneered several unconventional portfolio strategies that are now widely applied, including the fundamental index approach to indexation, which has at its crux the belief that because some stock prices are inefficient, capitalization weighted indexes necessary lead to the purchase of more of the overpriced securities and less of the underpriced securities. Specifically, Mr. Arnott said, "the market is not passive at all from a company centric point of view", and went on to site the current premium for AAPL (Apple Inc. - NASDAQ) and discount on BAC (Bank of America Corporation - NYSE). Mr. Arnott has challenged conventional industry wisdom in other areas as well, including asset allocation whereby he argued for including a broader range of risky asset classes, tactical asset allocation ("which some call market timing") that he promoted before its current trendiness, global tactical asset allocation, & tax-advantaged equity management.
Focusing on Consumer (and Other Client) Needs: Mr. Arnott has a well earned reputation as one of the world's most provocative and respected financial analysts. He seeks only products that add value for clients and investors, eschewing marketing gimmicks. For instance, Mr. Arnott likely could have maintained the fundamental index approach in a black box and charge far higher fees as an active manager. He explained though that it, "comes down to the fact that the end customer has to win...", and he believes that, "our industry, contrary to many views, has ethical standards" in alluding to the lower cost model for delivery of his technology.
Taking Responsibility: Mr. Arnott speaks at many conferences, often for no fees, and has written over 100 articles in journals such as the Journal of Portfolio Management, the Harvard Business Review, & the Financial Analysts Journal, as well as being the co-author of The Fundamental Index: A Better Way to Invest. He has served on the board of the Financial Analysts Journal, including as editor-in-chief from 2002 to 2006, and as a visiting professor at the UCLA Anderson School of Management. When asked about his academic and professional accomplishments in this regard, Arnott replied that, "I blame it on my urge to test ideas and see if they are true..." pointing to his fundamental curiosity and his willingness to share his findings.
CEO Summit XXI
Award Recipient
Bill Sharpe
Professor Emeritus
Stanford University
Bill Sharpe (Professor Emeritus, Stanford University)
Bill Sharpe is the STANCO 25 Professor of Finance, Emeritus, at Stanford University's Graduate School of Business and also Director Emeritus at Financial Engines, which he cofounded in 1996. Professor Sharpe's research interests focus on macro-investment analysis and equilibrium in capital markets. He is associated with dozens of widely utilized investment concepts, including being one of the originators of the Capital Asset Pricing Model (CAPM), and the creator of the Sharpe Ratio for risk-adjusted investment performance analysis, the binomial method for the valuation of options, the gradient method for asset allocation optimization, and returns-based style analysis for evaluating the style and performance of investment funds. Professor Sharpe received the Nobel Prize in Economic Sciences in 1990.
Professor Sharpe previously taught at the University of Washington and the University of California at Irvine, and also worked at the RAND Corporation. He has written six books, including Portfolio Theory & Capital Markets; Asset Allocation Tools; Fundamentals of Investments; and Investments. He has also written articles in many professional journals.
Professor Sharpe humbly regaled the Tiburon CEO Summit attendees with his influences, past and present research and projects, a humorous retelling of his experiences receiving the Nobel Prize, and a professional philosophy that he summed up with, "if at first you don't succeed, keep trying...".
As it pertains to the Tiburon CEO Summit award criteria, some of Professor Sharpe's accomplishments include:
Challenging Conventional Industry Wisdom (Innovation): Professor Sharpe has proven to be a master at expressing complicated concepts in elegant simplistic terms, making them widely usable. For instance, Professor Sharpe's Nobel Prize work on Modern Portfolio Theory captured the simplicity of the risk & reward relationship. At Tiburon CEO Summit XXI, Professor Sharpe was quick to share credit for his inspiration with one of his early mentors, Armen Alchian (Professor Emeritus - UCLA), saying that, "I guess it goes back to my original influence; Alchian encouraged us to simplify things..." so, "I think of things simplistically..".
Focusing on Consumer (and Other Client) Needs: Professor Sharpe's more recent work at Financial Engines, which, "came out of helping defined benefit pension plans understand risk". Upon recognizing that the 401K market had shifted the problems of pension management to consumers, Professor Sharpe led the building of a firm that has as its mission an effort to address the fact that average investors are not well served by financial advisors and product companies. Professor Sharpe said that, "I started turning all my academic research and writing towards the individual", and in fact, the goal of Financial Engines, "is to put the proper advisory tools in the hands of these investors". Even at the beginning, Professor Sharpe was credited with focusing on consumers, often referring to Chilean consumers where defined contribution plans had first grown. Founded in 1996, Financial Engines is now the largest RIA serving consumers directly, with 518,000 clients, $44 billion assets under management, and a moderate median client of $38,000. One of the early business decisions made by Financial Engines was to sell no proprietary products and accept no commissions, the two common drivers of industry profitability at the time.
Taking Responsibility: Professor Sharpe has given back substantially in his business activities focused on average consumers; Financial Engines has a noble purpose. Professor Sharpe added, that "the objective was to help employees to save and invest" and "it is still that simple". Professor Sharpe was also the past president of the American Finance Association and a trustee of the Economists for Peace & Security.
Guest Speakers
Tiburon Strategic Advisors is pleased to share highlights of its Tiburon CEO Summit XXI guest speaker presentations. Along with Tiburon's Managing Partner Chip Roame and Tiburon CEO Summit award recipients Rob Arnott (CEO, Research Affiliates) & Bill Sharpe (Professor Emeritus, Stanford University), guest speakers included Pete Kight (Managing Partner, The ComVest Group), Michael Sapir (CEO, ProShares), & Paul Steiger (CEO, Pro Publica).
CEO Summit XXI
Guest Speaker
Pete Kight
Managing Partner
The ComVest Group
Pete Kight (Managing Partner, The ComVest Group)
Pete Kight is Managing Partner (and co-chairman) of The ComVest Group. He is a pioneer in financial services technology, especially in electronic funds transfer, online banking, and electronic billing & presentment.
Mr. Kight previously served as CEO (and chairman) of CheckFree Corporation from its inception in 1981 until it was acquired by Fiserv for $4.4 billion in cash in 2007. Mr. Kight founded CheckFree in his grandmother's basement, with a vision of providing electronic funds transfer services to businesses & consumers. After the realization of those goals, his vision expanded into building infrastructures to support new services that enable & simplify the electronic movement & management of personal & business finances. Today, those products & services have become pervasive, particularly the ability for consumers to view & pay bills online. Mr. Kight has more than a dozen patents for electronic banking and payment systems, and he has been recognized as one of ten unsung financial heroes by Money magazine and featured in Fortune magazine, where CheckFree's e-payments functionality was named one of the Seven Silver Bullet Technologies. In 2007, he received the Ellis Island Medal of Honor and was the first recipient of the Peter Kight Lifetime Achievement Award from Bank Technology News. Pete is a member of the board of directors of Akamai Technologies, Manhattan Associates, & Fiserv.
Mr. Kight provided his views on the intersection of finance and technology. Mr. Kight was a returning guest speaker at the Tiburon CEO Summits, having previously received one of the highest attendee satisfaction scores over the prior eleven years. A self effacing speaker, Mr. Kight provided an update on his predictions from 2009 summing up a number of developments by saying, "it is not happening as fast as I thought it would, but it is happening". Mr. Kight discussed the concept of the Digital Consumer as, "ultimately where we are headed", and though he described the financial services industry as having, "incrementally moved forward, slower than in most areas" (related to other industries), and went on to describe what he called Digital Distribution Power, and the emergence of technology companies like Apple, Google, Facebook, Amazon, & Netflix as, "the concentration of power with a few players". Mr. Kight summarized with a description of Google Wallet by stating, that "in some ways it has been delivered 1,000 times in the last 15 years, but this is the first time someone had the end to end solution".
CEO Summit XXI
Guest Speaker
Michael Sapir
CEO
Pro Shares
Michael Sapir (CEO, ProShares)
Michael Sapir is CEO (and Chairman) of ProFund Advisors in Bethesda, MD, a firm that he founded in 1997. Mr. Sapir described the firm's original target market by saying that, "we were aware of some RIAs (Registered Investment Advisors) who were bucking the trend" in using tactical asset allocation as opposed to the more traditional strategic model. ProFund Advisors is perhaps now best known for pioneering the ProShares family of leveraged & inverse ETFs in 2006. The ProShares family has since grown to 90 ETFs and $31 billion assets under management, making it the fourth largest ETF family. ProFund Advisors also manages 115 ProFunds mutual funds and manages the Canada-based Horizon BetaPro ETFs.
Mr. Sapir previously served as a principal at Padco Advisors, the advisor to the Rydex Funds, and a partner at the Washington, DC law firm of Jorden Burt, where he represented financial institutions. An innovator before founding ProFunds, Mr. Sapir was integrally involved in the creation of the first prime rate fund, the first registered fund investing exclusively in developing market securities, and the first general account annuity. He has been a staunch defender of the benefits of leveraged funds, butting heads with regulators and the media on numerous occasions.
Mr. Sapir provided his views of indexing by saying that, "..in the early days, tactical might have been code for market timing..", and on exchange traded funds, active ETFs, and inverse & leveraged funds by asserting that, "actively managed ETFs will be successful if they can take the reasons that index ETFs have been successful, and transfer them". He also discussed his views of business transformation, flatly stating, in response to a question about opportunities for new entrants to the ETF arena, "the time is not right; there are too many players".
CEO Summit XXI
Guest Speaker
Paul Steiger
CEO
Pro Publica
Paul Steiger (CEO, Pro Publica)
Paul Steiger is the CEO (and Editor-in-Chief) of Pro Publica, the investigative journalism firm. Pro Publica reporters received Pulitzer Prizes in both 2010 and 2011. He is also a member of the steering committee for the Reporters Committee for Freedom of the Press, which provides free legal assistance to journalists and a trustee of the John & James Knight Foundation, which funds efforts to enhance journalism and the functioning of American communities.
Mr. Steiger was previously the managing editor of the Wall Street Journal from 1991 to 2007. During his tenure, staff members were awarded sixteen Pulitzer Prizes. Previously, Mr. Steiger worked for fifteen years as a reporter, the Washington economics correspondent, & the business editor for the Los Angeles Times, and for 26 years as a reporter and editor for the Wall Street Journal. He was also a member of the Pulitzer Prize Board from 1999 to 2007, serving as its chairman in his final year.
Mr. Steiger opened with both humor and a bit of warning by introducing his message to the Tiburon CEO Summit Attendees with, "Good morning, Masters of the Universe, I bring you greetings from Occupy Wall Street". He shared his views on the cost and challenges to continuing to provide traditional investigative journalism, the decline of newspapers (a function of budgets and the rise of both legitimate and unsubstantiated blogs), and the growth of investigative journalism in a new format (the Pro Publica model). He also discussed his take on the financial services industry, and Pro Publica's extensive coverage of recent financial services industry events reported in the news. Mr. Steiger challenged the Tiburon CEO Summit attendees, as representatives of the financial services industry, to take this opportunity to have a positive impact, stating that, "you also have leverage with key people in both parties" and touched on the public relations problems of Wall Street by advising the group that, "one of the best ways for the industry (financial services) to address the public relations problem is to be less defensive". In fact, he outlined a more comprehensive plan for this issue by suggesting that the financial services industry should: 1) "accept that the past two or three decades before 2008 were anomalies", 2) "..don't whine..", 3) "tell your industry associations and lobbyists not to push for every last concession", & 4) "put better people in charge of handling distressed mortgage loans". The talk was both informative, and sobering, and a productive departure from the norm at Tiburon CEO Summits.
Attendees
Tiburon CEO Summit XXI had 141 Tiburon client attendees, including:
Tiburon CEO Summit XXI also welcomed select media attendees, including:
Janet Levaux (Managing Editor, Research Magazine)
Brooke Southall (Editor-in-Chief, RIA Biz)
Jennifer Tekneci (Reporter, Merger Markets)
Tiburon CEO Summit XX: April 12-13, 2011
Tiburon CEO Summit XX was held April 12-13, 2011 at the
Ritz Carlton Hotel in New York,
NY. The Summit started at 7:45am on Wednesday, April 13, 2011, included a group dinner that evening, & concluded at 1:00pm on Thursday, April 14, 2011. Over 160 senior industry executives took two days out of their busy schedules to participate. Along with Tiburon's Managing Partner Chip Roame and award recipients Jack Bogle (Founder, The Vanguard Group) & Mark Casady (CEO, LPL Financial), guest speakers included Keith Banks (President, US Trust), Charles Brandes (Chairman, Brandes Investment Partners), David Carroll (Senior Executive Vice President, Wells Fargo Corporation), Ric Edelman (CEO, Edelman Financial Services), Ed Finn (President, Barron's), & Allen Thorpe (Managing Director, Hellman & Friedman). Tiburon CEO Summit XX also featured the ever popular Ask the Advisors panel and a CEO Summit insights panel with four Tiburon clients, five less formal break-out sessions, & two networking-based social events.
Tiburon CEO
Summit XX featured a general session keynote opening presentation by Tiburon's
Managing Partner Chip Roame regarding the state of the financial services
industry. This presentation served as the backdrop and overview of the entire
CEO Summit.
CEO Summit XX Opening Speaker Chip Roame Managing Partner
Tiburon Strategic Advisors
Charles Roame is the Managing Partner of Tiburon Strategic
Advisors and a leading strategic consultant to CEOs, other senior executives,
& boards of directors in the brokerage, investments, banking, &
insurance 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 conference speaker. 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, separately managed
accounts, 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
investment banking transactions. At Tiburon, Mr. Roame has led over 1,300 client
engagements for over 300 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 people
in financial planning 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). In the past, he has served on a variety of other
boards, including those for start-up ventures Anira Advisory Group, OneHarbor,
& Prima Capital Holdings, the SA Funds mutual fund family, and Institute of Investment Management Consultants
trade group.
Mr. Roame addressed the state of the financial services
industry and key issues faced by Tiburon's financial services CEO-level
clients, structuring his comments around the broad market environment and
financial services industry strategies. Specifically, Mr. Roame addressed the
broad overarching world events & continual financial services industry
stumbles in the news; the US economy which is still struggling, the stock
markets, which are roaring ahead, & the housing markets which are still
mixed; recovering consumer wealth, including consumers' attitudinal changes;
the limited progress on regulatory reform & the resetting of the
political landscape, continuing market & distribution channel evolution;
continuing product trends; & the accelerating strategic activity.
Mr. Roame first addressed the broad overarching world
events & continual financial services industry stumbles in the news. He
stated that among events impacting the world economy that, in terms of lives
lost, the earthquake in Haiti
in 2010 was far more devastating than the recent Japan earthquake and tsunami, but
the latter is likely to be the costliest disaster in history with,
“estimates of the damage running at $200 billion, only $25 billion of
which is insured”. And, on the home front, man-made disasters in the
financial markets that led to the government’s bailout of Fannie Mae
and Freddie Mac, “may reach $363 billion…by far the biggest chunk
of the bailout”.
Mr. Roame further addressed the US economy’s continual
struggle, the roaring stock markets, & the mixed housing market. He said
that, “consumer households lost $4.6 trillion of real estate equity
since the peak in 2006, and more troubling still is that, unlike the equity
markets, none of that has come back yet”.
Mr. Roame continued to address recovering consumer wealth
but with attitudinal changes. He noted that the US personal savings rate is
up, and that many investors have become more sophisticated, stating that,
“I think you are seeing a generational shift right now” in
relation to more self-directed activity.
Mr. Roame went on to address the limited progress on
health care reform, financial services reform, the fiduciary issue, & the
12b1 issue, as well as the resetting of the political landscape. He stated that
most of these issues are, "a long way from being settled right
now".
Mr. Roame also reviewed the continuing market &
distribution channel evolution, including those in the financial advisory
markets (wirehouses, break-away brokers, independent broker/dealers, &
fee-based financial advisors), self-serve markets, institutional markets,
& international markets. He said that, “all of the growth is in the
independent channel…all other channels have shrunk”. Further,
about the break-away broker trend he said, “it is not accurate to say
that they are breaking away in mass from the wirehouses” to go
independent as “2/3 of those who left wirehouses went to other
wirehouses”, and many of those reported as going independent
“were fired”, which hardly supports the break-away broker trend
as broadly reported in the media.
Mr. Roame went on to address accelerating product shifts
such as those in mutual funds (target date mutual funds), exchange traded
funds (ETFs), hedge funds (40 act structured funds), & guaranteed products.
He stated that, “the flows are all going to mutual funds and
ETFs”, and that the hedge fund industry is "rapidly
maturing".
Mr. Roame concluded that strategic activity is
accelerating, including mergers & acquisitions opportunities in the
banking, mutual funds, & independent broker/dealer markets. He closed
saying that because the majority of total financial services industry market
capitalization is held by retail banks, "that makes banks the
acquirers", and in a bit of a challenge to one of the keynote speakers,
David Carroll of Wells Fargo Corporation, Mr. Roame predicted that,
“Wells Fargo will acquire UBS’ brokerage business" in 2011
or 2012.
Tiburon recognized John Bogle
(Founder, The Vanguard Group) & Mark Casady (CEO, LPL Financial) as the
third annual recipients of its Tiburon CEO Summit awards at
Tiburon CEO Summit XX. Tiburon's CEO Summits are built around three
key themes, including focusing on consumer (and other client) needs,
challenging conventional industry wisdom (innovation), & taking
responsibility. In order to recognize leaders in the financial services
industry who have supported these themes, Tiburon initiated its Tiburon CEO
Summit Awards. Tiburon Strategic Advisors is pleased to share some highlights
of the Tiburon CEO Summit XX awards presentations.
CEO Summit XX
Award Recipient Jack Bogle
Founder The Vanguard Group
Jack Bogle (Founder, The Vanguard
Group)
John Bogle founded The Vanguard
Group in 1974, served as chairman & CEO until 1996 and senior chairman
until 2000, and today serves as the president of Vanguard's BogleFinancialMarketsResearchCenter.
Mr. Bogle has been a recipient of
numerous awards, including being named as one of the world's 100 most
powerful & influential people by Time magazine in 2004 and one of the
investment industry's four giants of the twentieth century by Fortune Magazine
in 1999. He also is a recipient of Institutional Investor magazine's Lifetime
Achievement Award in 2004, the Woodrow Wilson Award from PrincetonUniversity
for distinguished achievement in the Nation's service in 1999, and the Award
for Professional Excellence from the Association for Investment Management
& Research (now CFA Institute) in 1998, and the Berkeley Award for
Distinguished Contributions to Financial Reporting in 2006. Mr. Bogle is a
best-selling author, with nine books, including Bogle on Mutual Funds: New
Perspectives for the Intelligent Investor (1993), Common Sense on Mutual
Funds: New Imperatives for the Intelligent Investor (1999), John Bogle on
Investing: The First 50 Years (2000), Character Counts: The Creation &
Building of The Vanguard Group (2002), The Battle for the Soul of Capitalism
(2005), Enough (2007), & Don't Count on It! (2010). Mr. Bogle's life and
career is also the subject of a book titled John Bogle & the Vanguard
Experiment: One Man's Quest to Transform the Mutual Fund Industry (1996 by
Robert Slater).
Mr. Bogle was being recognized as
a Tiburon CEO Summit award recipient because he exemplifies the three central
themes, including Focusing on Consumer (and Other Client) Needs, Challenging
Conventional Industry Wisdom (Innovation), & Taking Responsibility. Mr.
Bogle, 81 years old, is one of the most respected mutual fund leaders and a
legend to many. As it pertains to Tiburon CEO Summit award criteria, some of
Mr. Bogle's accomplishments include:
Focusing on Consumer (and
Other Client Needs): Mr. Bogle structured The Vanguard Group as a
mutual, in which its mutual funds own the company. In turn, investors
own the mutual funds and benefit directly from its low costs. Mr. Bogle
has likely given up billions in personal wealth and allows investors to
determine how to share their savings. Numerous studies have shown that
low expenses are the most reliable indicator of mutual fund performance
Challenging Conventional
Industry Wisdom (Innovation): Mr. Bogle has been at the forefront of two
of the mutual fund industry's most impactful innovations, including
index funds (1976) and no-load mutual funds (1977). Neither was an
overnight success (Vanguard's S&P 500 index fund raised only $11
million in its initial offering period). Mr. Bogle's passion and stamina
in part led to their success
Taking Responsibility: Mr.
Bogle has been relentless in telling the indexing and other stories to
assist investors, having published nine books
Tiburon's Managing Partner Chip
Roame sat down with Mr. Bogle at Tiburon CEO Summit XX to recognize him for
focusing on consumer (and other client) needs, challenging conventional
industry wisdom (innovation), & taking responsibility. Prior to Mr.
Roame's questions, Mr. Bogle made a few opening comments to the group, and
with equal parts humor and wisdom, he thanked Tiburon for the award, and
humbly said, that fifteen years after a heart transplant he was,
'"pleased to be anywhere". He briefly recounted the story of the
development of Vanguard and the origins of the first index mutual fund and
said that "time after time, lady luck smiled on me".
When Mr. Roame asked Mr. Bogle
about focusing on consumer needs, Mr. Bogle stated quite clearly that is The
Vanguard Group's entire mission. He stressed his career long fight against,
"the tyranny of costs", and the beneficial impacts of a simpler and
lower cost model that puts shareholders first, ahead of the profits and
growth of the mutual fund company.
When Mr. Roame shifted to the
topic of challenging conventional wisdom, Mr. Bogle referred to the original
objective of The Vanguard Group. He said early on it was far from a certainty
that the low cost index mutual fund would work, and said that it had been
referred to as, "Bogle's folly", raising only $11 million in its
initial offering period.
And finally on the topic of taking
responsibility, Mr. Bogle discussed The Vanguard Group's long standing policy
to help both regulators and the media, saying that, "the mutual funds
industry does not need Vanguard....every industry needs a Vanguard!"
Mr. Roame also welcomed Tiburon
CEO Summit XX attendees to pose questions to Mr. Bogle. One attendee asked
Mr. Bogle about continuing to challenge conventional wisdom, and Mr. Bogle
commented that, "I love a good fight", saying that, "it is
even better when you win".
Mr. Bogle was recognized as a
Tiburon CEO Summit award recipient as he exemplifies the three central
themes, including Focusing on Consumer (and Other Client) Needs, Challenging
Conventional Industry Wisdom (Innovation), & Taking Responsibility.
Mark Casady (CEO, LPL Financial)
Mark Casady is the CEO of LPL
Financial. Before joining the firm in 2002, Mr. Casady was managing director
of the mutual funds group at Deutsche Asset Management, Americas
(formerly Scudder Investments). He was also a member of the Scudder, Stevens,
& Clark board of directors and
management committee. Prior to Scudder Investments, Mr. Casady held roles at
Concord Financial Group and Northern Trust.
Mr. Casady serves on the Financial
Industry Regulatory Authority's (FINRA) board of governors and is former
chairman and a current board member of the Insured Retirement Institute. Mr.
Casady also previously served on the executive committee of the Investment
Company Institute board of governors. Mr. Casady was recognized as the financial
executive of the year by DePaul University College of Commerce in 2007 and
was also named one of the top 50 financial professionals by Irish American
magazine in 1999. Mr. Casady was inducted into the Redefining Investment
Strategy Education Hall of Fame by the University of Dayton
in 2008.
Mr. Casady was recognized as a
Tiburon CEO Summit award recipient because he exemplifies the three central
themes, including Focusing on Consumer (and Other Client) Needs, Challenging
Conventional Industry Wisdom (Innovation), & Taking Responsibility.
Mr. Casady made a rather dramatic
career shift in moving from the manufacturing (Scudder Investments) side of
the business to the independent financial advisor distribution (LPL
Financial) side and has met with great success, including leading LPL's 2010
initial public offering. As it pertains to Tiburon CEO Summit award criteria,
some of Mr. Casady's accomplishments include:
Focusing on Consumer (and
Other Client Needs): Mr. Casady has been a vocal supporter of both
objective advice and the democratization of advice. LPL's core clients
are not consumers but rather its independent advisor clients. As one LPL
executive team member reported to Tiburon, "Mark came to take us
public and fell in love with financial advisors." As an example of
his commitment to LPL's financial advisor clientele, Mr. Casady updated
and redistributed LPL's commitment creed that was originally written in
1986 and which lays out five fundamental premises about serving
financial advisors
Challenging Conventional
Industry Wisdom (Innovation): Prior to LPL's ascendency under Mr.
Casady's leadership, independent broker/dealers were small key person
organizations. Mr. Casady institutionalized the LPL value proposition,
built out an executive team, and grew its number of financial advisor
clients from 3,000 to 12,000, making LPL the third largest brokerage
firm in the US
Taking Responsibility: Mr.
Casady serves on the Financial Industry Regulatory Authority’s
(FINRA) board of governors and is former chairman and a current board
member of the Insured Retirement Institute. Mr. Casady also previously
served on the executive committee of Investment Company Institute board
of governors. On a more personal level, Mr. Casady & LPL formed the
Invest in Others Foundation which includes matching gifts to LPL
financial advisors' charities as well as an industry charitable event
(in association with Investment News) recognizing charitable efforts
across the industry
Tiburon's Managing Principal Chip
Roame sat down with Mr. Casady at Tiburon CEO Summit XX to recognize him for
focusing on consumer (and other client) needs, challenging conventional
industry wisdom (innovation), & taking responsibility.
When Mr. Roame asked Mr. Casady
about focusing on consumers, Mr. Casady stated quite clearly that LPL
Financial, “remains true to Todd Robinson’s (LPL founder)
original vision from when he started the firm as a 27 year old Smith Barney
broker”, eschewing the traditional Wall Street model of selling proprietary
products to the firm’s clients, and instead creating an independent
platform for financial advisors to provide planning based conflict-free
solutions.
When Mr. Roame shifted to the
topic of Mr. Casady’s role in challenging conventional wisdom, growing
the firm, and recently having taken LPL Financial public, Mr. Casady
confirmed a quote from one of his senior colleagues at LPL Financial who said
that, "Mark came to LPL to take it public, and he fell in love with
financial advisors along the way". Mr. Casady amplified that feeling by
discussing the, “need for advice” on the part of investors and
“the important work” that independent financial advisors do in
that respect.
And finally on the topic of taking
responsibility, Mr. Casady discussed LPL Financial's growing efforts to
support independent financial advisors with regulators, saying that,
“our model (independent advisors) is under tremendous threat”,
and that he has, in conjunction with two separate lobbying firms been
spending a lot of time in Washington, DC, citing an old Capitol Hill adage
that, “if you are not at dinner, you are on the menu”.
Mr. Roame also welcomed Tiburon
CEO Summit attendees to pose questions to Mr. Casady. Several attendees were
curious about Mr. Casady’s impressions on the fiduciary issue, and he
said that, “the SEC study was actually pretty good….the standard,
as written by the SEC would work..” in
reference to unbiased advice and LPL Financial’s dually registered
financial advisor model.
Mr. Casady was recognized as a
Tiburon CEO Summit award recipient because he exemplifies the three central
themes, including Focusing on Consumer (and Other Client) Needs, Challenging
Conventional Industry Wisdom (Innovation), & Taking Responsibility.
Along with Tiburon's Managing Principal Chip Roame and award
recipients John Bogle (Founder, The Vanguard Group) & Mark Casady (CEO,
LPL Financial), guest speakers at Tiburon CEO Summit XX included
Keith Banks (President, US Trust), Charles Brandes (Chairman, Brandes
Investment Partners), David Carroll (Senior Executive Vice President, Wells
Fargo Corporation), Ric Edelman (CEO, Edelman Financial Services), Ed Finn
(President, Barron's), & Allen Thorpe (Managing Director, Hellman &
Friedman).
CEO Summit XX
Guest Speaker Keith Banks President US Trust
Keith Banks
(President, US Trust)
Keith Banks is president of US Trust, Bank of America
Private Wealth Management. Mr. Banks also oversees Bank of America Global
Capital Management, which is Bank of America’s money market fund
business. Mr. Banks is also a board member of the Bank of America Charitable
Foundation and is a member of the American Bankers Association Investment
Advisory Committee, the Lincoln Center Corporate Fund’s Leadership
Committee, the Michael Geltrude Foundation, and the Board of Visitors of
Columbia University Medical Center.
Mr. Banks has been with Bank of America Corporation and its
predecessor organizations since 2000 when he joined Fleet Boston Financial.
He previously served as president of Global Private Client, Institutional and
Investment Management, president of Global Wealth & Investment
Management, and president & chief investment officer of Columbia
Management. Prior to joining Fleet Boston Financial, Mr. Banks spent sixteen
years at JP Morgan Investment Management, where his roles included head of US equity, head of global equity research
& US
equity research, equity research analyst, and portfolio manager.
Mr. Banks addressed his views of the private banking and asset
management businesses. Mr. Banks said that in relation to the clarity and
simplicity of his mission, “this is a rocket science free zone…we
are focused on blocking & tackling”. Mr. Banks went on to say that,
“our goal is to become the pre-imminent private bank”, and that,
“I talk about getting the swagger back” in relation to returning
US Trust to its former market position.
Mr. Banks also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. One attendee asked
Mr. Banks about the working relationship between US Trust and Merrill Lynch,
and Mr. Banks commented that, “it is not easy, but it is doable”.
Another attendee asked Mr. Banks about open architecture versus proprietary
products, and Mr. Banks asserted that, “proprietary products were once
viewed by clients as a way for us to charge them more money, and now they see
it as us controlling the quality of the investment process".
CEO Summit XX
Guest Speaker Charles Brandes Chairman Brandes Investment Partners
Charles Brandes
(Chairman, Brandes Investment Partners)
Charles Brandes is the chairman of the Executive Committee of Brandes
Investment Partners, where he shares responsibility for driving strategic
decisions and monitoring implementation of the firm’s vision &
objectives. Mr. Brandes is also a member of the firm’s Investment
Oversight Committee, which monitors the processes & activities of the
firm’s investment committees. Mr. Brandes presently serves on the board
of trustees of the Salk Institute for Biological Studies and the Museum of Contemporary Art
in San Diego, CA.
Mr. Brandes founded the firm in 1974 after training to be a
stockbroker and after becoming an acquaintance of Benjamin Graham, widely
considered the father of the value investing approach. Mr. Brandes is one of
the most closely followed value investors and also authored a 2003 book
called Value Investing Today.
Mr. Brandes addressed his views of the investment management business,
including numerous successful 2000s investments in financial services stocks.
Mr. Brandes said that, “value investing is the new alternative
investment”. Speaking not long after Mr. Bogle’s award, and about
the strength of the trend toward indexing, Mr. Brandes went on to say that,
“quoting Warren Buffett from about ten years ago, I like it when all my
competition has gone away”, suggesting that the indexing movement
indicates a thinning in the ranks of active managers.
Mr. Brandes also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. One investment
professional asked Mr. Brandes about the Russian equity markets, and Mr.
Brandes commented that he did not find the market that compelling, saying
that investors, “still have a problem regarding the rule of law”
as a broad issue, and went on to say that he is “not finding valuations
attractive enough to take that level of risk”.
CEO Summit XX
Guest Speaker
David Carroll
Senior Executive Vice President Wells Fargo Corporation
David Carroll
(Senior Executive Vice President, Wells Fargo Corporation)
David Carroll is the senior executive vice president of Wells Fargo
Corporation’s wealth, brokerage, & retirement services business.
His responsibilities include the firm’s private banking, trust &
estate services, retail brokerage, & institutional recordkeeping
businesses. Mr. Carroll also serves on the board of the Mint Museum of Art in
Charlotte, NC
and on the board of visitors of the Kenan-FlagerBusinessSchool
at the University of North Carolina at Chapel Hill.
Mr. Carroll has been employed by Wells Fargo Corporation and its
predecessor organizations since 1979 when he joined then Wachovia Bank &
Trust Company (and in 1981 when he joined then First Union Bank). He
previously served in a variety of capacities, including as head of corporate
services & merger integration, chief of ecommerce & technology, and
head of First Union’s General Banking Group in Georgia & Florida. In 1985, he was named senior
executive vice president of then Wachovia Corporation’s Capital
Management Group, which included retail brokerage (Wachovia Securities),
asset management (Evergreen Investments), and Retirement & Investment Products.
Mr. Carroll addressed his views on the wealth, brokerage, &
retirement businesses. Mr. Carroll said that, “we love this
business…the business of helping our clients achieve financial
success”. Mr. Carroll went on to say that, at Wells Fargo Corporation,
“we do business with one in three households in the United States”.
Mr. Carroll also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. When discussing why
he believed Wells Fargo Corporation had grown while competitors had lost
ground, Mr. Carroll said, “I am a huge believer in plan-based
advice” and continued by saying that it (plan-based advice) has a,
“higher ROA (return on assets) than the traditional brokerage
model”. Mr. Carroll, commenting on why a bank would want to be in the
brokerage business, said that, “it is almost a dumb question as banks
are slower growing on balance and this business (investments) has some tail
wind to it”.
Ric Edelman
(CEO, Edelman Financial Services)
Ric Edelman is CEO of Edelman Financial Services, as well as president
of Sanders Morris Harris Group. Mr. Edelman has been ranked by Barron’s
among America’s
top 100 financial advisors seven times, including being ranked as the number
one independent financial advisor in both 2009 & 2010. Mr. Edelman has
also been ranked as a top financial advisor by Research Magazine, Registered
Rep, Financial Advisor, & other publications. Mr. Edelman is also a best
selling author, syndicated columnist, & host of weekly television and
radio shows on personal finance. His seven books on personal finance include
The Truth About Money; Ordinary People, Extraordinary Wealth; & The New
Rules of Money. Mr. Edelman served for five years on the board of the United Way of the
National Capital Area, including a two year stint as its chairman, and
currently serves on the boards of the Wolf Trap Foundation for the Performing
Arts & the Boys and Girls Clubs of America.
Mr. Edelman founded his firm in 1987.
Mr. Edelman addressed his views of the financial advisory business.
Mr. Edelman said that with regard to his approach with the mass affluent
investor market, “the same people who criticize me for charging 2.00%
up to $150,000 would not take that client at any price!” Mr. Edelman
went on to say that, “we are known for serving the mass affluent, but
that is a misnomer….we (Edelman Financial Services) serve more high net
worth households than any other firm has clients”, further stating that
his firm has more than 1,000 households with, “seven, eight, & even
nine figure net worths”.
Mr. Edelman also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. One attendee asked
Mr. Edelman about his, “marketing machine”, and Mr. Edelman said
that, “anybody can get someone to buy something once”, but that
at his firm, “we focus very intently on the experience”, citing
the Starbuck’s model, and holding firmly to the service standard of,
“one face, one voice”, with the proof being the firm's,
“98% retention rate” of clients.
Ed Finn
(President, Barron’s)
Ed Finn is the president of Barron’s, where he is responsible
for the company’s print, digital, & conference operations.
Mr. Finn joined Barron’s as managing editor in 1993, and was
named editor in 1995 and president in 1998. He was previously the editor of
American Banker, assistant managing editor at Forbes magazine, & a writer
and editor at The Wall Street Journal. Mr. Finn is also the author of
Barron’s Guide to Building Wealth.
Mr. Finn addressed his views of the investments industry. Mr. Finn
said that, “clients may be back in the market, but they are back in a
more conservative way”. Mr. Finn went on to say that investors today
have a, “scared and scarred mindset” about the current markets.
Mr. Finn also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. Mr. Finn commented on
both politics and financial markets, and specifically said, in relation to
the healthcare reform debate, “whichever way we go, we are not going to
let old people starve in the streets”. Then, in a somewhat
unconventional perspective, Mr. Finn discussed investing in high dividend
paying stocks as fixed income substitutes, stating that, “I have (more)
confidence in Johnson & Johnson’s ability to pay a dividend more
than some municipalities' ability to make interest payments”
CEO Summit XX
Guest Speaker Allen Thorpe Managing Director
Hellman & Friedman
Allen Thorpe
(Managing Director, Hellman & Friedman)
Allen Thorpe is a Managing Director at Hellman & Friedman and
leads the firm's New York
office. Mr. Thorpe’s primary areas of focus are financial services
& healthcare. Mr. Thorpe serves as lead director at LPL Investment
Holdings; as a director at Emdeon, Sheridan Healthcare, & Mondrian
Investment Partners, and as a member of the advisory board at Artisan
Partners and Grosvenor Capital Management Holdings. Mr. Thorpe was formerly a
director of Gartmore Investment Management Limited, Mitchell International,
Vertafore, & Activant Solutions.
Mr. Thorpe joined Hellman & Friedman in 1999. He was previously a
vice president at Pacific Equity Partners and a manager at Bain &
Company.
Before Mr. Thorpe addressed his views on the private equity market, he
made a general comment on alternative investments for retail investor saying
that, “knowing what is underneath all of this stuff
matters a lot”. Mr. Thorpe went on to say that at Hellman &
Friedman, “we think of ourselves as investors….not private
equity, or deal, or LBO (leveraged buyout) guys”.
Mr. Thorpe also welcomed Tiburon CEO Summit XX attendees to pose
questions in an extended question & answer session. Commenting on the
trend of investors handling things on their own, Mr. Thorpe said, “I am
bearish on the self-seve movement….advice is still important and
needed”, as if to further endorse the firm’s investment in LPL
Financial. When asked about rollups of investment advisory firms, Mr. Thorpe
hedged briefly, saying that, "I am sure that someone will eventually
prove me wrong on this...”, but, “the ante is high service and
low fee, and that is really challenging”, suggesting that he would not
be interested in investing in that area.
Attendees
Tiburon CEO Summit XX had 167 Tiburon client attendees, including:
Rachael Joyce (Senior
Producer, Money Media, Financial Times Group, Pearson)
David Geracioti (Editor-in-Chief, Registered Rep,
Penton Business Media, Penton Media)
Joe Giannone (Senior Correspondent Wealth
Management, Reuters Group, Thomson Reuters)
Tiburon CEO Summit XIX: October 6-7, 2010
Tiburon CEO Summit XIX was held October 6-7, 2010 at the Ritz Carlton
Hotel in San Francisco, CA. The Summit
started at 7:45am on Wednesday, October 6, 2010, included a networking dinner
that evening at a water front restaurant in Tiburon, CA,
& concluded at 1:00pm on Thursday, October 7, 2010. Almost 120 senior
industry executives took two days out of their busy schedules to participate.
In addition to Chip Roame (Managing Partner' Tiburon Strategic Advisors),
guest speakers included Judy Barber (CEO, Family Money Consultants), Dale
Brown (CEO, Financial Services Institute), Ron Carson (CEO,
Carson Wealth Management Group), Harold Evensky (President, Evensky
& Katz), Jeff Maggioncalda (CEO, Financial Engines), Meir Statman
(Professor, Santa Clara University), & Mark Yusko (CEO, Morgan Creek
Capital Management). Tiburon CEO Summit XIX also featured a general
session panel discussion as well as five concurrent break-out sessions that
took place at lunch on October 6, 2010.
Opening Keynote Presentation Highlights
Tiburon CEO Summit XIX featured a general session keynote opening
presentation by Tiburon's Managing Partner Chip Roame regarding the state of
the financial services industry. This presentation served as the backdrop and
overview of the entire CEO Summit.
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 brokerage, investments, banking, &
insurance 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 conference speaker. 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, separately managed accounts, 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 investment banking transactions. At Tiburon, Mr. Roame has
led over 1,300 client engagements for over 300 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 twenty-five most influential people in financial planning 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
addressed the State of the Financial Services Industry and included 25 issues
he felt financial services industry CEOs needed to be addressing, grouped
into six categories. Specifically, Mr. Roame's points included issues
surrounding significant consumer changes, the new legislative &
regulatory agenda, accelerating product shifts, accelerating channel shifts,
a return to tactical basics, & abundant financial services investment
opportunities.
Mr. Roame
first addressed significant consumer changes and how net worth has declined
and consumers turned conservative.
Mr. Roame
further addressed the new legislative & regulatory agenda, including
health care reform, financial services reform, and fiduciary issue, & the
12b1 issue.
With
significant consumer changes & a new regulatory regime, Mr. Roame went on
to address accelerating product shifts such as those in mutual funds (target
date mutual funds), exchange traded funds (ETFs), hedge funds (40 act
structured funds), & guaranteed products.
Mr. Roame
also reviewed accelerating channel shifts, including those in the financial
advisory markets (wirehouses, break-away brokers, independent broker/dealers,
& fee-based financial advisors), institutional markets, &
international markets.
Mr. Roame
further went on to address the return to basics in which three key tactics
for financial services industry & financial advisors included sales &
marketing, staffing & compensation, and technology & outsourcing.
Mr. Roame
concluded that there are abundant financial services investment
opportunities, including mergers & acquisitions opportunities in the
banking, mutual fund, & independent broker/dealer markets; financial
advisor acquisitions as the aging RIAs & independent reps begin to
retire; & the recent pick up in financial services industry IPOs.
Award Recipients Highlights
Tiburon CEO Summit
XIX featured the second annual Tiburon CEO Summit Award
presentations to Joe Mansueto (CEO) & Don Phillips (President,
Fund Research) of Morningstar.
Joe Mansueto
(CEO, Morningstar)
Joe Mansueto is the founder, chairman, & CEO of
Morningstar. He founded the company in 1984.
Mr. Mansueto received the 2007 Skip Viragh Award,
sponsored by Rydex Investments & Financial Advisor magazine, which
recognizes new and innovative services that positively impact the financial
advisor community. Mr. Mansueto also received the 2007 Visionary Award and
was one of ten winners of the 2007 Chicago Innovation Award, sponsored by the
Chicago Sun-Times and Kuczmarski & Associates. In 2007, Smart Money
magazine recognized Mr. Mansueto in the Smart Money Power 30, its annual list
of the top 30 most powerful forces in business and finance. He received the
Distinguished Entrepreneurial Alumnus Award from the University of Chicago
Graduate School of Business in 2000. He received the KPMG Peat Marwick High
Tech Entrepreneur of the Year Award in 1993 and won the Rosenthal Award for
Excellence in Investment Research from the University of Chicago
in 1992. Before founding Morningstar, Mr. Mansueto was a securities analyst
at Harris Associates
Don Phillips
(President, Fund Research, Morningstar)
Don Phillips is president of fund research for
Morningstar, overseeing global research on mutual funds, exchange traded
funds, & alternative investments. He has also served on the
company’s board of directors since 1999.
Mr. Phillips joined Morningstar in 1986 as the
company’s first mutual fund analyst and soon became editor of its
flagship publication, Morningstar Mutual Funds, establishing the editorial
voice for which the company is best known. Mr. Phillips helped to develop the
Morningstar Style Box, the Morningstar Ratings, & other distinctive
proprietary Morningstar innovations that have become industry standards. In
2010, Investment Advisor magazine named Mr. Phillips to its thirty most
influential individuals list. Investment Advisor also named him to its list
of the most influential people in the financial planning industry in 2003
& 2004. Financial Planning magazine named him one of the financial
planning industry’s movers & shakers in 2003. Registered Rep named
him one of the investment industry’s ten key players in 2002
Guest
Speakers Highlights
Tiburon CEO
Summit XIX guest speakers included Judy Barber (CEO, Family Money
Consultants), Dale Brown (CEO, Financial Services Institute), Ron Carson
(CEO, Carson Wealth Management Group), Harold Evensky (President,
Evensky & Katz), Jeff Maggioncalda (CEO, Financial Engines), Meir
Statman (Professor, Santa Clara University), & Mark Yusko (CEO, Morgan
Creek Capital Management)).
Judy Barber (CEO, Family Money Consultants)
Judy Barber founded and
serves as CEO of Family Money Consultants. Ms. Barber has worked with
individuals, couples, families, & family enterprises regarding issues of
accumulated, inherited, sudden, & diminished wealth. She assists
participants in articulating shared goals, enhancing communications,
addressing succession planning, inter-generation transfers, & governance
issues. She is a licensed marriage & family therapist.
Ms. Barber has nearly twenty five years of experience in working with clients
and financial advisors. She is a founding member of the American Bar
Association’s psychological & emotional issues of estate &
financial planning sub-committee of the real property, probate, & trust
law section. She is an advisor member of the Institute for Private Investors.
Ms. Barber also was inaugurated as a Family Firm Institute fellow in 2001.
She is also a member of Attorneys for Family-Held Enterprise and the
Association for Dispute Resolution.
While most were prepared for Ms. Barber to address issues on wealth transfer,
philanthropy, & overlapping family enterprise issues, she went much
further into the dynamics in wealthy families. Ms. Barber said that,
“in 25 years of working with families, the greatest tool I have is the
irrational…when they (families) can talk about the irrational,
we can get to the rational. Ms. Barber went on to say that, “you
can’t stuff rationality down people’s throats if they’re in
an irrational place”. Ms. Barber also welcomed Tiburon CEO Summit
attendees to pose questions in an extended question & answer session. Tif
Joyce (President, Joyce Financial Management) asked Ms. Barber about children
and money, and Ms. Barber commented that “Kids (young children) have
concrete thinking…I want what I want now and the intentional dialogue
must reflect that reality”. She went on to say that “as they
(Kids) age they get more abstract in their thinking…more long term and
future focused”, which seems to set up teachable moments around
financial literacy.
Dale Brown (CEO, Financial Services Institute)
Dale Brown serves as the CEO of the Financial Services Institute. He
is responsible for management of the non-profit organization dedicated to
serving & representing the interests of independent broker/dealers &
their financial advisors.
Mr. Brown brings more than twenty years of association management experience
to the FSI, most recently as the associate executive director of the
Financial Planning Association (FPA). At the IAFP, one of the FPA’s
predecessor organizations, he led the government relations program and the
broker/dealer program, which grew to more than 130 member firms by the time
the FPA was created in 2000. He also led the
successful fight in the mid-1990s against the IRS’s attempts to force
independent broker/dealers to reclassify their representatives as statutory
employees.
Mr. Brown addressed the independent broker/dealer industry as well as
regulatory reform affecting it. Mr. Brown said that “we formed this
mission in response to an oppressive regulatory environment”. Mr. Brown
went on to say that, the Financial Services Institute has “123 member
firms (FINRA has 4,700+ firms)”, and is particularly proud of the
“14,500 financial advisor members”. Mr. Brown also welcomed
Tiburon CEO Summit attendees to pose questions in an extended question &
answer session. When asked by an audience member about the Dodd/Frank
legislation’s intent toward harmonization (between FINRA & SEC
standards for Advisors), Mr. Brown shook up the group by saying “I have
a good friend in Washington who says that Congress does two things very well;
nothing and overreact”. He went on to continue the theme of moderation
in movement toward the Fiduciary Standard being imposed on FINRA member firm
representatives and stuck closely to a thoughtful lobbyist position on changes
impacting his constituency.
Ron Carson (CEO, Carson Wealth Management Group)
Ron Carson founded and
serves as CEO of Carson Wealth Management Group. He 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.
He is also a registered principal at LPL Financial.
Mr. Carson has been honored as one of Barron's Top 100 financial advisors and
was named by Registered Rep Magazine as the #1 independent advisor.
He has also 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 IAFP, 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 addressed his experiences in financial management and as an
independent financial advisor. Mr. Carson, a firm believer in holistic wealth
management and Maslow’s hierarchy of needs said that “we’re
uniquely positioned to have a bigger impact on safety and security than any
other profession”. Mr. Carson went on to challenge a bit of
conventional wisdom by saying that “the bear market wasn’t really
confined to stocks, bonds, and commodities. It was a bear market in
trust”. Mr. Carson struck an engaging mix between motivation speaker,
life coach, and seasoned financial advisor. He also demonstrated his humility
when describing his father’s back handed compliment around his
"persidity" (sic), his unique mix of “persistence and na�ve
stupidity”. As the single largest producer in the independent broker dealer
universe (as measured by gross revenues) and an accomplished financial
advisor, author, and speaker, Carson was likeable and open. In fact, many of
his peers would probably like to develop their own "persidity” to
more effectively compete with Carson.
Harold Evensky (President, Evensky & Katz)
Harold Evensky founded
and serves as the president of Evensky & Katz. Prior to forming Evensky
& Katz, Mr. Evensky served as a vice president of investments with major
investment banking firms.
Mr. Evensky has served as chairman of the International CFP� Council, the
CFP� Board of Governors, the Board of Examiners, & the Board of Appeals.
He has served on the Editorial Advisory Board of the Asia Financial Planning
Journal, as a columnist for Worth.com, on the Editorial Advisory Board of the
Journal of Financial Planning, & he is currently the research columnist
for the Journal of Financial Planning and a board member of the Academy of Financial Services. He has also served
on the National Board of the IAFP and the Charles Schwab Institutional
Advisory Board & Council. He is the past chairman of the TIAA-CREF
Institute Advisory Board and is a member of the Financial Planning
Association, the Academy
of Financial Services,
& the CFA Institute and is an associate member of the American Bar
Association. He is the author of Wealth Management (McGraw-Hill) and
co-editor of The Investment Think Tank & Retirement Income Redesigned
(Bloomberg)..
Mr. Evensky addressed his experiences in the investments & financial
planning industry. Mr. Evensky said that “we (financial
planners/financial advisors) tend to focus on the probabilities and not the
consequences”. This sobering, yet measured advice in Mr.
Evensky’s 7 Things presentation was his belief that “the
risk of (investors) losing standard of living is our primary focus as
planners”. He went on to say, in relation to investment time horizon
and asset sufficiency for most investors, “what ought to keep you awake
at night is that you won’t die”. But far from gloom and doom, Mr.
Evensky advocates a low fee (“fees matter….a lot!”) Core
& Satellite philosophy, a minimum of two years of cash flow reserve, and
prudence in optimizing portfolios for outperformance by stating that
“costs overwhelm excess returns in pursuing alpha”. Mr. Evensky
also welcomed Tiburon CEO Summit attendees to pose questions in an extended
question & answer session. When asked by one of the few financial
advisors in the audience about the current regulatory environment, Mr.
Evensky did not hesitate and said, “we’re financial
planners…fee-only fiduciaries in our practice”.
Jeff Maggioncalda (CEO, Financial Engines)
Jeff Maggioncalda serves
as 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.
Mr. Maggioncalda 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
for 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 received his MBA from
the Stanford Graduate School of Business and a bachelor’s degree in
quantitative economics and English from StanfordUniversity.
Mr. Maggioncalda took the group through the
evolution of his company’s formation and changing mission with an
engaging degree of humility, calling Financial Engines a mutant company with
a story of survival by adaptation. He described the companies value
proposition by stating that “what makes us different is the way we use
technology”, and went on to suggest that “any broadly shared
financial problem will probably be solved with technology at some
point”. Mr. Maggioncalda addressed the retirement industry as well as
the access to investment advice to retail investors. Mr. Maggioncalda said
that, “people are not in very good shape to retire, at least for the
most part”. Mr. Maggioncalda went on to say that Financial Engines has
done a lot of work around “success by default”, or “setting
up (retirement plan) default choices to better outcomes”. Mr. Maggioncalda
also welcomed Tiburon CEO Summit attendees to pose questions in an extended
question & answer session. When asked about competitive pressure in
his arena, Mr. Maggioncalda said that “the top 4% of all 401(k) plans
have more than half of the assets (of all 401(k) plans)”. He went
on to tell the group that “there’s price pressure everywhere
now”. However the markets seem to be endorsing Financial
Engine’s approach to solving these problems, as evidenced by the
company raising more than $125 million through a successful IPO in the spring
of 2010.
Meir Statman (Professor, Santa ClaraUniversity)
Meir Statman is the Glenn
Klimek Professor of Finance at the Leavey School of Business, Santa ClaraUniversity
and Visiting Professor at TilburgUniversity in the Netherlands. His research focuses
on behavioral finance and will be reflected in his book, What Investors
Really Want, which is scheduled to be published by McGraw-Hill this fall.
Professor Statman’s
research has been published in the Journal of Finance, the Journal of
Financial Economics, the Review of Financial Studies, the Journal of
Financial & Quantitative Analysis, the Financial Analysts Journal, the
Journal of Portfolio Management, & many other journals. The research has
been supported by the National Science Foundation, the Research Foundation of
the CFA Institute, & the Investment Management Consultants Association
(IMCA). Professor Statman is a member of the Editorial Board of the Financial
Analysts Journal, the Advisory Board of the Journal of Portfolio Management,
the Journal of Wealth Management, & the Journal of Investment Consulting,
an Associate Editor of the Journal of Financial Research, the Journal of
Behavioral Finance, & the Journal of Investment Management, and a
recipient of a Batterymarch Fellowship, a William F. Sharpe Best Paper Award,
a Bernstein Fabozzi/Jacobs Levy Outstanding Article Award, a Davis Ethics
Award, a Moskowitz Prize for best paper on socially responsible investing,
two Baker IMCA Awards, and three Graham & Dodd Scroll Awards. Professor
Statman consults with many investment companies and presents his work to academics
and professionals in many forums in the US and abroad.
Professor Statman addressed behavior finance and
its effects on the financial services industry. Specifically, he discussed
how investors and managers make financial decisions and how these decisions
are reflected in the financial markets. Professor Statman said that
“investors are looking for more than utilitarian benefits (when
investing)”. Professor Statman went on to say that, when
investing, the first lesson is to “know yourself”, then second to
“assure yourself”, and lastly to “protect
yourself”. Professor Statman not only challenged conventional
wisdom, but took the discussion of behavior finance further by positing that
investors are not irrational as many of his peers would argue, but instead
are normal, and that sometimes investors are normal smart, and other times
normal stupid, and that we (people/investors) “..fall
victim to cognitive errors and emotions on our way to what we want”.
Professor Statman provided both serious and whimsical examples to make his
point through a combination of PowerPoint and video, and cautioned financial
advisors to be aware of the difference between what is said to investors, and
ultimately what they hear from advisors.
CEOSummitXIX GuestSpeaker MarkYusko CEO MorganCreek Capital Management
Mark Yusko (CEO, MorganCreek
Capital Management)
Mark Yusko has been the
Founder, CEO, & CIO of Morgan Creek Capital Management since its
formation in 2004. Mr. Yusko is responsible for the oversight of the
firm’s strategic & tactical asset allocation decisions and
operations.
Prior to forming Morgan Creek Capital Management, Mr. Yusko was Founder,
President, & Chief Investment Officer of UNC Management Company, the
Endowment investment office for the University
of North Carolina at Chapel Hill, from 1998 to 2004. Until 1998, Mr. Yusko
was the Senior Investment Director for the University of Notre Dame
Investment Office where he joined as the
Assistant Investment Officer in 1993.
Mr. Yusko addressed his experiences and views of
the global financial markets and the investment management industry. He also
discussed why he feels it is important to think differently when investing by
using alternative thinking strategies. Mr. Yusko said that “we’re
in a depression”, and went on to say that as it relates to some once
great companies with lofty valuations, “you can smoke all the
‘Hope-ium’ you want….it’s not coming back”. Mr.
Yusko went on to say that many Investors and financial advisors are viewing
fees through the wrong paradigm when delegating to investment managers, and
shook up many of the index oriented members of the crowd by stating that
“fees matter…in fact there’s a perfect correlation between
fees and performance”. Yusko posits that the best talent on Wall
Street charges the highest fees, and went on to demonstrate, through charts
and data the dramatic outperformance of hedge funds and private equity (both
historically high fee asset classes) in relation to traditional stock and
bond investments over the past twenty years. Mr. Yusko left
little time for questions from CEO Summit attendees, though he did depart
pretty dramatically from his well documented findings when asked about his
alma mater, Notre Dame (by Chip Roame, a University of Michigan graduate),
and their prospects for the current college football season – clearly
he’s not all facts and figures. The basic take away, on sports
and investing was stated pretty unequivocally by Mr. Yusko when he said,
“Winning is good…losing sucks”. Among the many other
noteworthy comments from Mr. Yusko, his advice on manager selection (his firm
meets with 4,500/yr and selects only 3% for investment) and allocation stands
out as he suggests that “investments are like spice; a little bit makes
the meal, and too much is terrible”.
Attendees
Tiburon CEO Summit XIX had 118 Tiburon client attendees, including:
Kim Wright-Violich (President, Schwab Charitable, The Charles Schwab Corporation)
Mark Yusko (CEO, Morgan Creek Capital Management)
Jamie Ziegler (Partner, AUM Partners)
Tiburon CEO Summit XVIII: April 14-15, 2010
Tiburon CEO Summit XVIII was held April 14-15, 2010 at the
Ritz Carlton Hotel in Battery Park in New
York, NY. The Summit started at
7:45am on Wednesday, April 14, 2010, included a networking dinner that
evening at Delmonico's Restaurant, & concluded at 1:30pm on Thursday,
April 15, 2010. Almost 150 senior industry executives took two days out of
their busy schedules to participate. In addition to Chip Roame (Managing
Principal, Tiburon Strategic Advisors), guest speakers included Ed Bernard
(Vice Chairman, T. Rowe Price Group), Abby Cohen (President, Global Markets
Institute, Goldman Sachs Group), Steve Forbes (CEO, Forbes Media), Jim McCool
(Executive Vice President, The Charles Schwab Corporation), Jonathan
Steinberg (CEO, Wisdom Tree Investments), David Tittsworth (Executive
Director, Investment Adviser Association), & Fred Tomczyk (CEO, TD
Ameritrade). Tiburon CEO Summit XVIII also featured three general session
panels spread over two days, including the Ask the Stock Analysts panel, the
Ask the Reporters panel, & the Ask the Consumers panel, as well as
five concurrent break-out sessions that took place at lunch on April 14,
2010.
Tiburon CEO Summit XVIII
Welcome, Brief Introductions, & Agenda Highlights
Mr. Roame welcomed Tiburon CEO Summit XVIII
attendees, provided a brief introduction of the firm and the vision behind
the CEO Summits, & then highlighted the agenda for Tiburon
CEO Summit XVIII:
Tiburon Strategic Advisors
maintains a focus on corporate-level strategy:
Serve senior executives only
at financial services companies
Publish series of 62
off-the-shelf research reports ($5,000 each; $25,000 for access to all
reports for all employees for one year)
Host semi-annual Tiburon
CEO Summits
According to Tiburon
CEO Summit attendee feedback forms collected, the most recent
Tiburon CEO Summit (XVII) scored a record-high 9.2 out of 10.0 on
overall satisfaction, with one speaker, Pete Kight of Fiserv
Corporation, tying the all-time high score of 9.3 out of 10.0
Tiburon CEO Summit XVIII
included a White House Briefing Room style media facility
Tiburon CEO Summit
XVIII had 16 sessions, including Chip Roame's Tiburon
presentations, seven guest speakers, a choice of five break-out
sessions, three general session panels, & two terrific social
events
Tiburon CEO Summit XVIII had
160 confirmed client attendees, with over one-third of them being first
time attendees
Tiburon CEO Summit
XVIII had 12 past & future speakers in attendance
The Future of Advice: Top
Five Themes from Tiburon Client Project Requests
Mr. Roame then provided a backdrop for his Future of
Advice opening keynote presentation by highlighting recent client project
request topics, including significant consumer changes, a new regulatory
regime, accelerating product & channel shifts, a return to tactical
basics, & abundant financial services investment opportunities:
Significant Consumer Changes
Consumer household net worth
fell $11.5 trillion in 2008 to $51.5 trillion before recovering
partially to $54.2 trillion in 2009
Consumer household net worth
increased to $54 trillion due to an increase of $2 trillion in
investable & retirement plan assets
Consumer households’
equity in their homes fell to 38% in 2009, the lowest level since records
have been kept
The number of consumer
households with over $1.0 million net worth dropped 27% in 2008 but
recovered to 7.8 million in 2009
The US
personal savings rate has been decreasing in recent years, but increased
to 2.9% in 2008, 4.3% in 2009, and 6.0% in early 2010, as consumers have
become more conservative
New Regulatory Regime
Health care reform
Financial services reform
Systemic risk
Three-tier bank regulation
Consumer Financial
Protection Agency
Derivatives regulation
Broker/dealer
& RIA harmonization
Fiduciary issue
Role of non-fiduciary
commission salesman
SEC support?
Accelerating Product & Channel Shifts
Products shifts worth
watching include those in mutual funds, bonds & bond mutual
funds, target date mutual funds (alive and well), indexing, ETFs,
non-correlated strategies (hedge funds), & guarantees. Specifically,
details include:
Mutual funds had a 52 week
streak of net inflows, topping out at $54 billion in last month
Bond mutual funds dominated
inflows in 2009, taking in over $400 billion, while money market funds
had outflows of $300 billion
Traditional long-only active
high-fee investing strategies may give way to investing in ETFs &
low cost mutual funds, guaranteed products, & hedge funds &
hedge fund like products
Exchange traded fund assets
declined from $608 billion to $578 billion in 2008 but rebounded in
2009 to $782 billion
Hedge fund assets fell to
$1.3 trillion in 2008 but recovered to surpass their 2007 high, now at
$1.9 trillion
Channel shifts worth watching
include those amongst financial advisors (wirehouses, break-away
brokers, independent broker/dealers, & fee-based financial
advisors (RIAs)), institutional markets, & international
markets. Specifically, details include:
Perspective is required
regarding the rush of break-away brokers…
A $200 billion move would
boost the independent advisors market by 10%
Traditional full-service
brokerage firms & banks are losing share to independent financial
advisors & discount brokers
Return to Tactical Basics
FSI & FA Sales
& Marketing (client service)
Retention
Aging clients
Client referrals
FSI & FA
Staffing & Compensation
325,000 financial services
industry job losses
Compensation rules for
TARP players
Hedge fund compensation
Employee morale
FSI & FA
Technology & Outsourcing
Rapidly changing technology
Technology outsourcing
One financial advisor
recognized the importance of client communications
Many financial advisors have
event built their businesses around outsourcing models
Amazing FDIC assisted
deals for private equity funds
Insurance companies
Mutual fund companies
FA M&A
RIAs
& IBD reps aging
Employee economics do not
work for large firms
Lift outs
FSI Private Equity
Lack of debt
FSI IPOs
Coming soon
Retail banks will be the
most aggressive acquirers because they are the largest
institutions…
Five financial services
institutions collectively raised $22 billion, showing that the IPO
market is opening up, especially in Asia!
Guest
Speaker Presentation Highlights
Tiburon CEO Summit was held April
14-15, 2010 at the Ritz Carlton Hotel in New York, NY.
There were over twenty planned sessions. Along with Tiburon's Managing
Principal Chip Roame, guest speakers included Ed Bernard (Vice Chairman, T.
Rowe Price Group), Abby Cohen (President, Global Markets Institute, Goldman
Sachs Group), Steve Forbes (CEO, Forbes Media), Jim McCool (Executive Vice
President, The Charles Schwab Corporation), Jonathan Steinberg (CEO, Wisdom
Tree Investments), David Tittsworth (Executive Director, Investment Adviser
Association), & Fred Tomczyk (CEO, TD Ameritrade).
Ed Bernard
(Vice Chairman, T. Rowe Price Group)
Ed
Bernard has served as vice chairman of the board of directors of T. Rowe
Price Group since 2007, is a member of the firm's management committee, &
chairman of the T. Rowe Price Mutual Funds. He oversees the firm's
distribution, client service, technology, operations, & communications
activities.
Mr.
Bernard has over 20 years of experience in the investment management
industry, all of which have been with T. Rowe Price Group. In addition to his
responsibilities at T. Rowe Price Group, he serves as chairman of the board
of governors of the Investment Company Institute, the national trade
association for the mutual fund industry. Prior to joining T. Rowe Price, Mr.
Bernard worked for a large direct marketing company.
Mr.
Bernard utilized his experience in distribution, client service, technology,
& communications to address how his firm plans to compete in the new
economy, including highlighting the importance of maintaining client focus
& concentrating on simplified product offerings. Mr. Bernard said,
“if you’re going to be competitive and add value, you’re
going to have to pick your spots”. Mr. Bernard went on to say
“the target date fund is the closest thing I’ve seen to a silver
bullet.”
Abby Cohen
(President, Global Markets Institute, Goldman Sachs Group)
Abby
Joseph Cohen is senior investment strategist and president of the Global
Markets Institute at Goldman Sachs Group. Ms. Cohen joined Goldman Sachs in
1990, having specialized in quantitative strategy & economics at other
major financial firms. She began her career as an economist at the Federal
Reserve Board in Washington,
DC.
Ms.
Cohen’s extracurricular activities focus on education and public
policy. She is the chair of the board of trustees of the Jewish Theological
Seminary. She also serves as a presidential councillor at CornellUniversity
and on the boards of the WeillCornellMedicalCollege & the
Brookings Institution. She previously served as chair of the board of the
Chartered Financial Analyst Institute, from which she received the
Distinguished Service Award. Ms. Cohen is an advisor to the investment
committees of CornellUniversity and Major
League Baseball. She is on the national board of the Smithsonian Institution
and is a member of the Council on Foreign Relations. She is a frequent guest
lecturer at several universities & graduate schools of business. Ms.
Cohen holds degrees in economics from CornellUniversity
and The George Washington University. She has received three honorary
doctorates, including one in engineering. She has been recognized as a leader
in US
portfolio strategy for more than 15 years, and was previously ranked No. 1 by
Institutional Investor magazine and Greenwich Associates. Her career is the
subject of a HarvardBusinessSchool
case study and a Business Week cover story. She has been honored by many
groups, including the Financial Women’s Association, New York Stock
Exchange, the Wall Street Week Hall of Fame and leading financial
publications.
Ms.
Cohen utilized her 25 years of experience as a highly regarded economist and
strategist to share her views on the future of investing, both how it has
been affected by recent financial services industry events and how proposed
new regulations might affect it moving forward. Ms. Cohen said “we do
believe that not all of the problems that led to the credit crisis have been
resolved.” Ms. Cohen, however, provided a positive outlook for the
economy and markets citing “70%, the vast majority, of companies are
increasing IT spending.”
Steve Forbes
(CEO, Forbes Media)
Steve
Forbes has served as CEO of Forbes Media and Forbes Magazine since 1990.
Since he assumed his position, Forbes Media has launched several businesses,
including Forbes FYI & Forbes Global, the firm's international
publication.
Prior
to assuming his current position at Forbes Media, Mr. Forbes served as
chairman of the Board of International Broadcasting for Ronald Reagan,
overseeing the operations of Radio Free Europe & Radio Liberty,
broadcasting behind the Iron Curtain. He has twice campaigned for the
Republican nomination for the presidency of the United States, in 1996 and again
in 2000.
Mr.
Forbes shared his perspectives on operating a multinational media corporation
and some of the new challenges he faces. He addressed some of the foundations
of his business that have brought him such success. He discussed the new
regulatory regime from his own perspective as one inside the circle, and
outlined key points that industry leaders are weary of moving forward. Mr.
Forbes said, “you don’t succeed in the free market unless you
meet the needs of the people.” Mr. Forbes went on to cite Austrian
economist Joseph Schumpeter’s ideas on creative destruction by
suggesting that “most people are much happier with the creative part
than about the destruction”.
Jim McCool
(Executive Vice President, The Charles Schwab Corporation)
Jim
McCool has served as executive vice president of The Charles Schwab Corporation
since 2006. Mr. McCool currently oversees Schwab's Institutional Services
business with combined assets under management of $850 billion, serving
independent investment advisors, corporate clients, & their employees.
Schwab Institutional Services provides custodial, operational, practice
management, & trading support for more than 6,000 independent investment
advisory firms that serve 1.9 million individual clients with $590 billion
assets under management Schwab Institutional also provides corporate
retirement and brokerage services, either directly to companies or through
third party administrators. These services include employer-sponsored
retirement plans, stock plans, & corporate brokerage services, in
addition to record keeping, trustee, & custodial services. Mr. McCool
also oversees Schwab’s investment-only sales and mutual fund clearing
businesses.
A
25-year veteran of the financial services industry, Mr. McCool began his
career in the retirement plan servicing industry in 1984 and helped establish
The Hampton Company, which became a wholly owned subsidiary of The Charles
Schwab Corporation in 1995.
Mr.
McCool addressed developments in two of Schwab’s fastest growing
businesses, independent financial advisors & retirement plans. He focused
specifically on the changing landscape for financial advisors and new
challenges in the 401K industry, discussing the shifts in products &
client focus. Mr.
McCool referred to many of what he called
“head fakes in the 401K industry.” Mr. McCool went on to address
a question about insurance products in retirement plans by saying that
“annuities are a solution to a problem that participants don’t
know they have.”
Jonathan
Steinberg (CEO, Wisdom Tree Investments)
Jonathan
Steinberg has served as CEO of Wisdom Tree Investments since 2004. He is
responsible for the overall management of the firm, including overseeing the
company’s strategic growth initiatives. Wisdom Tree is an
innovative ETF sponsor and asset manager with equity and currency income ETFs
covering the domestic, developed, & emerging markets.
Prior
to establishing Wisdom Tree, Mr. Steinberg founded and served as CEO of
Individual Investor Group. From 1998 to 2004, he held the role of
editor-in-chief of Individual Investor and Ticker magazines. Prior to those
endeavors, Mr. Steinberg was a mergers & acquisitions analyst at The Bear
Stearns Companies.
Mr.
Steinberg addressed his experience in the exchange-traded fund business and
its significance as one of the fastest-growing segments of the asset management
industry. As a leader in the industry, he offered insights into his firm's
model and also offered insights into his firm's strategic initiatives going
forward. Mr. Steinberg said, “I believe that structure matters”.
Mr. Steinberg went on to say “I believe that
investment advisors and their clients have never been less
satisfied.”
David
Tittsworth (Executive Director, Investment Adviser Association)
David
Tittsworth has served as executive director of the Investment Adviser Association
since 1996. He is responsible for the management of the non-profit
organization dedicated to serving & representing the interests of
SEC-registered investment advisory firms. Based in Washington, DC,
his firm engages in numerous advocacy, compliance, & educational services
on behalf of its membership.
Prior
to assuming his current position, Mr. Tittsworth served as counsel of the
house committee on energy & commerce. Prior to that he was a partner
at government relations firm Chambers, Conlon, & Hartwell. Mr.
Tittsworth has served in Washington,
DC, almost continuously, since
1987, including stints on the house budget committee and as senior counsel to
the house subcommittee on transportation, trade, & hazardous
materials.
Mr.
Tittsworth addressed US regulatory
reform and what it means for investment advisers. Specifically, his comments
addressed the six pillars of regulatory reform, the meaning of the fiduciary
term, the SEC as a body, the concept of self-regulating organizations,
& next steps currently being considered by regulators. Mr.
Tittsworth said, “FINRA is actively lobbying to expand its turf.”
In relation to the fiduciary standard Mr. Tittsworth went on to say,
“don’t weaken or water down the Advisors Act fiduciary
duty."
Fred Tomczyk
(CEO, TD Ameritrade)
Fred
Tomczyk has served as president and CEO of TD Ameritrade since 2008 and
previously served as the company’s chief operating officer. His
involvement with the company goes back more than five years as he helped to
shape the Ameritrade & TD Waterhouse merger and later served on the board
of directors. Today, Mr. Tomczyk oversees the management of the firm and
progress made toward its strategic objectives: to maintain a leadership
position in the trading business and to continue growing as an asset
gatherer.
Prior
to assuming his current position, Mr. Tomczyk served as vice chairman of
corporate operations for TD Bank Financial Group. Prior to that role, Mr.
Tomczyk's positions at TD Bank Financial Group included executive vice
president of core banking & wealth management, as well as executive vice
president of retail distribution, where he led the branch networks of TD Bank
and Canada Trust through the merger to become TD Canada Trust. Prior to
joining Canada Trust, Mr. Tomczyk served as CEO of London Life.
Mr.
Tomczyk discussed the challenges that he faces in pursuing his strategic
objectives and managing TD Ameritrade for long-term growth, despite difficult
economic & market environments. He also reviewed his learnings from
mergers & acquisitions and discussed the future of such for his firm,
given its relatively strong standing within the industry. Mr. Tomczyk said,
“we are open minded about acquisitions, but they have to make strategic
and financial sense.” When specifically asked about acquiring a major online
competitor, Mr. Tomczyk went on to say “he wouldn’t rule it
out,” but cited balance sheet issues as being of concern.
Tiburon CEO Summit XVIII
Attendees
Attendees
Tiburon CEO Summit XVIII had 141 Tiburon client attendees, including:
Dick Hoey (Chief Economist, The Bank of New York Mellon Corporation)
John Iachello (CEO, Brokerage Clearing & Operations, Ameriprise Financial)
Brian Jacobs (Chief Commercial Officer, Hatteras Funds, Hatteras Investment Partners)
Dwight Jacobsen (Executive Vice President, Intermediary Distribution, MSBC Securities Corporation, The Dreyfus Corporation, The Bank of New York Mellon Corporation)
Bryce James (President, Smart Portfolios)
David Jobson (Executive Vice President, Product Development & Analytics, US Retail, Allianz Global Investors, Allianz)
David Johnson (Partner, Harpeth Partners)
Tom Johnson (Business Head, Business Development, Retirement Income Security Products,
New York
Life)
Jamie Kase (Executive Vice President, Global Sales & Marketing, State Street Global Advisors, State Street Corporation)
Mark Katzelnick (Chief Operations Officer, National Financial Services, Fidelity Investments)
Mike Kim (Investment Management Firms Analyst, Sandler, O’Neill, & Partners)
Rob Klapprodt (President, Vestmark Software, Vestmark)
Jeff Lancaster (Principal, Bingham, Osborn, &
Scarborough
, Boston Private Financial Holdings)
Randal Langdon (President, Lindner Capital Advisors)
Bruce Lavine (President, Wisdom Tree Investments)
Chuck Lewis (CEO, My Vest Corporation & Personal Capital Corporation)
Sarah Libbey (President, Fidelity Charitable Gift Fund, Fidelity Charitable Services, Fidelity Investments)
Bob Lindner (CEO, Lindner Capital Advisors)
Julie Littlechild (CEO, Advisor Impact)
Jeff Lovell (Chairman, Lovell Minnick Partners)
Joe Luby (CEO, Jagen Funds, Jagen Investments)
John Lunny (CEO, Vestmark)
Tom Lydon (President, Global Trends Investments)
Frank Maiorano (CEO, Trust Company of America )
Doug Mangini (Chief Operating Officer, Retail & Intermediary Business, Morgan Stanley Investment Management, Morgan Stanley, Mitsubishi UFJ Financial Group)
George McClelland (Vice Chairman, F-Squared Investments)
Jim McCool (Executive Vice President, Schwab Institutional Services, The Charles Schwab Corporation)
George Riedel (Business Head, Intermediary Distribution, Third-Party Distribution, T. Rowe Price Group)
Neal Ringquist (President, Advisor Software)
Tony Rochte (Senior Managing Director, US Sales, Client Service, & Strategy, Intermediary Business Group, State Street Global Advisors, State Street Corporation)
Jim Ross (Senior Managing Director, Intermediary Business Group, State Street Global Advisors, State Street Corporation)
Bill Salus (Chief Business Development Officer, PNC Global Investment Servicing, The Bank of New York Mellon Corporation)
Tom Sholes (Executive Vice President, Strategic Planning & Global Product Management, PNC Global Investment Servicing, The Bank of New York Mellon Corporation)
Luciano Siracusano (Chief Investment Strategist, Wisdom Tree Investments)
