INDEPENDENT ADVISORMARKET

Scott Wenger Financial Planning

2012

Financial Planning

OUR AUDIENCE• There are nearly 300,000 professionals (comprised of RIAs,

independent broker-dealers and dually registered reps) in the universe covered by Financial Planning.

• The total is projected to grow to 385,000 by 2018.

• Overall employment of advisors is expected to increase faster than the average for all occupations.

• Advisors have more than $3.4 trillion in AUM.

Source: Cerulli Associates

• 75% Series 6/7

• 45% Series 65

• 40% CFP

• 40% RIA

Source: Cerulli Associates, Tiburon Strategic Advisors

Licenses & Designations

Fee-Based Financial Advisor and Independent Broker/Dealer Overlap

Independent Broker/Dealer Reps

Fee-BasedFinancial Advisors

HYBRIDS

Source: Tiburon Strategic Advisors

Fee-Based Financial Advisors by Registration

10,466 SEC Registered

47%

11,919 State Registered

53%

Source: Tiburon Strategic Advisors

RIA and Dually Registered New Advisors by Previous Channel

• 47% Fee and Commission

• 33% Fee only

• 9% Commission only

• 8% Salary

Source: Cerulli Associates, Tiburon Strategic Advisors

Compensation

THREE KEY CHALLENGES:

• Practice Management

• Client Management

• Portfolio Management

Financial Planning

• 70% of RIAs say their firms have grown in the past year.

• Nearly 9-in-10 want to grow over the next five years.

In Growth Mode

Fee-Based Financial AdvisorsBy Expected Three-to-Five-Year Growth Rate

Source: Tiburon Strategic Advisors

Less than 10%21%

10%-15%23%

Greater than 15%56%

FIDUCIARY STANDARD• Advisors worry ongoing federal efforts to protect consumers by

mandating that advisors be held to a higher standard will increase costs while actually harming consumers.

• New regulations could make even the simplest advice — such as on opening an IRA — much more expensive.

POTENTIAL IMPACT• Need for extensive compliance training and consulting. • Significant expenditures on new compliance software.

The Practice: Regulation

Source: The Boston Consulting Group

FEE PROJECTIONS BASED ON FIRM SIZE

Source: The Boston Consulting Group

CLEAR PREFERENCE: SEC vs. FINRA-IA SRO

Source: Financial Planning Tech Survey, 2011

Source: Financial Planning Tech Survey, 2011

Source: Financial Planning Tech Survey, 2011

Source: Financial Planning Tech Survey, 2011

Source: Financial Planning Tech Survey, 2011

CONFIDENCE BUILDING• Advisors are trying to grow AUM but some struggle because clients

are still paralyzed by fear of extreme market volatility.• Many advisors are embracing new tools social media and

tablets to connect with prospects and clients.

IMPACT• Advisors must identify market solutions that keep risk-averse

clients headed toward their financial goals.• Advisors must master social media and learn to communicate

appropriately while remaining compliant.

The Client: Trust and Communication

Fee-Based Financial Advisors & Client Interaction

Source: Tiburon Strategic Advisors

The individual client comes to the RIA to plan and/or invest The financial

advisor can provide the full range of services or utilize a vendor for any or all the client’s needs

Do it themselves

Utilize a TAMP

Utilize an investment selection specialist

Use back office vendor

Registered Investment Advisors by AUM

Less Than $25M 71%

$25M - $1B23%

More Than $1B6%

Source: Tiburon Strategic Advisors

OCTOGENARIANS, NONAGENARIANS, CENTENARIANS• Baby boomers are turning 65. • A man's average life expectancy at 65 is now 17+ years,

30% longer than in 1970.• A woman's average life expectancy at 65 is 20+ years,

compared with 17 in 1970.

IMPACT• Advisors need to help clients plan to stretch their money to

last 30+ years.• Advisors need to purchase more advanced portfolio

management and rebalancing software.

The Portfolio: Retirement Strategies

Sources: Cerulli Associates, in partnership with FPA, IMCA and Morningstar

• 52 years old• 18 years industry experience• 86% Male / 14% Female• $191,000 average HHI• 91% have a college degree

or higher (46% have a master’s degree or higher)

Financial Planning: Reader Profile

EXPERIENCED

• Average client base of 124• Personally manage $116 million

in client assets• Average client account value

is $2.3 million• Invest $18.5 million annually

on behalf of their clients

SUCCESSFUL

SIGNATURE ISSUES

• RIA Leaders

• FP 50: Annual Broker-Dealer Survey

• Pro Bono Planners of the Year

• Influencer Awards

• Top Schools for Financial Planning

• FP Annual Tech Survey

Financial Planning

PRINT, ONLINE & LIVE EVENTS• Focus on News Advisors Can Use

• E-Newsletters: FP Daily, First Look, Practice Management,Regulatory, Retirement Planning, Technology, Wealth Advisor, Weekend Update, What You Missed In Print

• Women Advisors Forum, Conferences & Webinars

• AdvisorTV

• Introduction of iPad app

• New Blogs and Discussion Boards

• Social Media Updates: Twitter, Facebook, LinkedIn

Financial Planning