Cerulli Advisor Survey Results

Transcription

1 Cerulli Advisor Survey Results Presented by:

2 Topics Large-Scale Advisory Trends Changing Advice Dynamics Product Changes

3 Asset Marketshare by Channel, E Channel E 2012E Wirehouse 43% 40% 38% IBD 16% 16% 17% Regional 15% 15% 15% RIA 12% 12% 13% Dually registered 7% 7% 7% Bank 4% 5% 5% Insurance 4% 4% 5%

4 Advisors by Revenue Source, % 60% 50% 40% 48% 52% 30% 42% 37% 41% 39% 31% 20% 27% 0% 7% 7% 11% 12% 17% 13% 14% Fee-only Fee-based

5 Advisor Business Mix by Channel, % 80% 60% 40% 20% 0% 8% 9% 36% 36% 11% 13% 47% 37% Wirehouse RIA IBD All Advisors Retail non-qualified Institutional (including foundations and endowments) Employer plans IRAs

6 Advisor Portfolio Construction Method, 2011 Method B/D RIA All Advisors Strategic allocation with a tactical overlay 57% 31% 54% Strategic allocation 11% 19% 11% Risk budgeting 8% 2% 8% Other 6% 21% 8% Tactical allocation 7% 12% 7% Style box 7% 2% 6% Mean variance optimization 2% 3% Liability-driven investing 2% 2% 2%

7 Changing Advice Dynamics Comprehensive advice Challenges Opportunities

8 Percentage of Clients Receiving Modular or Comprehensive Planning Advice, E 60% 50% 49% 40% 40% 30% 29% 26% 20% 12% 19% 13% 12% 0% Comprehensive financial planning Modular planning Modular Advice w/ no formal documentation No financial planning services Currently Planned for 2012

9 Anticipated Change in Practice due to Transition to Retirement Income, % 70% 60% 50% 40% 30% 20% 0% 73% I expect my practice's revenue to increase as more clients seek retirement income advice 40% I intend to expand my advice offerings to create more revenue opportunity 29% I expect to add clients to compensate for my declining asset base 16% I plan to increase my use of alternative fees to compensate for a smaller accounts

10 Advisors Cited Obstacles To Retirement Income Planning, 2008 vs % 25% 20% 15% 21% 26% 17% 18% 12% 15% 14% 14% 13% 11% 7% 11% 9% 9% 7% 5% 3% 0% Lack of consumer awareness Too time consuming Poor technology Lack of B/D support Product complexity Lack of planning assistance Lack of training or designations Lack of product offering Client resistance

11 Factors Address in Advisor Retirement Income Plans, % 60% 50% 40% 30% 61% 55% 54% 51% 50% 49% 43% 40% 32% 27% 20% 0% Longevity scenarios Client's budget Health care costs Social security income Client's desired lifestyle NA -do not deliver plans Estate considerations Inflation Taxes Medicare

12 Planning Services by Channel, 2011 Wirehouse RIA IBD All Advisors Asset allocation 84% 84% 77% 75% Retirement accumulation planning 47% 50% 53% 51% Retirement income planning 50% 55% 44% 47% Insurance (life, health, disability, etc.) 23% 32% 35% 37% Estate planning 34% 35% 27% 28% Employer benefits retirement planning 21% 26% 21% 22% Education funding 17% 19% 16% 19% Elder care planning 11% 12% 12% Business Planning 9% 8% 7% 9%

13 Product Changes Retirement Income Products Managed Accounts Product Choices

14 Advisor Preference for Retirement Income Products, 2008 vs % 50% 54% 56% 49% 52% 40% 38% 37% 36% 38% 30% 27% 26% 27% 26% 20% 22% 18% 17% 16% 8% 6% 3% 8% 0% Variable Annuities w ith Living Benefits Bond funds Systematic Withdraw als from Variable Annuities Dividend Paying Equity mutual funds Dividend Paying Stocks Systematic Withdraw als from Mutual Funds Annuitization Individual fixed income securities Packaged Retirement Income mutual funds Reverse mortgages

15 Advisor Opinion of Retirement Income Mutual Funds, % 50% 40% 30% 20% 42% 50% 18% 27% 28% 19% 8% 17% 21% 32% 15% 14% 14% 12% 0% I replicate similar portfolios using other products I use the products as part of a solution. Not enough control over clients' portfolios Part of a prudent portfolio for generating retirement income The products are too expensive I will use the products if they add guarantees The strategies are unproven

16 Managed Accounts Assets and Growth Rates, 2Q 2011 Program Types Separate Account Consultant Programs Mutual Fund Advisory Programs ETF Advisory Programs Rep as Portfolio Manager Rep as Advisor Unified Managed Accounts Description 2Q 2011 ($B) YOY 2-Year Asset managers administer portfolios of securities for investors in discretionary separate accounts. (ML Consults, UBS Access) $ % 31.0% Allocates investors assets across mutual funds. Range of FA Control: packaged, hybrid, and open. (EDJ Advisory Solutions, WFA FundSource ) $ % 65.7% Allocates investors assets across ETFs. Range of FA Control: packaged, hybrid, and open. $ % 191.7% Discretionary advisory programs in which financial advisors act as money managers (ML PIA, MSSB Custom Portfolio) $ % 82.3% Nondiscretionary advisory accounts, advisor must obtain approval each time a change is made (ML MLPA, UBS Strategic Advisor) $ % 74.6% Fee-based programs using multiple investment vehicles, with overlay management (MSSB Select UMA, UBS Strategic Wealth) $ % 160.8% Total MA Industry $2, % 63.0% Note: Numbers presented throughout represent most currently available industry data. Source: Cerulli Associates

17 Advisor Opinion of Managed Accounts Types, 2011 Program Type Managed Accounts Description Approximate Managed Accounts Marketshare Most Desirable to FA Open The advisor is solely responsible for determining use of asset managers and asset allocation 56% 54% Hybrid Those where recommendations are made by your B/D or third party, but the advisor can adjust those recommendations 23% 26% Packaged Those where asset managers and asset allocation are determined by the broker/dealer or third party 21% 13%

18 Managed Account Outlook Advisors want / need more flexibility, but also more capabilities This means more broker/dealer involvement and more oversight/compliance Advisors following home office suggestions, but may be only performance-related Third-party strategists may have stronger future role UMAs continue to be hindered by lack of flexibility, particularly compared to rep-driven programs Solving for retirement needs Managed accounts historically positioned for accumulation, not preservation or distribution Insurance programs widely believed to be too expensive, unwieldy Gaining perfect information on client is still a hurdle and dependent on client

19 Expected Change in Advisor Product Mix, 2011 Products Expecting Share Gains Increase More Than Increase up to No Change Decrease up to Decrease More Than Net % Advisors Expecting Increase Exchange-traded funds 20% 33% 44. 3% 0.1% 50% Variable annuities 12% 30% 51% 5% 2% 35% Variable life//whole life/term/ltc 7% 31% 58% 4% 0.0% 34% Equity mutual funds 18% 28% 40% 13% 2% 32% Commodities 2% 26% 69% % 26% Other mutual funds 9% 21% 66% 3% 1.0% 26% Individual fixed-income securities 4.5% 12% 60% 17% 7% -8% Fixed-income mutual funds 7.9% 14% 44% 25% 9% -12% Money markets, cash, etc. 1.4% 8% 67% 22% 2% -14%

20 Questions? For more information: Scott Smith Associate Director x132