TIBURON STRATEGIC ADVISORS ANNOUNCES UPDATED RESEARCH FROM ITS INDEPENDENT REP BEST PRACTICES BENCHMARKING TOOL

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1 --- FOR IMMEDIATE RELEASE --- TIBURON STRATEGIC ADVISORS ANNOUNCES UPDATED RESEARCH FROM ITS INDEPENDENT REP BEST PRACTICES BENCHMARKING TOOL -- Research reveals most recent usage and satisfaction statistics for leading products in the independent rep market, including publications, web sites, conferences, seminar materials, web site developers, and financial advisor coaches -- TIBURON, CA, April 1, Tiburon Strategic Advisors, a research-based strategic consulting firm, recently released new findings from its Independent Rep Best Practices web-based benchmarking tool. This newly updated research shows that independent reps prefer: Financial Advisor as a magazine, Morningstar s web site, their broker/dealers annual sales or education conference, seminar materials from Emerald Publishing, AdvisorSquare as a web site developer, and Tom Gau as a financial advisor coach. Tiburon recently releases statistics on independent reps product preferences in mutual funds, annuities, life insurance, TAMPs, and software products. Additional findings, including best practices of leading advisors and a comparison to fee-only financial advisors will be released over the coming weeks, and Tiburon will soon publish a revised version of its research report on this topic with all of the findings from almost 1,300 survey participants to date. Context Setting To give the reader of this release some context, it is worth noting the following averages for the 1,298 users thus far of the Independent Rep Best Practices tool: The survey participants came from a wide variety of broker/dealers; SunAmerica Securities, Royal Alliance, and FSC have provided the most participants thus far There are at least 63 million dollar producers in the database, whose practices Tiburon defines as the best practices; Royal Alliance has accounted for the largest share of million dollar producers The average rep in the survey has 298 clients, $52 million of client assets under administration, $428,000 of revenues, and $219,000 of pre-tax profits. Averages can sometimes be deceiving though. In this case, the reps were segmented across four firm revenue ranges and the median revenues were closer to $252,000. In other words, while the average is being supported by a few larger reps, the typical independent rep is a small business person with revenues near $252,000 Reps are substantially licensed for both insurance and investment product sales. The three leading licenses are: state insurance licenses (85%), series 7 (83%), and series 63 (75%). Other popular licenses and designations include: series 24, series 65, and series 6 Up-front commissions contribute a little over 50% of the average rep s revenues, Reps are Substantially Licensed for Both Insurance and Investment Product Sales; State Insurance Licenses, Series 7, and Series 63 are the Three Most Common State Insurance Licenses Series 7 Series 63 Series 24 Series 65 Series 6 CFP RIA CLU MBA ChFC Licenses & Designations Held Across All Reps 12% 11% 11% 32% 32% 42% 49% 47% 75% 85% 83%

2 while trailers and investment advisory fees account for an additional 20% each. While upfront product commissions are the dominant revenue source across broker/dealers, reps at LPL and Raymond James utilize more investment advisory products at the expense of upfront product commissions In a similar vain, across all reps, mutual funds and variable annuities account for the majority of investment product usage, with almost 60% of the total. While mutual funds are the leading product at all broker/dealers, LPL, Raymond James, and Securities America reps seem to utilize more investment advisory accounts Publications Four of the five most widely read publications by reps are those devoted to financial advisors; Financial Advisor (64%), Financial Planning (59%), the Wall Street Journal (56%), Investment Advisor (55%), and Registered Rep (50%) are the five most popular publications. Other leaders include The Journal of Financial Planning (32%), Forbes (22%), Investment News (21%), Money (21%), Barron s (20%), Investor s Business Daily (19%), Bloomberg Wealth Manager (19%), Mutual Funds Magazine (17%), Smart Money (), and Fortune (15%). Four of the Five Most Widely Read Publications by Reps are those Devoted to Financial Planners; Financial Advisor, Financial Planning, the Wall Street Journal, Investment Advisor, and Registered Rep are the Five Most Popular Publications Financial Advisor Financial Planning Wall Street Journal Investment Advisor Registered Representative Journal of Financial Planning Forbes Investment News Money Barron's Inve stor's Business Da ily Bloomberg Wealth Manager Mutual Funds Magazine Smart Money Fortune Publications Read Across All Reps 22% 21% 21% 20% 19% 19% 17% 15% 32% 50% 56% 55% 59% 64% The five leading publications are most popular at all broker/dealers and in all revenue size segments. In terms of satisfaction, the five leading publications receive good but not great satisfaction scores. The Wall Street Journal receives a 7.4 on a 10.0 scale, but the industry journals receive lower scores: Financial Planning (6.8), Investment Advisor (6.7), Financial Advisor (6.6), and Registered Rep (6.1). Reps added: I love the Wall Street Journal; it is the most comprehensive source. The reason why I read the Wall Street Journal is because I know my clients do as well and when they see an article and call me, I like to be prepared. I get Financial Planning, Investment Advisor, and Financial Advisor, but for the most part, I don t have time to read it all. I think the reason why the top industry publications are read is because they are free. I ve been trying to get my name off of their lists, so they stop sending them to me Morningstar/Morningstar Advisor is the Most Widely Visited Web Site by Reps, With Half of All Reps Visiting it Regularly Morningstar/Morningstar Advisor Yahoo Finance Web Sites Morningstar/Morningstar Advisor is the most widely visited web site by reps, with half of reps visiting it regularly. Other popular web sites include Yahoo Finance (38%), CNBC (34%), CBS CNBC CBS MarketWatch Motley Fool Microsoft Money Central Quicken FPA Web Sites Visited Across All Reps 19% 23% 27% 34% 38% 50% 2

3 MarketWatch (27%), Motley Fool (23%), Microsoft Money Central (19%), Quicken (), and FPA (). Morningstar/Morningstar Advisor is the most widely visited web site across most broker/dealers, with utilization peaking above 60% for American Express reps. Securities America reps prefer Yahoo and LPL reps prefer CNBC. Morningstar/Morningstar Advisor is also the most widely visited web site across all size segments. In terms of satisfaction, Morningstar s site also receives a pretty good satisfaction score of 7.5. Yahoo also receives a respectable 7.4 and CNBC receives a 6.7. Reps added: I like Morningstar s web site. The only problem I have with it is their silly password system which gets changed on us every once in a while. I think the reason why Yahoo is used so much but gets a lower satisfaction score is because it is a public site. Reps don t understand that they should not expect more than they are going to get, since it is free. Conferences Reps seem to stick to the conferences of their broker/dealers; a vast majority of reps (80%) attend their broker/dealer s annual sales or education conference. Other leading conferences include their broker/dealers regional forums (51%), mutual fund company due diligence trips (41%), their broker/dealers top producers trip (31%), and the FPA conferences (18%). Reps Seem to Stick to the Conferences of their Broker/Dealers; A Vast Majority of Reps Attend the Broker/Dealer s Annual Sales or Education Conference Broker/Dealer Annual Sales or Education Conference Broker/Dealer Regional Forum Mutual Fund Company Due Diligence Trip Broker/Dealer Top Producers' Trip Conferences Attended Across All Reps The vast majority of reps across all FPA 18% broker/dealers attend their respective sales or education conference (more than 80% at almost all broker/dealers). Securities America reps though prefer mutual fund due diligence trips (over 90%). Reps across all sizes seem to stick to the conferences of their broker/dealers; not surprisingly, the top producers trips grow in popularity with rep firm size (almost 80% of the largest reps claim to go on such trips). In terms of satisfaction, the three broker/dealer conferences and the mutual fund due diligence trips all receive pretty good satisfaction scores. The annual sales or education conferences receive a 7.6 on a 10.0 scale while the top producers trips receive a 7.5 and the regional forums receive a 7.0. Mutual fund due diligence trips receive a 7.6. Reps added: I think it makes sense for people to go to the conferences that are most familiar to them most often. I think it is nice to see your friends and peers within your broker/dealer. I think that the biggest problem is that my broker/dealer s conference is too product oriented. We go to a workshop on educational funding and it is basically a bait and switch. Couldn t get enough CE credits It is a 6.0 but I still enjoy going for networking I think the reason why broker/dealer sponsored conferences receive a higher attendance than the industry conferences is because we get subsidized for these conferences. It is much cheaper for me to go to my broker/dealer s conference than an FPA or Morningstar conference. 31% 41% 51% 80% 3

4 Seminar Materials Emerald Publishing delivers the most popular seminar materials, used by half of all reps. Other leaders include Ibbotson (31%), Successful Money Management Seminars (25%), and NF Communications (15%). Emerald Publishing Delivers the Most Popular Seminar Materials, Used by About a Half of All Reps Emerald Publishing Seminar Materials Utilized Across All Reps 53% Emerald produces the most widely used seminar materials across reps at all broker/dealers, with its lowest utilization amongst Advantage reps (10%). When segmenting reps by size, we see that the use of Emerald Publishing s materials decreases with firm size (just over 20% of the largest reps). Ibbotson Successful Money Management Seminars NF Communications 15% 25% 31% In terms of satisfaction, seminar materials from Ibbotson receive a slightly higher satisfaction score (7.3) than those from Emerald (7.1) and Successful Money Management Seminars (6.8). Reps added: I think the reason why Emerald is used the most is because they have a broad mix of topics. I think Emerald does a pretty good job. Web Site Builders AdvisorSquare is the dominant web site developer for reps, capturing almost 40% of the market. Other leaders include Lightport (25%), Emerald Publishing (21%), and AdvisorSites (). AdvisorSquare is the Dominant Web Site Developer for Reps, Capturing Almost 40% of the Market AdvisorSquare Web Site Developer Utilization Across All Reps 38% AdvisorSquare is most widely used at all broker/dealers except at Advantage where no reps use the firm and many use AdvisorSites. In terms of size segments, AdvisorSquare s utilization decreases as rep firm size grows (less than 20% of the largest reps use the firm). Lightport Emerald Publishing AdvisorSites As for satisfaction, Emerald receives the highest satisfaction score of 7.8 while AdvisorSquare receives a 6.7. Reps added: I think the reason AdvisorSquare is so popular is because they started in this industry first. AdvisorSquare is used the most because we have a list of vendors we could use to build our web site in order for the compliance department to approve our site quickly. If you use a different vendor, the approval process is very long. Coaches Tom Gau is the most popular FA coach across all reps (38% utilization), with Bill Bachrach (35%), Bill Good (26%), and Dan Sullivan (24%) being other popular choices. Others include: Steve Moeller (15%), Mark Tibergien (12%), John Bowen (9%), and Pete Montoya (9%). 21% 25% 4

5 Tom Gau is the dominant FA coach amongst SunAmerica reps; other coaches are more popular at other broker/dealers (including Bill Bachrach at Royal Alliance, FSC, Advantage Capital, and Sentra- Spelman). The use of coaches is fairly consistent across rep firm sizes; the largest reps may use coaches a bit less. In terms of satisfaction, Dan Sullivan scores the highest at 7.9. Tom Gau (7.1) and Bill Bachrach (7.0) also receive good scores. Tom Gau is the Most Popular FA Coach Across All Reps, With Bill Bachrach, Bill Good, and Dan Sullivan Being Other Popular Choices Steve Moeller (American Business Visions) FA Coaches Utilized Across All Reps Tom Gau (Million Dollar Producer) Bill Bachrach (Bachrach & Associates) Bill Good (Bill Good Marketing System) Dan Sullivan (Strategic Coach) Mark Tibergien (Moss Adams) John Bowen (Creating Equity) Peter Montoya (Millennium Advertising) 9% 9% 12% 15% 24% 26% 35% 38% Tiburon Strategic Advisors Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer research-based strategic consulting and other related services to financial institutions and investment managers. The firm has served over 150 corporate clients and completed over 350 research and strategic planning projects in that period. The firm s knowledge base ranges from mutual fund distribution, to wrap programs, alternative investments, online financial services, the fee-only financial advisor market, and bank/broker mergers. Tiburon Tools Tiburon Strategic Advisors recognizes that one of the obstacles to being a financial advisor is the inability to compare one s practice to those of other advisors. At the same time, in Tiburon s core business of offering strategic business advice to financial institutions and money managers, Tiburon needs data on the business practices and product preferences of various segments of financial advisors. The result was the creation of the Tiburon Tool Kit. The Tiburon Tool Kit includes benchmarking tools for a variety of markets: Advisor Benchmarking. Com: a tool for fee-only financial advisors; introduced in early 2001 with Rydex Funds (and now run exclusively by Rydex) Independent Rep Best Practices. Com: a tool for independent reps who utilize one of the independent broker/dealers such as Royal Alliance, SunAmerica Securities, and FSC; introduced in mid-2001 with the SunAmerica Financial Network Tax Pro Best Practices. Com: a tool for CPAs, EAs, and other independent tax professionals; introduced in mid-2001 with HD Vest Financial Services and the National Association of Enrolled Agents Tiburon also has three new tools under development that will be released in the next few weeks: Fee-Only Financial Advisor Best Practices. Com: a replacement for the original tool for feeonly financial advisors Broker Best Practices. Com: a tool for financial consultants at the wirehouses and regional brokerage firms Insurance Agent Best Practices. Com: a tool for full-time insurance agents While having customized questions, all of the Tiburon tools work in essentially the same way. Advisors visit the appropriate web address and are guided through questions pertaining to their business practices. As each question is answered, the advisor has the ability to compare his/her answers to the aggregate averages of all those advisors who have completed the survey 5

6 ahead of him/her. At the conclusion of the questions, advisors can print a free copy of Tiburon s research report on the topic, which provides a comprehensive understanding of the product usage, business models, and best practices of the segment of advisors. CONTACT: Krista Jenssen at Tiburon Strategic Advisors at [email protected] or (415) If you are still receiving Tiburon releases by regular mail, please drop us a line with your address and we will get these out to you 5-7 days earlier and more conveniently. 6