NEW YORK - Advisors rule the financial services industry for now -- but keep an eye on direct-channel “self-serve” distribution, Chip Roame said Tuesday at his firm's semiannual CEO Summit.

The advisor channel currently “dominates” as both the “biggest and fastest-growing” distribution channel in financial services, said Roame, managing partner of Tiburon Strategic Advisors, during his keynote presentation on "The Future of Wealth Management."

That trend also makes the advisor channel a sweet spot for private equity activity, he said, speculating that fee-based advisors, outsourcing providers (such as Envestnet and Dynasty Financial Partners) and self-serve firms like Betterment, Mint and Wealthfront would make attractive targets. That latter group -- firms that provide financial services directly to consumers online for a low fee -- constitute a “wild card” that is a “potential huge revolution in the works,” Roame said.


Financial advisors took center stage for most of Roame’s presentation at the Summit, a highly anticipated event that attracts many of the financial service industry’s top executives.

He pointed specifically to the proliferation of advisor business models, citing firms that are taking advantage of scale -- such as United Capital Financial Partners -- as well as companies targeting specific markets, such as Lenox Wealth Management.

Among the other key trends Roame cited: independent broker-dealers repositioning themselves as custodians, turnkey asset management providers and producers; as well as the steady growth of the discount brokerage firm channel, which now has over $4.6 billion in assets under administration.


And while independent advisors are also slowly gaining market share, Roame maintained that it was a “flawed” overstatement to suggest that “breakaway brokers” were tipping the balance of power from the large wirehouse brokerage firms to RIAs.

“Breakaway brokers are a trickle, not a flood,” accounting for only about $60 billion of a $5 trillion business he said. “This is not the end of wirehouses,” Roame added, citing the impressive productivity of wirehouse brokers.

Similarly, Roame cautioned that advisors should not feel undue pressure to aggregate their practices into larger entities. “The industry is amazingly fragmented,” he said. “The big players don’t even have 1% market share. There is no big behemoth that is going to crush you.”


The really good news for advisors, according to Roame, is the fact that as baby boomers age, more than $40 trillion from retirement plan assets, personal assets (such as homes), small businesses and other illiquid assets will all be flowing into the investable asset pool that advisors will manage -- a pool that is already over $32 trillion.

“For the people in that business,” Roame said, “this means that all that money will be flowing their way for the next 20 years.”

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