The rapidly emerging online distribution channel is expected to be a hot topic at the Tiburon CEO Summit in New York.

Tiburon Strategic Partners has released a preview of managing partner Chip Roame's keynote address that gives a clear view of the industry trends on Roame's radar -- minus his trademark name-dropping asides.

And Roame is dedicating serious attention to so-called robo advisors -- which, in what Roame calls "B2C round two," are attracting serious venture capital interest. Roame divides these online providers can be divided into three models:

  • Investment management, exemplified by Personal Capital, Betterment, WealthFront and Financial Engines.
  • Financial planning and non-discretionary advice, exemplified by, LearnVest and Jemstep.
  • Online financial advisors, currently being executed by Edelman Online, Savant Capital Management and Searcy Financial Services.

Many of the "do-it-yourself" firms that can "combine delivery mechanisms" will be a "smart bet" going forward, according to the presentation. "Online-only advice may be less successful," Roame said in an email responding to questions about the presentation. "Online advice that includes [video] access to ... financial advisors available for episodic advice may be way more successful."
That may be good news for Edelman Online; Edelman, Morningstar and Personal Capital were voted the most impressive B2C models at last fall's Tiburon CEO Summit in San Francisco.


Roame's presentation also looks more broadly at retail channels. The presentation is set to highlight the wirehouses' continued domination of the market, even as custodians and independent broker-dealers continue to make steady gains. The presentation also contends that some regional broker-dealers, bank broker-dealers, private banks and "second-tier" independent broker-dealers are "struggling."

In addition, Roame is expected to point out (again) that although the breakaway-broker trend is over-hyped, independent advisory and brokerage channels are poised to capture "huge" assets.

"Private equity should always bet on [distribution] channel businesses over product businesses," Roame is set to tell conference attendees, "because the firms closest to the clients always win when margins compress."

Nonetheless, the presentation notes, "independent advisors are even more fragmented than other areas of financial services."


The presentation also highlights the resurgence of financial, investable and retirement plan assets in the U.S.  since 2008. It notes that consumer net worth reached a new peak of $75 trillion last year, up 32% from $57 trillion in 2008.

Much of that wealth is concentrated at the top: Consumer households with more than $500,000 in investable assets make up just 8% of consumer households, but control 77% of the assets. Households with less than $500,000 in investable assets make up 91% of all consumer households, according to Tiburon research, but control just 23% of financial assets.

That widening wealth gap has affected consumer behavior, Roame contends, resulting in "reduced spending, some deleveraging, some increased savings, net flows out of equity mutual funds and renewed growth in the self-service channels."

One smart bet, according to Roame: advisory firms that take advantage of scale, aggregation and outsourcing.

The continuing rise of the ETF market will be cited as one of the industry's top investing trends. Managed ETFs, according to Roame, are "a big deal," while active ETFs are "a wild card."

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