SunStar’s president & CEO Kathryn Morrison recently spoke at Tiburon’s CEO Summit XXXV held in San Francisco, California on October 8 and 9, 2018. The event drew more than 200 C-level attendees.

Chip Roame, Tiburon Managing Partner, delivered the keynote presentation, The Top Six Wealth Management Industry Trends & Wealth Management Industry Strategic Activity. He focused his remarks on six key trends he sees in the Wealth Management industry.

We share them here with his permission:


1. Continuing Importance of Baby Boomers & the Baby Boomer Retirement Crisis

  • Baby Boomers hold approximately 81% of the U.S. assets and that should continue for the next 10 years.
  • Many advisors think it’s time to shift focus from Baby Boomers to Millennials since it is the fastest growing segment. However, we believe they should consider that Boomers currently have $26 trillion in investible assets while Millennials have only about $1.6 trillion today.
  • In ten years Baby Boomers will have approximately $40 trillion in investable assets, a $14 million growth, while Millennials’ asset will have grown fast, but only by $9 trillion. This suggests it’s too early to count Boomers out and advisors should approach shifting their focus to the next generations with caution.
  • Baby Boomers have significant savings outside of the typically counted retirement asset vehicles. As they retire and begin to liquidate homes and businesses, more assets will flow into the investible pot.


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2. Clear Shift to Indexing, Exchange Traded Funds (ETFs), & Cost-Conscious Investment Products

  • There is a definite shift to passive investing as indexing continues to grow, but we are not seeing as much revenue coming from those products as from other products.
  • Active management is likely to fall behind but will survive. Yet, those declining assets will be offset by large revenues as wealth managers play a larger role in providing planning services.
  • Cost consciousness is permeating everything and is here to stay.
  • Passive products are providing investors are better deals – and putting pricing pressure on active managers as well. Investors are benefiting from overall cost savings because they’re moving many of their assets to lower cost funds, both passive and active.


3. More Moderate Shift to Discount Brokerage Firms, Robo Advisors, & Cost-Conscious Financial Advice

  • The advice market is currently an $8 trillion industry.
  • Advisors and larger firms are aggressively offering advice in different ways.
  • Robo Advisors are having an impact – they are creating price pressure and scooping up some of the incremental clients; traditional advisors need to provide more service than ever before
  • Even if Robo Advisors do not survive, and we think their potential is limited, the technology they have designed is outstanding and will become an integral part of investing methodologies.
  • The number of financial advisors, currently 300,000, is dwindling.


4. Managed Accounts, Streamline Product Offerings, & The Fiduciary World

  • Managed accounts in the U.S. were $82 billion in 1992 and have increased to $4.5 trillion today.
  • Managed accounts make up about 43% of advisor assets but 51% of their revenue.
  • Many firms are eliminating products and streamlining their offerings.
  • Market forces have pushed the industry to a fiduciary environment – regardless of government regulation, the fiduciary model is taking over and is here to stay.


5. Return of Financial Planning, with Focus on Retirement Income, Health Care, Long-Term Care, & Longevity Product Needs

  • Baby Boomers are driving an increased need for good financial planning services as they face longer lifespans, health care, and long-term care insurance concerns.
  • Advisors can address a changing business model by choosing to use Robo platforms while they focus their own efforts on specialized financial planning.
  • There is a growing need for longevity annuities as people live longer.


6. Continuing Emergence of Nationwide Fee-Only Financial Advisors (RIAs)

  • Fee-based advisors have taken a big share of the assets and are growing.
  • Fee-based advisors currently have 51% of the industry’s AUM.


Mr. Roame's full keynote presentation was live streamed via Facebook and can be viewed in its entirety here

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