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 mutual fund companies, annuity companies, insurance companies, TAMPs, and software vendors -- TIBURON, CA, March 15, Tiburon Strategic Advisors, a research-based strategic consulting firm, recently released new findings from its Independent Rep Best Practices webbased benchmarking tool. This newly updated research shows that independent reps prefer products from American Funds, SunAmerica, AIG, SEI, and Morningstar. Additional findings, including statistics on magazine readership, conference attendance, and financial advisor coach utilization 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 $1+ million dollar producers in the database, whose practices Tiburon defines as the best practices; Royal Alliance has accounted for the largest share of $1+ 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, CFP, series 65, and series 6 Up-front commissions contribute a little over 50% of the average rep s revenues, while trailers and investment advisory fees account for an additional each. While up-front 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 up-front product commissions In a similar vain, across all reps, mutual funds and variable Across All Reps, Mutual Funds and Variable Annuities Account for the Majority of Investment Product Usage, With Almost 60% of the Total Investment Product Use Across All Reps Inv estme nt Advisory Fees 10% TAMPs 6% Individual Securities 11% Other 11% Variable Annuities 19% Mutual Funds 40%

2 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 sell more investment advisory accounts Mutual Fund Companies American Funds, with 74% utilization, is the most popular fund company amongst reps, but reps do use a wide variety of fund families. Other mutual fund companies with high utilizations include: Putnam (65%), AIM (64%), Oppenheimer (61%), Franklin/Templeton (58%), SunAmerica (56%), and MFS (53%). Several other firms have also achieved substantial penetration: Alliance (48%), Fidelity/Fidelity Advisor (45%), Van Kampen (35%), PIMCO (30%), Eaton Vance (28%), Janus (22%), and Zurich/Scudder (). American Funds is the Most Popular Fund Company Amongst Reps but Reps Do Use a Wide Variety of Fund Families Am erican Funds Oppe nheime r Fra nklin/templeton SunAmerica Fidelity/Fidelity Advisor Van Kampen Ea ton V a nce Zu ric h/s cud de r Mutual Fund Companies Utilized Across All Reps Putnam AIM MFS Alliance PIMCO Ja nus 35% 30% 28% 22% 48% 45% 53% 58% 56% 61% 65% 64% 74% Reps across all broker/dealers use a wide variety of fund companies, with American Funds being one of the leaders at all firms. American Funds is the leader in penetration at firms as diverse as American Express, LPL, Raymond James, Royal Alliance, FSC, and Sentra-Spelman. SunAmerica Securities reps rely heavily on the in-house product, making it number one in utilization with American Funds coming in at number two. American Funds is also the leader in all size segments when the independent reps are segmented by revenues. On the satisfaction side, American Funds earns an 8.0 on a 10.0 scale for overall satisfaction. The other leading mutual fund firms have varying satisfaction scores: Putnam (6.3), AIM (6.7), and Oppenheimer (7.3). When we followed up with reps to explore this apparent strong attraction to American Funds, we received the following comments: I use them because they will never blow up on you. For certain accounts, you want a fund family that is very stable and very consistent; I think American Funds is a fund family I don t have to worry about. I think American Funds are the most popular amongst reps because they are the closest thing reps can sell to a no-load but still collect commissions. I think they really understand the concept that the rep is their client. They solve problems really well and very efficiently. Annuity Companies Reps utilize a wide variety of annuity companies, with SunAmerica (51%) and Nationwide (50%) being the leaders. Other annuity companies with substantial penetrations include: American Skandia (39%), Pacific Life (35%), Hartford (34%), Manulife (22%), AIG (), Lincoln National (), Reps Utilize a Wide Variety of Annuity Companies, with SunAmerica and Nationwide (Best of America) Being the Leaders American Skandia Lincoln National Sun Life of Ca na da (MFS) Scudder Kemper Annuity Companies Utilized Across All Reps SunAmerica Nationwide Pacific Life Ha rtfo rd Ma nulife AIG Putnam 17% 15% 13% 22% 34% 35% 39% 51% 50% 2

3 Putnam (17%), Sun Life of Canada (15%), and Scudder Kemper (13%). SunAmerica s annuities are most popular in its sister companies SunAmerica Securities and Royal Alliance. However, at other independent broker/dealers, Nationwide and American Skandia are the leaders. From the survey results, we would hypothesize that the following are the leading annuity companies by broker/dealer: American Express (three way tie between Nationwide, American Skandia, and Pacific Life), LPL (American Skandia), Raymond James (Hartford), Securities America (American Skandia), FSC (American Skandia), and Advantage Capital (Nationwide). SunAmerica, Nationwide, and American Skandia are the three leaders in all size segments of reps as well. In terms of satisfaction, SunAmerica scores highest with a 7.8 on a 10.0 scale. Pacific Life also receives a high satisfaction score. Reps added: I think Nationwide is one of the most widely sold annuity products because of their wholesaling efforts. They have the best internal and external wholesalers in the business. American Skandia is very responsive to our needs. Insurance Companies Reps sell a wide variety of other insurance products; almost all reps (95%) sell term life insurance. And, Reps Utilize a Wide Variety of Insurance Companies, with AIG Being the Most Popular Insurance Companies Utilized Across All Reps reps use a wide variety of insurance companies, with AIG AIG 35% being the most popular (35%), followed by Pacific Life (29%), and Pa cific Life Nationwide 29% 27% Nationwide (27%). Other leading Lincoln Benefit 24% insurance companies in terms of Ha rtford 23% penetration include: Lincoln Benefit (24%), Hartford (23%), GE (), Jackson National (17%), Manulife (), American Skandia (14%), ING (13%), and C.N.A. (12%). The GE (Life of VA) Ja ckson National Manulife American Skandia ING 17% 14% 13% C.N.A leaders at each broker/dealer vary, 12% with AIG, Pacific Life, Nationwide, Note: Please do note the relatively lower percentages on this page versus the comparable mutual funds and and variable annuities pages and Hartford all taking the lead at one or more broker/dealers. AIG is the leader in all size segments except the largest reps who prefer both Nationwide and Hartford. Amongst the leading insurance companies, Pacific Life receives the highest satisfaction score with a 7.9 on a 10.0 scale. Both AIG and Nationwide score a bit lower at 7.3 and 7.2 respectively. Reps added: I think bigger reps use AIG more often because they recognize the fact that they are the best insurance company for term and fixed insurance I think the reason why Pacific Life has a higher satisfaction rating than AIG is because the only thing Pacific Life sells is variable annuities. It is much easier for them to support one product than it is for AIG to support the various different products that they sell Turnkey Asset Management Programs (TAMPs) Reps use a wide variety of Turnkey Asset Management Programs (TAMPs), with SEI (48%) being the dominant leader. Other leaders include: Meridian (), Clark Lanzen Skalla (), Lockwood (), RTE (), AssetMark (12%), Centurion (11%), Assante (10%), and Bell Capital (9%). SEI is the leading TAMP across most broker/dealers (especially at LPL, Royal Alliance, Securities America, SunAmerica, and FSC); each broker/dealer also seems to have one or more other favorites. For instance, FSC reps also utilize Bell Capital extensively; Advantage reps use CLS 3

4 and RTE; and Sentra-Spelman reps use Centurion more than most. SEI is the leading TAMP across reps of all sizes. SEI not only has the highest utilization but it also has one of the highest satisfaction scores Meridian Clark Lanz en S ka lla amongst the TAMPs at 7.6. Lockw ood Lockwood also has a high satisfaction score. Reps added: RTE AssetMark 12% SEI does it right. The rep is responsible for the sale and Ce nturion 11% SEI handles everything else; Assante/RWB 10% they have simple forms where Bell Capital 9% all you do is fill in the blanks I have a very good relationship with Lockwood. They have a conference every year where the money managers come in and speak to us about their styles. I think it is really helpful Software Vendors Independent reps use a wide variety of software products; key are: Financial planning & asset allocation software Data & research services Portfolio management software Contact management software Morningstar (54%) and to a lesser extent Financial Profiles (30%) and Wiesenberger Blue Print (23%) are the dominant financial planning and asset allocation software products used by reps. Other leaders include: Frontier Allocation Master and MV Optimizer. Morningstar leads across most broker/dealers and all size segments. Morningstar also receives an excellent 8.1 satisfaction score with Wiesenberger also earning a very good score of 7.8. Reps Utilize a Wide Variety of TAMPs, With SEI Being the Dominant Leader Morningstar (74%), and to a lesser extent Yahoo (42%), are the dominant research services used by reps. Other leaders include: Wiesenberger (29%), Bloomberg (26%), MSN Money Central (26%), Standard & Poor s (), AOL (19%), Value Line (), Quicken.Com (17%), and Ibbotson (). Morningstar and Yahoo are two of the leading research services across most broker/dealers and all size segments as well. In terms of satisfaction, Morningstar again receives an excellent satisfaction score of 8.2; Yahoo receives a quite respectable 7.6 as well. One rep summed it up well, saying, I have had a great experience with Morningstar. SEI TAMPs Utilized Across All Reps Morningstar, and to a Lesser Extent Financial Profiles and Wiesenberger Blue Print, are the Dominant Financial Planning and Asset Allocation Software Products Used by Reps Morningstar Financial Profiles W ie senbe rge r Blue Print Frontier Allocation Master MV Optimizer 15% 23% 30% 48% Financial Planning & Asset Allocation Software Utilization Across All Reps 54% 4

5 Although none is used widely, dbcams (5%) is the most popular portfolio management software utilized by reps. Other softwares with small utilizations include: Centerpiece (3%), Datamax (3%), and Advent/Axys (2%). Morningstar, and to a Lesser Extent Yahoo, are the Dominant Research Services Used by Reps Morningstar Wiesenberger Research Services Utilization Across All Reps Ya ho o 29% 42% 74% Bloomberg The most common contact management softwares utilized are MSN Money Central 26% ACT and ProTracker, with each having about a quarter of the market Standard & Poors AOL 19% (28% and 24% respectively). Other Value Line leaders include: Excel (14%), dbcams+ (12%), Outlook/Outlook Quicke n.com 17% Ibbotson Express (9%), Goldmine (7%), Access (7%), and EZ Data (6%). ACT and ProTracker are most popular across reps at most broker/dealers and in most size segments, except the largest where dbcams+ takes the lead. 26% 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: 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 5

6 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 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 KJenssen@TiburonAdvisors.com 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