Future of Advice Research Report Series. The Future of Advice: Defining the Winning Product, Channel, & Tactical Strategies

Transcription

1 Future of Advice Research Report Series The Future of Advice: Defining the Winning Product, Channel, & Tactical Strategies January 2011

2 TABLE OF CONTENTS INTRODUCTION, KEY FINDINGS, & EXECUTIVE SUMMARY...55 EVOLUTION OF THE FINANCIAL SERVICES INDUSTRY...94 Key Driving Factors...94 Market History...94 Emergence Phase...94 Financial Product Development Phase...94 Innovation Phase...94 Market Growth...94 Firms...94 Branches...95 Employees...95 Clients...95 Accounts...95 Loans Outstanding...95 Loans Outstanding...95 Assets Under Admininstration...95 Assets Under Management...96 Insurance in Force...96 Revenues...96 Net Profits...96 Market Definition...96 Products & Services...96 Markets & Distribution Channels...96 Leading Financial Services Institutions...97 Branches...98 Employees...98 Clients...98 Accounts...98 Loans Outstanding...98 Loans Outstanding...99 Assets Under Administration...99 Assets Under Management...99 Insurance in Force...99 Revenues...99 Net Profits...99 STATE OF THE FINANCIAL SERVICES INDUSTRY Key Driving Factors Economy & Markets The Evolution of the Economy & Markets Economy & Markets History Country Formation Phase Great Depression & Aftermath Phase Growth Phase Trouble Times Phase Economy & Markets Measures Unemployment Interest Rates Future of Advice

3 Inflation Rate US Dollar Real Estate Oil Prices Stock Markets Financial Advisor Sentiment Consumer Sentiment Depressed Assets & Revenues Losses & Write-Downs Capital Raises Conclusions for the Economy & Markets Significant Consumer Impacts Loss of Retirement Funds Smaller Pension Plans Delayed Retirements Consumer Skepticism & Lawsuits Renewed Savings Effort Slow Recovery Likely Many Prior Investment Assumptions No Longer True & Theories Need To Evolve Decreased Revenues for Full-Service Brokerage, Discount Brokerage, & Financial Advisor Firms Due to Depressed Markets Assets Managers & Registered Investment Advisors Will Have Lower Revenues Due to Lower Assets Under Management Increased Opportunities for Hedge Funds Due to the Market Volatility Corporate Scandals The Evolution of Corporate Scandals Corporate Scandals History Financial Troubles Phase Insider Trading Scandals Phase Accounting Scandals Phase Corporate Scandals Definition Financial Troubles Phase Insider Trading Scandals Phase Accounting Scandals Phase Corporate Scandals Growth Corporate Scandals Lives Lost Jobs Lost Consumer Investing Behavior Impact Companies Impacted Financial Institutions Impacted Financial Impact Leading Corporate Scandals Lives Lost Jobs Lost Consumer Investing Behavior Impact Companies Impacted Financial Institutions Impacted Financial Impact Corporate Scandals Segmentation Future of Advice 3

4 Financial Troubles Phase Insider Trading Scandals Phase Accounting Scandals Phase Conclusions for Corporate Scandals Further Unraveling of Corporate Scandals Increasing Trend of the Corporate Scandals Sourcing from the Telecom & Healthcare Industries Spotlight Shed on Financial Services Firms Associated with Corporate Scandals Such as KPMG CPA & Law Firms to Benefit from the Increase in Scrutiny of Corporations Financial Services Industry Stumbles The Evolution of Financial Services Industry Stumbles Financial Services Industry Stumbles History Insurance Stumbles Phase Junk Bonds & IPOs Stumbles Phase Stock Analysts & Mutual Funds Stumbles Phase Ponzi Schemes Phase Financial Services Industry Stumbles Definition Investment Banking Stumbles Insurance Companies Stumbles Investment Management Stumbles Retail Broker Stumbles Insurance Agent Stumbles Independent Advisor Stumbles Retail Bank Stumbles Financial Services Industry Stumbles Growth Financial Services Industry Stumbles Financial Impact Settlements Financial Advisor Sentiment Consumer Sentiment Leading Financial Services Industry Stumbles Financial Services Industry Stumbles Financial Impact Settlements Financial Advisor Sentiment Consumer Sentiment Financial Services Industry Stumbles Segmentation Investment Banking Stumbles Insurance Companies Stumbles Investment Management Stumbles Retail Broker Stumbles Insurance Agent Stumbles Independent Advisor Stumbles Retail Bank Stumbles Conclusions for Financial Services Industry Stumbles Insurance Industry Worst Repeat Offenders McKinsey & Company & Merrill Lynch Amongst Individual Repeat Offenders 116 Demise of Long-Term Players Return of Key Players Future of Advice 4

5 Continuing But Decreasing Financial Services Industry Stumbles Due to Tighter Regulation Consumer & Institutional Wealth Consumer Wealth Evolution of Consumers & Their Savings Objectives Market History Development Phase World Dominance Phase Maturation Phase Market Growth Consumers Consumer Households Financial Concerns & Saving Goals Financial Concerns Saving Goals Baby Boomers & the Perceived Baby Boomer Savings Crisis Concentration of Consumer Wealth Decline in Pension Plans & Retiree Benefits Social Security & Medicare Challenges Social Security Challenges Medicare Challenges Stagnant Savings Rate Increased Contribution Limits Pension Protection Act Lack of Significant World War II Generation Wealth Transfer Longer Life Expectancies Female Life Expectancies Male Life Expectancies Year Old Life Expectancies Couples Life Expectancies Affluent Life Expectancies Consumer Wealth Facts & Figures Investable Assets Products Channels Accounts Financial Assets Retirement Plan Assets Household Assets Personal Assets Other Illiquid Assets Household Liabilities Home Mortgages Personal Credit Other Household Liabilities Household Net Worth Future Predictions for Consumer Wealth Consumers & Consumer Households Growth Consumers Consumer Households Consistent Financial Concerns & Savings Goals Future of Advice 5

6 Financial Concerns Savings Goals Clarifying the Consumer Savings Rate Baby Boomers Liquidations Retirement Plan Rollovers Stock Option & Restricted Share Plan Exercises Residential Real Estate Sales Private Business Sales Substantial Immigrant Impacts Social Security Housing, Private Businesses, & Stock Markets Institutional Markets Evolution of the Institutional Markets Market History Introduction of Defined Benefits Plans Growth of Defined Benefit Plans Growth of Defined Contribution Plans Market Definition Defined Benefit Plans Defined Contribution Plans Endowments & Foundations Corporate Cash & Treasury Services Sovereign Wealth Funds & Other Foreign Institutions Market Growth Institutional Clients Institutional Mandates Underlying Client Accounts Assets Under Management Revenues Net Profits Separate Account Managers Leading Institutional Plan Providers & Separate Account Managers Institutional Clients Institutional Mandates Underlying Client Accounts Assets Under Management Revenues Net Profits Market Segmentation Defined Benefit Plans Market History Market Definition Market Growth Leading Plan Providers & Separate Account Managers Defined Contribution Plans Market History Market Definition Market Growth Leading Plan Providers & Separate Account Managers Endowments & Foundations Market History Future of Advice 6

7 Market Definition Market Growth Leading Plan Providers & Separate Account Managers Corporate Cash & Treasury Services Market History Market Definition Market Growth Leading Plan Providers & Separate Account Managers Sovereign Wealth Funds & Other Foreign Investors Market History Market Definition Market Growth Leading Plan Providers & Separate Account Managers Future Predictions for the Institutional Markets Continued Institutional Client Growth Continued Assets Under Management Growth Shift in Investment Holdings Legislative & Regulatory Agenda The Evolution of Legislative & Regulatory Agenda Legislative & Regulatory Agenda History Bank Regulation Phase , 1934, & 1940 Acts Phase Glass Steagall Restructuring Phase Legislative & Regulatory Agenda Perceptions Conclusions for Legislative & Regulatory Agenda Parties in Power Have Traditionally Brought their Own Philosophies Directional Progress Historically Quicker When One Party Controls Both Presidency & Congress Tighter Regulatory Environment with Increased Regulation & Oversight by the Government Has Resulted from Democrats Control Health Care Insurance Regulatory Reform Bank Regulation Too Big to Fail Proprietary Trading Consumer Protection Agency Hedge Fund & Private Equity Funds Regulation Broker & RIA Regulation National Insurance Regulation SEC Registration Credit Ratings Agency Regulation Executive Compensation k System Regulation Estate Tax Rate b1 Fees & Soft Dollars Money Market Fund Regulation GSEs Toxic Asset Plan Single US Capital Market Regulator Short Selling Ban Financial Regulatory Reform of 2010 Impacts Future of Advice 7

8 Political Ideology Likely to Shift Back Towards Republicans in 2010 & Natural Disasters The Evolution of Natural Disasters Natural Disasters History Early Disasters Phase Earthquakes Phase Hurricanes Phase Natural Disasters Definition Early Disasters Phase Earthquakes Phase Hurricanes Phase Natural Disasters Growth Natural Disasters Lives Lost Financial Impact Consumer Investing Behavior Job Lost Leading World Disasters Events Lives Lost Financial Impact Consumer Investing Behavior Job Lost Natural Disasters Segmentation Early Disasters Phase Earthquakes Phase Hurricanes Phase Conclusions for Natural Disasters Increased Natural Disasters Due to Global Warming Increased Natural Disaster Impact in Economically Challenged Countries Continued Property & Casualty Insurance and Reinsurance Companies Losses Due to Unexpected Natural Disasters Increased Investment in Construction Infrastructure Causing Lower Property & Casualty Losses Future Opportunity Growth in Reinsurance World Affairs The Evolution of World Affairs World Affairs History Country Founding Phase World War I & World War II Phase Korean & Vietnam War Phase World Conflicts Phase World Affairs Definition Country Founding Phase World War I & World War II Phase Korean War & Vietnam War Phase World Conflicts Phase World Affairs Growth World Affairs Lives Lost Jobs Lost Consumer Investing Behavior Future of Advice 8

9 Companies Impacted Financial Institutions Impacted Financial Impact Leading World Affairs Lives Lost Jobs Lost Consumer Investing Behavior Companies Impacted Financial Institutions Impacted Financial Impact World Affairs Segmentation Country Founding Phase World War I & World War II Phase Korean War & Vietnam War Phase Global Conflicts Phase Conclusions for World Affairs Increased Economic Tension Between G-9 Countries Decreased Financial Opportunities Due to Stricter Laws in United States & United Kingdom Shift in Business Philosophies in Switzerland Increased Concern in Global Security Due to Terrorism Increased Market Share in China, Russia, & Brazil Financial Institutions Due to Lenient Laws Products & Services Investable Asset Products Cash Investments & Bank Savings Products Evolution of Cash Investments & Bank Savings Products Market History Early Phase Innovation Phase Restructuring Phase Market Definition Cash Investments Bank Savings Products Market Growth Firms Accounts Assets Under Management Net Flows Revenues Net Profits Leading Cash Investments & Bank Savings Products Companies Accounts Assets Under Management Net Flows Revenues Net Profits Market Segmentation Cash Investments Bank Savings Products Markets & Distribution Channels Future of Advice 9

10 Direct Distribution Online Financial Services Financial Advisor Markets Retail Banks Full-Service Brokerage Fee-Based Financial Advisors Other Financial Advisors Life Insurance Companies & Agencies CPA Firms Property & Casualty Insurance Agents Mortgage Brokers Upscale Channels Private Banks Money Managers Investment Banks Sports Agents & Entertainment Managers Other Boutique & Upscale Firms Institutional Markets Defined Contribution Plans Defined Benefit Plans Endowments & Foundations Corporate Cash & Treasury Services Sovereign Wealth Funds & Other Foreign Investors International Markets English Speaking Countries Markets Europe, Middle East, & Africa Markets Asia Pacific Markets Latin America Markets Offshore Markets Future Predictions for Cash Investments & Bank Savings Products Slow Decline of Money Market Funds & Shift Back to Bank Savings Products Continued Evolving Product Structure Shifts Increasing Importance of Direct Distribution & Institutional Channels Individual Securities & Capital Markets Evolution of the Individual Securities & Capital Markets Industry Market History Early Phase Middle Phase Recent Phase Market Definition Securities Exchanges Specialists Market Makers Electronic Communication Networks (ECNs) Technology & Data Service Providers Market Growth Leading Individual Securities Exchanges Firms Revenues Net Profits Future of Advice 10

11 Leading Individual Securities & Capital Markets Firms Revenues Net Profits Market Segmentation Securities Exchanges Specialists Market Makers Electronic Communication Networks (ECNs) Technology & Data Service Providers Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for Individual Securities & Capital Markets Impact of Switch to T+1 Settlement Emergence of After-Hours Electronic Trading Directed Brokerage & Soft Dollar Practices Under Attack Leveraging Portfolios through Securities Lending Technology Leading to Cost Reductions in Trade Execution Mutual Funds Evolution of the Mutual Funds Industry Market History Formation Early Expansion More Rapid Expansion Scandal & Commoditization Market Definition Open-End Mutual Funds Closed-End Mutual Funds Unit Investment Trusts Non-US Mutual Funds Market Growth Firms Accounts Assets Under Management Revenues Net Flows Net Profits Key Issues Product Structures Decreasing Investment Minimums Decreasing Fees Brokerage Firms Shift from Money Market Funds Decreasing Redemption Rates Increasing Compliance Increasing Technology Innovations Mutual Fund Mergers & Acquisitions Evolving Independent Board Member Roles Leading Mutual Fund Companies Accounts Future of Advice 11

12 Assets Under Management Revenues Net Flows Net Profits Market Segmentation Open-End Mutual Funds Closed-End Mutual Funds Unit Investment Trusts Non-US Mutual Funds Markets & Distribution Channels Mutual Fund Companies Direct & Discount Brokers Direct Distribution Direct to Consumer Discount Brokers & Mutual Fund Supermarkets Discount Brokers Mutual Fund Supermarkets Financial Advisor Markets Commission Mutual Fund Sales Mutual Fund Wrap Account Programs Fee-Based Financial Advisors Independent Reps Turnkey Asset Management Programs Retail Banks Insurance Agents CPA Firms Institutional Markets k Plans b Plans Plans Sub-Advisory Opportunities International Markets English Speaking Countries Europe, Middle East, & Africa Countries Asia Pacific Countries Latin America Countries Offshore Countries Future Predictions for Mutual Funds Moderate Industry Growth Interesting Investment Style Shifts Slower than Expected Exit from Equity Mutual Funds Exit from Money Market Funds Increased International Focus Evolving Investment Styles Evolving Product Structures Expansion of Share Classes Increased Utilization of Closed-End Funds Increased Utilization of Funds-of-Funds Increased Utilization of Mutual Fund Wrap Account Programs Increased Exposure of Unified Managed Account Programs Growing Popularity of Performance Fees Evolving Markets & Distribution Channels Future of Advice 12

13 Increasing Importance of Distribution Networks Opportunities in the International Market Evolving Wholesaler Models Brand Building Intellectual Wholesaling Increased Telephone & Virtual Wholesaling Strategies Distancing of the Leaders Bifurcation of the Industry Increased Focus on Value Declining Cost of Investment Products Increased Compliance Mutual Fund Scandals Consolidation of Mutual Fund Companies Large Company Market Mid-Size Company Market Small Company Market Fee-Accounts Evolution of the Separately Managed Accounts & Other Packaged Fee-Account Programs Business Market History Commissions Dominate Retail Business Introduction But Slow Growth Explosive Growth in Fee-Accounts Recasting of Fee-Accounts Regulatory Actions Against Fee-Based Brokerage Account Sponsors Key Driving Factors Fees Versus Commissions Fiduciary Responsibility Market Definition Proprietary Fee-Account Programs Turnkey Asset Management Programs Packaged Fee-Account Programs Fee-Based Financial Advisors Bank Trust Departments Separate Account Managers Market Growth Packaged Fee-Account Programs Packaged Fee-Account Clients Packaged Fee-Accounts Packaged Fee-Account Assets Packaged Fee-Account Revenues Packaged Fee-Account Profits Key Issues Client Profiling, Asset Allocation, & Proposal Generation Client Profiling Asset Allocation Proposal Generation Investment Vehicle & Manager Selection Ongoing Monitoring, Rebalancing, Performance Reporting, Billing, & Reallocation Ongoing Monitoring Future of Advice 13

14 Rebalancing Performance Reporting Reallocation Training, Payouts, Operations & Client Support, Technology, & Compliance Issues Training Payouts Operations & Client Support Technology Compliance Issues Leading Fee-Account Program Sponsors (Proprietary & TAMPs) Packaged Fee-Account Clients Packaged Fee-Accounts Packaged Fee-Account Assets Packaged Fee-Account Net Flows Packaged Fee-Account Revenues Packaged Fee-Account Profits Market Segmentation Proprietary Fee-Account Programs Turnkey Asset Management Programs Reasons to Use a TAMP Widespread Market Consolidation Explosive Assets Growth Intense Market Concentration Products Usage (Mutual Funds & Separately Managed Accounts) Product Segmentation Unified Managed Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Unified Managed Account Program Sponsors Clients Accounts Net Profits Separately Managed Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Separately Managed Account Program Sponsors Future of Advice 14

15 Clients Accounts Net Profits Multiple Style Portfolios Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Multiple Style Portfolio Program Sponsors Clients Accounts Net Profits Mutual Fund Wrap Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Mutual Fund Wrap Account Program Sponsors Clients Accounts Net Profits Annuity Wrap Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Annuity Wrap Account Program Sponsors Clients Accounts Net Profits ETF Wrap Accounts Market Definition Market Growth Programs Clients Accounts Future of Advice 15

16 Assets Under Management Net Flows Revenues Net Profits Leading ETF Wrap Account Program Sponsors Clients Accounts Net Profits Broker Wrap Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Brokerage Wrap Accounts Program Sponsors Clients Accounts Net Profits Fee-Based Brokerage Accounts Market Definition Market Growth Programs Clients Accounts Assets Under Management Net Flows Revenues Net Profits Leading Fee-Based Brokerage Account Sponsors Clients Accounts Net Profits Markets & Distribution Channels Direct Distribution Financial Advisor Markets Wirehouses, Regional, & Boutique Brokerage Firms Independent Broker/Dealers Fee-Based Financial Advisors National, Regional, & Community Banks Insurance Companies CPA & Law Firms Other Financial Advisors Upscale Channels Institutional Markets Defined Contribution Plans Defined Benefit Plans Endowments & Foundations Future of Advice 16

17 Corporate Cash & Treasury Management Sovereign Wealth Funds & Other Foreign Investors International Markets English Speaking Countries Markets Europe, Middle East, & Africa Markets Asia Pacific Markets Latin America Markets Offshore Markets Future Predictions for Fee-Accounts Substantial Expected Growth for Both the Packaged Fee-Accounts & Broader Fee-Accounts Markets Packaged Fee-Accounts Growth Projections Broader Fee-Account Growth Projections Growth in Seven of the Eight Types of Fee-Account Programs Emerging Distribution Opportunities Expected Process Improvements Potentially New Pricing Models ETFs & Indexing Evolution of the ETFs & Indexing Industry Key Driving Factors Stock Analysts & Mutual Funds Scandals Market History Indexed Separate Accounts Emerge Index Mutual Funds Emerge Indexing Growth & Product Innovation Exchange Traded Funds Emerge Market Definition Indexed Separate Accounts Index Mutual Funds Exchange Traded Funds Market Growth Firms Products Assets Under Management Net Flows Key Issues Index Portfolio Strategies Core & Explore Completion Strategies Three Holding Pattern Strategies Sector Rotation Strategies Investment Styles Recent Innovations Lack of High-Yield, Municipal Bond, & Small Cap International Products.183 Admitting Defeat Ignores Corporate Governance Issues Leading ETF & Index Companies Products Assets Under Management Net Flows Market Segmentation Future of Advice 17

18 Indexed Separate Accounts Index Mutual Funds Exchange Traded Funds Markets & Distribution Channels Direct Distribution Financial Advisor Channels Institutional Markets International Markets Future Predictions for ETFs & Indexing Accelerated Growth in Market-Linked Products Continued Expansion of Exchange Traded Funds Reallocation Shift to Index Mutual Funds Increased Product Innovation in Indexed Separate Accounts Hedge Funds Evolution of the Hedge Funds Business Market History Emergence Phase Strategy Diversification Phase High Returns & Initial Collapses Phase Risk Management & Continued Collapses Phase Market Definition US Hedge Funds Managed Futures Funds Hedge Fund Mutual Funds Non-US Hedge Funds Global Hedge Funds Market Growth Hedge Fund Managers Hedge Fund Partners Hedge Fund Employees Hedge Fund Clients Hedge Fund Accounts Hedge Fund Assets Under Management Hedge Fund Net Flows Hedge Fund Revenues Hedge Fund Net Profits Key Issues Hedge Fund Failures Limited Partnership Structure Various Investment Strategies Hedging Leverage High Investment Minimums High Fees Limited Transparency Limited Liquidity Inexperience Limited Data Integrity & Performance Reporting Internal Investment Increased Auditing & Regulation Leading Hedge Fund Companies Future of Advice 18

19 Hedge Fund Firms Hedge Fund Partners Hedge Fund Employees Hedge Fund Accounts Hedge Fund Assets Under Management Hedge Fund Net Flows Hedge Fund Revenue Hedge Fund Net Profits Market Segmentation Investment Strategies Emerging Markets Hedged Equities Equity Market Neutral Dedicated Short Selling Fixed Income Arbitrage Convertible Bond Arbitrage Statistical Arbitrage Event Driven Strategies Merger Arbitrage Distressed Securities & Bankruptcies Global Macro Strategies Multi-Strategy Funds-of-Funds Product Structures Hedge Funds-of-Funds Hedge Fund Index Funds Registered Hedge Funds Mutual Funds with Hedge Fund Strategies Hedge Funds in Variable Life Wrappers Offshore Hedge Funds US Hedge Funds Managed Futures Funds Hedge Fund Mutual Funds Non-US Hedge Funds Global Hedge Funds Markets & Distribution Channels Direct Distribution Online Tools & Advice Online Banking & Mortgages Online Brokerage Online Insurance Financial Advisors Markets Retail Banks Full-Service Brokerage Firms Discount Brokerage Firms Independent Reps Fee-Based Financial Advisors Upscale Channels Private Banks Family Offices Institutional Markets Defined Contribution Plans Defined Benefit Plans Future of Advice 19

20 Endowments & Foundations Corporate Cash & Treasury Services Sovereign Wealth Funds & Other Foreign Investors International Markets English Speaking Countries Markets Europe, Middle East, & Africa Markets Asia Pacific Markets Latin America Markets Offshore Markets Future Predictions for Hedge Funds Continual Blow Ups But Still Steady Market Growth Continual Blow-Ups Steady Market Growth Disproportional Market Impacts Retailization of Hedge Fund Products Hedge Funds-of-Funds Hedge Fund Index Funds Registered Hedge Funds Mutual Funds with Hedge Fund Strategies Hedge Funds in Variable Life Wrappers Emerging Market Opportunities Emerging Affluent Consumer Households Increased Regulation Institutionalization & Consolidation of the Hedge Funds Business Venture Capital & Private Equity Evolution of the Venture Capital & Private Equity Businesses Market History Early Days Private Equity Growth Venture Capital Prominence Private Equity Renewal Market Definition Venture Capital Private Equity Mezzanine Finance Market Growth Venture Capital & Private Equity Firms Venture Capital & Private Equity Funds Venture Capital & Private Equity Fund Flows Venture Capital & Private Equity Fund Assets Under Management Venture Capital & Private Equity Fund Commitments Key Issues Volatile Initial Public Offering Market Investment Product Polarization Emergence of Indices Emergence of Secondary Market Fees Vary Due Diligence & Manager Selection Liquidity Problems Retailization Larger Funds Future of Advice 20

21 Internal Rate of Return New Firms Enter Industry Management Strategy Funds-of-Funds Contract Negotiation Performance Reporting Diversification Requirements Leading Venture Capital & Private Equity Firms Venture Capital & Private Equity Funds Venture Capital & Private Equity Fund Flows Venture Capital & Private Equity Fund Assets Under Management Venture Capital & Private Equity Fund Commitments Market Segmentation Venture Capital Private Equity Mezzanine Finance Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for Venture Capital & Private Equity Impressive Industry Growth Evolving Markets & Distribution Channels New Fund Structures Rise of Compliance Issues Evolving Investments Early Signs of Bifurcation Real Estate Evolution of the Real Estate Investment Business Market History Early Phase Middle Phase Recent Phase Market Definition Pooled Partnerships REITs Mortgage Backed Securities Direct Mutual Funds Market Growth Funds Assets Under Management Revenues Net Profits Key Issues Leading Real Estate Investment Product Companies Funds Assets Under Management Revenues Net Profits Future of Advice 21

22 Market Segmentation Pooled Partnerships REITs Mortgage Backed Securities Direct Mutual Funds Product Segmentation Traditional Real Estate Timberland Farmland Energy Property Investments Markets & Distribution Channels Direct Distribution Online Tools & Advice Online Banking & Mortgages Online Brokerage Online Insurance Financial Advisor Markets Retail Banks Full-Service Brokerage Firms Discount Brokerage Firms Independent Reps Fee-Based Financial Advisors Other Financial Advisors Upscale Channels Institutional Markets Defined Contribution Plans Defined Benefit Plans Endowments & Foundations Corporate Cash & Treasury Services Sovereign Wealth Funds & Other Foreign Investors International Markets English Speaking Countries Markets Europe, Middle East, & Africa Markets Asia Pacific Markets Latin America Markets Offshore Markets Future Predictions for Real Estate Stagnant Growth in the Real Estate Investments Business Slowed Growth in All Types of Real Estate Investments Emerging Market Opportunities Wine Investments Evolution of the Wine Industry Market History Early Development Phase Phylloxera Phase US Prohibition & World War II Phase Maturation Phase Market Definition California Wineries Other US & Canada Wineries Future of Advice 22

23 France, Italy, & Other Europe Wineries Other New World Wineries Market Growth Growers Wineries Acres Cases Produced Revenues Net Profits Leading Wineries Acres Cases Produced Revenues Net Profits Market Segmentation California Wineries Napa Valley Sonoma Valley Mendocino & Lake Counties Livermore Valley & Central Valley Sierra Foothills Marin County Santa Clara & the Santa Cruz Mountains Southern California Other US & Canada Wineries Oregon Washington Other American Wine Growing Regions France, Italy, & Other European Wineries France Bordeaux Cote d Rhone Loire Valley Provence Sauternes Italy Piedmont Tuscany Other European Wine Growing Regions Germany Spain Portugal Austria Other New World Wineries Australia New Zealand South Africa South America Chile Argentina Mexico Future of Advice 23

24 Peru Brazil Uruguay Alternative Segmentations Varietals Red Grape Varietals Barbera Cabernet Franc Cabernet Sauvignon Carignan Charbono Gamay Grenache Malbec Merlot Mourvedre Nebbiolo Petit Verdot Petit Syrah Pinotage Pinot Noir Syrah Sangiovese Tempanillo Zinfandel White Grape Varietals Albarino Chardonnay Chennin Blanc Gewurtzaminer Gruner Veltliner Malvasia Blanco Marsanne Muller-Tyurga Muscat Muscadet Pinot Blanc Pinot Gris (Pinot Grigio) Riesling Rousanne Sauvignon Blanc Semillon Viognier Vintages s s Early 1970s Late 1970s Early 1980s Late 1980s Early 1990s Future of Advice 24

25 Late 1990s Markets & Distribution Channels US Market Size & Statistics Market Growth Market Size International & Import/Export Markets Argentina Canada Australia United Kingdom Chile France Italy Developing Countries Future Predictions for Wine Investments Continued Growth of High-End Wines Emergence of New World Wineries Emergence of New US Wine Growing Areas Reversal of Trends to Chardonnay & Merlot Streamlining of Distribution Production Careers Distribution Careers Retail Careers Industry Consolidation Opportunities for Investing in the Wine Industry Vineyards Collections Futures Other Financial Alternative Investments Investment Product Polarization Evolution of Other Financial Alternative Investments Market History Early Phase Middle Phase Recent Phase Market Definition Old-Line Limited Partnerships Stock Market & Individual Stock Options Folios Structured Debt Treasury Inflation Protection Securities (TIPS) Bank Loan Funds Catastrophe Bonds Stable Value & Principal Protected Funds Structured Settlements Commodity & Financial Futures Market Growth Leading Firms Market Segmentation Old-Line Limited Partnerships Stock Market & Individual Stock Options Future of Advice 25

26 Folios Structured Debt Treasury Inflation Protection Securities (TIPS) Bank Loan Funds Catastrophe Bonds Stable Value & Principal Protected Funds Structured Settlements Commodity & Financial Futures Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for Other Financial Alternative Investments Other Financial Alternative Investments Will Grow in Popularity Other Non-Financial Alternative Investments Investment Product Polarization Evolution of Other Non-Financial Alternative Investments Market History Early Phase Middle Phase Recent Phase Market Definition Commodities Fine Art, Antiques, & Collectibles Jewelry & Watches Coins & Stamps Antique & Racing Cars Baseball Cards, Comic Books, & Beer Cans Sports Teams Market Growth Leading Firms Market Segmentation Commodities Fine Art, Antiques, & Collectibles Wine Investments Jewelry & Watches Coins & Stamps Antique & Racing Cars Baseball Cards, Comic Books, & Beer Cans Sports Teams Markets & Distribution Channels Direct Distribution Online Tools & Advice Online Banking & Mortgages Online Brokerage Online Insurance Financial Advisor Markets Retail Banks Full-Service Brokerage Firms Discount Brokerage Firms Future of Advice 26

27 Independent Reps Fee-Based Financial Advisors Other Financial Advisors Upscale Channels Institutional Markets Defined Contribution Plans Defined Benefit Plans Endowments & Foundations Corporate Cash & Treasury Services Sovereign Wealth Funds & Other Foreign Investors International Markets English Speaking Countries Markets Europe, Middle East, & Africa Markets Asia Pacific Markets Latin America Markets Offshore Markets Future Predictions for Other Non-Financial Alternative Investments Other Non-Financial Alternative Investments Will Grow in Popularity Lending Services Evolution of Lending Services Market History Early Phase Middle Phase Recent Phase Market Definition Credit Cards Mortgages & Home Equity Loans Specialized Lending Market Growth Companies Employees Clients Accounts Credit Card Loans Mortgage Originations Home Equity Loans Revenues Net Income Key Issues Growing Importance of Private Banking Services Growing Importance of Specialized Lending Leading Lending Firms Employees Clients Accounts Credit Card Loans Mortgage Originations Home Equity Loans Revenues Net Income Market Segmentation Future of Advice 27

28 Credit Cards Mortgages & Home Equity Loans Specialized Lending Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for Lending Services Impending Credit Card Crisis Continuing Mortgage & Home Equity Losses Insurance Products Evolution of the Insurance Business Market History Early Phase Demutualization Phase Recent Phase Market Definition Health Care Insurance Disability Insurance Long-Term Care Insurance Property & Casualty Insurance Retirement Income (Annuities) Life Insurance Market Growth Insurance Companies Insurance Industry Employees Agents, Brokers, & Service Employees Number of People Insured Number of Policies in Force Amount of Coverage in Force Revenues Premiums First Year Premium Net Income Key Issues Leading Insurance Companies Employees People Insured Number of Policies in Force Insurance Liabilities Insurance Coverage in Force Assets Policy Holders Surplus This section outlines policy holders surplus Premiums First Year Premiums Revenues Losses Net Income Market Segmentation Future of Advice 28

29 Health Care Insurance Disability Insurance Long-Term Care Insurance Annuities & Other Retirement Income Products Property & Casualty Insurance Retirement Income (Annuities) Life Insurance Markets & Distribution Channels Direct Distribution Financial Advisor Channels Institutional Channels International Channels Future Predictions for Insurance Products Continued Overall Industry Growth Emerging Products Product Commoditization & Focus on Cost Management Factors Driving Demand for Various Products Selective Health Care Opportunities Annuities Life Settlements Life Insurance Increasing Consumer Needs Driving Product Innovation Lack of Wholesaling Model Disasters Impacting the Property & Casualty Market Decline in Reinsurance Market Evolving Markets in the Financial Advisor & International Markets Insurance Agents to Continue Entering Related Businesses New Distribution Channels Entering Insurance Industry Banks Full-Service Brokers Online Financial Advisors Independent Advisors Global Markets Evolving Industry Structure Insurance Company Acquisitions to Continue Demutualization to Continue Regulations to Tighten and Possibly Move to the Federal Level Wealth Management Services Aggregation & Financial Planning Services Evolution of Aggregation & Financial Planning Services Market History Early Phase Middle Phase Recent Phase Market Definition Aggregation Financial Planning Life Planning Market Growth Leading Aggregation & Financial Planning Services Firms Market Segmentation Future of Advice 29

30 Aggregation Financial Planning Life Planning Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for Wealth Management Services Future Predictions for Aggregation & Financial Planning Services Aggregation & Financial Planning Services Will Grow in Importance College Savings Market (529 Plans) Evolution of College Savings Market (529 Plans) Key Driving Factors Market History Early Phase Dot Com Troubles Phase Recovery Phase Market Struggles Phase Market Definition Taxable Accounts Custodial Accounts Coverdell Educational Savings Accounts Plans & State-Paid Tuition Programs Market Growth Firms Accounts Assets Under Management Net Flows Revenues Net Profits Leading College Savings Market Managers Accounts Assets Under Management Net Flows Revenues Net Profits Market Segmentation Taxable Accounts Custodial Accounts Coverdell Educational Savings Accounts Plans & State Pre-Paid Tuition Programs Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for the College Savings Market Growth in College Savings Market Growing Dominance of College Savings Market Growth in National Plans Future of Advice 30

31 Growth of Age-Based Investment Options Growth in ETF-Based Plans Growth in Direct Sold Plans Emergence of 529 Plan Comparison Tools Estate Planning & Charitable Giving Evolution of the Estate Planning & Charitable Giving Market Key Driving Factors Estate Planning Charitable Giving Market History Creation Phase Estate Tax Additions Phase Estate Tax Modification Phase Market Definition Trust Services Revocable Living Trusts Testamentary Trusts Marital & Bypass Trusts Qualified Terminal Interest Property Trusts Bypass Trusts AB Trusts Grantor Trusts Qualified Personal Residence Trusts Grantor Retained Annuity Trusts Grantor Retained Unitrusts Private Annuities Defective Grantor Trusts Dynasty Trusts Irrevocable Life Insurance Trusts Life Insurance Term Life Whole Life Variable Life Market Growth Firms Accounts Assets Under Administration Assets Under Management Leading Estate Planning & Charitable Giving Companies Firms Accounts Assets Under Management Revenues Net Profits Market Segmentation Trust Services Revocable Living Trusts Testamentary Trusts Marital & Bypass Trusts Qualified Terminal Interest Property Trusts Bypass Trusts Future of Advice 31

32 AB Trusts Grantor Trusts Qualified Personal Residence Trusts Grantor Retained Annuity Trusts Grantor Retained Unitrusts Private Annuities Defective Grantor Trusts Dynasty Trusts Irrevocable Life Insurance Trusts Life Insurance Term Life Whole Life Variable Life Markets & Distribution Channels Direct Distribution Financial Advisor Markets Retail Banks Full-Service Brokers Independent Advisors Fee-Based Financial Advisors Independent Reps Life Insurance Agents CPA Firms Estate Attorneys Real Estate Agents Private Banks Boutique Brokers Other Upscale Firms Future Predictions for Estate Planning & Charitable Giving Growing Estate Planning & Charitable Giving Market Aging of the Baby Boomer Population Increased Consumer Focus on Wealth Management Charitable Giving Life Insurance Sales Emergence of Independent Trust Companies Market Size Types of Independent & Private Label Trust Companies Appropriate Independent Trust Offering Life Insurance Companies Demutualization, Consolidation, & Product Development Insurance Company Acquisitions to Continue Demutualization to Continue Regulations to Tighten and Possibly Move to the Federal Level Impact Investing Evolution of the Impact Investing Market Key Driving Factors Market History Market Definition Market Growth Leading Impact Investing Firms Market Segmentation Future of Advice 32

33 Socially Responsible Investing Community Lending Microfinance Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for the Impact Investing Market Institutionalization of the Business Emergence of Platform Development Increased Adoption by Brokerage Firms Reverse Mortgages Evolution of the Reverse Mortgages Market Key Driving Factors Market History Market Definition Market Growth Leading Reverse Mortgages Firms Market Segmentation Federally Insured Reverse Mortgages Single Purpose Reverse Mortgages Proprietary Reverse Mortgages Markets & Distribution Channels Direct Distribution Financial Advisor Markets Institutional Markets International Markets Future Predictions for the Reverse Mortgages Market Short-Term Stagnation in Growth but Overall Long-Term Boom Emergence of Stricter Reverse Mortgage Standards Family Offices Sports Agents Entertainment Managers Institutional Markets International Markets Family Office Services Evolution of Family Office Services Market History Early Middle Recent Market Definition Tax Preparation Family Counseling Market Growth Firms Clients Accounts Assets Under Management Revenues Future of Advice 33