Investment Behaviors and Attitudes of Financial Advisors 2012 Q2 Executive Summary and Data Overview Copyright 2012 by Horsesmouth, LLC. All rights reserved. For information, contact: Horsesmouth Research research@horsesmouth.com
You were one of 2,745 financial advisors who participated in our in-depth survey regarding advisor investing behaviors and attitudes about working with investment companies for Q2 2012. We appreciate your valuable time and effort participating in what, to our knowledge, is the most extensive research of its kind. Here is an executive summary of key findings and an overview of data. Looking Ahead EXECUTIVE SUMMARY 42% of advisors believe the European Debt Crisis will have the biggest impact on their portfolios. o 28% believe the US Presidential election will have the biggest impact. o 15% believe unemployment will have the biggest impact. o 6% believe oil prices would have the most impact. 38% of advisors do not plan to change their client portfolios as a result of these events in 2012. o 17% of advisors will increase allocations to Alternative Investments. o 13% will increase Cash. o 13% will increase Equities. o 9% will increase Fixed Income. 2012 Q2 Position For the second straight six-month period, average Team AUM decreased. o While Team AUM for Independent RIAs rose again. o Teams of advisors at Wirehouses maintain the highest average AUM, but the gap continues to narrow. Advisors decreased use of Cash/Cash Equivalents, from a 6.7% share in Q4 2011, to a 4.9% share of their aggregate portfolio. o Independent RIAs decreased cash positions the most, going from 9.0% to 5.0%. Advisor Rankings of Asset Management Companies PIMCO, followed by First Eagle and ishares, topped the rankings of firms with the highest percentage of advocates -- advisors who do business with the firm and would strongly recommend the firm to a friend or colleague. 2
DATA OVERVIEW 1. Aggregate Portfolio Mix by Type of Firm 2. Average Team AUM by Type of Firm 3. Selected Advisor Views on Portfolios Going Forward 4. Selected Advisor Rankings of Asset Management Companies a) Most Advocates for the Firm b) Most Advocates for the Firm s External Wholesalers c) Most Advocates for the Firm s Internal Wholesalers d) Trustworthy/Ethical e) Dedicated to Advisors f) External Wholesaler's Knowledge About Their Firm's Products g) External Wholesaler's Ability to Help Build Advisor's Business 5. Demographics a) Gender b) Type of Firm c) Tenure level 3
1. Aggregate Portfolio Mix by Type of Firm All Mutual Funds (nonwrap) Wires Reg. RIA Insurance Mutual Funds (wrap) Stocks & Bonds VAs SMAs ETFs Cash & Equiv. Fixed Ann. Alt. Invst. Perm. Life Other 21.1% 19.0% 15.4% 12.2% 8.4% 7.2% 4.9% 4.0% 3.4% 3.6% 0.8% 25.4% 12.3% 23.0% 7.1% 12.7% 7.7% 6.7% 0.7% 3.2% 0.4% 0.7% 19.7% 19.8% 27.3% 8.5% 7.7% 5.3% 5.8% 1.3% 2.7% 0.9% 1.1% 23.0% 21.0% 9.9% 17.4% 7.5% 5.3% 3.7% 4.1% 4.2% 3.3% 0.6% 17.2% 26.0% 14.6% 3.7% 7.8% 16.5% 5.0% 3.3% 3.6% 1.7% 0.6% 12.7% 16.0% 4.0% 26.3% 3.4% 1.5% 2.0% 12.9% 1.2% 19.4% 0.5% 2. Average Team AUM by Type of Firm Team AUM ($ MM) % Change Over Prior 6 Months Wires 273-9% RIA 224 7% All 162-4% Reg. 153-7% 85 8% Insurance 63 13% 4
3. Selected Advisor Views on Portfolios Going Forward Event to Have Largest Impact on Client Portfolios All Euro Debt Crisis Pres. Election Oil Prices Other 42.0% 28.1% 14.5% 5.6% 9.9% 43.6% 26.7% 15.1% 5.4% 9.2% 39.6% 30.7% 16.1% 6.1% 7.5% 41.3% 29.0% 13.9% 5.5% 10.3% 44.7% 26.5% 10.6% 4.2% 14.0% 41.9% 30.1% 15.3% 6.8% 5.9% Primary Action Necessary to Protect Against Key Events (noted above) All Unemployment Wires Reg. RIA Insurance Wires Reg. RIA Insurance No Change Alts. Cash Equities Fixed Inc. Other. 38.1% 16.9% 13.3% 13.2% 8.9% 9.7% 37.0% 13.2% 16.4% 16.7% 6.8% 9.9% 36.9% 12.9% 14.0% 18.3% 7.9% 10.0% 35.2% 20.9% 12.1% 11.3% 10.2% 10.4% 44.1% 16.0% 13.7% 9.0% 6.7% 10.6% 43.6% 9.3% 9.3% 8.9% 15.3% 6.8% 5
4. Advisor Rankings of Asset Management Companies The survey addressed 22 firms in depth: American Funds, BlackRock, Columbia, Fidelity, First Eagle, Franklin Templeton, Guggenheim, ING Funds, Invesco, ishares, Ivy Funds, JPMorgan Asset Management, MainStay, OppenheimerFunds, PIMCO, PowerShares, ProShares, Putnam, SPDR ETFs / State Street, T. Rowe Price, Vanguard, Virtus Investments. Here are the top rated firms in various categories: a) Most Advocates for the Firm PIMCO, First Eagle, ishares (highest percentage of advisors that would strongly recommend the firm to a friend or colleague) b) Most Advocates for the Firm s External Wholesalers Invesco, Mainstay, JPMorgan (highest percentage of advisors that would strongly recommend the firm s external wholesaler to a friend or colleague) c) Most Advocates for the Firm s Internal Wholesalers JPMorgan, PIMCO, BlackRock (highest percentage of advisors that would strongly recommend the firm s internal wholesaler to a friend or colleague) d) Trustworthy/Ethical PIMCO, American Funds, Vanguard e) Dedicated to Advisors Franklin Templeton, BlackRock, American Funds f) External Wholesaler's Knowledge About Their Firm's Products Invesco, Franklin Templeton, OppenheimerFunds g) External Wholesaler's Ability to Help Build Advisor's Business BlackRock, Invesco, OppenheimerFunds 6
5. Demographics The 2,745 financial advisors surveyed are a good representation of the industry. Advisors from every state in the US participated, representing all backgrounds, ages, tenure levels, firm types, business models, business sizes, and business types. a) Gender Male: 84% Female: 16% b) Type of Firm Independent : 34% Traditional Wires: 25% Independent RIAs: 15% Regional s: 11% Insurance: 9% Other Bank/Trust: 5% Other: 2% c) Tenure level Under 10yrs: 30% 10-19 yrs: 33% Over 20 yrs: 38% 7