gabriel garcia managing director bny mellon | pershing · 2018-06-05 · robo-advice: does it...
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Four Myths: Fact or Fiction
Gabriel Garcia
Managing DirectorBNY Mellon | Pershing
For advisor or investment professional use only
Robo
Platforms Make
It Difficult
to Compete
The Industry
Will Benefit
From a Huge
Wealth
Transfer
Firms Are
Growing
Advisors
Are Reducing
Their Fees
Four Myths: Fact or Fiction?
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Placeholder: Expectations vs. Reality Robos
Wealth
Transfer
Growth
Fees
Source: U.S. National Center for Health Statistics
Oldest group turned
71 years old
Have YOLO
mindset
40% will leave behind an inheritance
30% will spend it
30% aren’t sure
Boomers
$30
Trillion
Wealth
TransferBoomers spend $400B annually
on consumer goods
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Remaining Life Expectancy at Age 65, 1950-2009
Source: U.S. Centers for Disease Control, Health, United States, 2011, www.cdc.gov/nchs/data/hus/hus11.pdf#022
Robos
Wealth
Transfer
Growth
Fees
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How Advisors Should Respond to Fee Challenges by ClientsRetainer Fees Vs The AUM Model
Revenue Sharing Falls
Victim to Fiduciary Push
Robos
Wealth
Transfer
Growth
Fees
Pricing Headlines
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Elite Advisory Firms Are Not Feeling the Pressure to Reduce Fees
Source: Elite Advisor Summit 2018 attendee poll.
Robos
Wealth
Transfer
Growth
Fees
Only 25% of firms
made pricing
changes in 2015,
out of them, 65%
increased fees
Elite advisory firms not feeling the pressure to reduce feesMajority of advisors kept fees steady in 2017
58%No
42%Yes
84%No Change
10%Increased
6%Decreased
Pressure from clients to reduce fees? Most are not feeling it
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Yield on Assets Over the Last Five Years
Source: 2016 InvestmentNews Financial Performance Study.
Robos
Wealth
Transfer
Growth
Fees
Only 25% of firms
made pricing
changes in 2015,
out of them, 65%
increased fees
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Why Not?
Source: Elite Advisor Summit 2018 attendee poll.
Robos
Wealth
Transfer
Growth
Fees
Only 25% of firms
made pricing
changes in 2015,
out of them, 65%
increased fees
Holistic wealth management services are driving
business and helping advisors maintain pricing
Drivers of pricing power in the market
58%Holistic wealth
management
services, including
estate and tax planning,
private banking, etc.
32%A strong brand that
articulates a unique value
proposition
10%A solid network of
client referrals
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Robo-Advice: Does it Measure Up to Human Advice?Robos
Wealth
Transfer
Growth
Fees
84% of Millennials
seek financial advice
82% want MORE
personal meetings
from their advisor
is
62% of Millennials
did not know what a
robo-advisor is
Source: LendEDU survey, 2017.
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Robo Advice: It’s a “Nay” for Most Millennials Robos
Wealth
Transfer
Growth
Fees
Source: LendEDU survey, 2017.
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Trust Is Stronger Human to Human Robos
Wealth
Transfer
Growth
Fees
Source: LendEDU survey, 2017.
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Investor Adoption Rates of Robo Advice and Traditional Advisor Usage by Investable Assets Robos
Wealth
Transfer
Growth
Fees
Source: InvestmentNews, Robos, digital platforms and human financial advice: What investors really want, 2017.
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Robos
Wealth
Transfer
Growth
Fees
Firms Are Getting Larger
Source: 2016 InvestmentNews Financial Performance Study.
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Operating Profit Margin Over the Past Five Years
Note: 2011–2014 data sourced from previous Moss Adams/InvestmentNews annual benchmarking studies.
Source: 2016 InvestmentNews Financial Performance Study.
Robos
Wealth
Transfer
Growth
Fees
20.9% 20.4%22.3%
25.5% 25.2%
2011 2012 2013 2014 2015Note: 2011–2014 data sourced from previous Moss Adams/InvestmentNews annual benchmarking studies.
Source: 2016 InvestmentNews Financial Performance Study.
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Income per Owner by Evolutionary Stage
Source: 2016 InvestmentNews Financial Performance Study.
Robos
Wealth
Transfer
Growth
Fees
$394,000
$473,000
$775,000
$1,050,000
Solo Ensemble Enterprise Ensemble Super Ensemble
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Median Revenue Growth Over the Past Five YearsRobos
Wealth
Transfer
Growth
Fees
10%
16%14%
8%
5%
16%
32%
13%
1%
12%
22%
0%
5%
10%
15%
20%
25%
30%
35%
0%
5%
10%
15%
20%
25%
30%
35%
2012 2013 2014 2015 2016 2017
S&P data
??
Source: 2016 InvestmentNews Financial Performance Study.
Note: 2012–2015 data sourced from previous Moss Adams/InvestmentNews annual benchmarking studies.
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Implications for Advisors
Seeds of Destruction Invest Profits for
Growth
Execute a
Sales Plan
Become Relevant to
Other Demographics
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Drivers of Business Growth
Source: Elite Advisor Summit 2018 attendee poll.
29%
26%
23%
16%
6%
Developing an impactful
branding and marketing strategy
Implementing new technologies,
capabilities or solutions
to meet client needs
Hiring and developing talent
Growing through
mergers and acquisitions
Reaching new and untapped
investor segments
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Are You Tracking Leads?
Average Median
Leads generated in
2015
225 90
Leads per professional 30 12
Leads per active owner 59 24
Percent of leads
elevated to prospects
54% 50%
Percent of prospects
converted to clients
37% 37%
Percent of leads
converted to clients
21% 17%
Source: 2016 InvestmentNews Financial Performance Study.
27%
11%62%
Yes, tracked at
a firm-level and
shared among
advisers
Yes, tracked by
individual
adviser, but not
shared among
advisers
No, not tracked
formally
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Become Relevant to Other Demographics
Matures Boomers MillennialGen X Gen Z
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Capturing the Future Client—Serving New Needs and Attitudes
Source: Capgemini—United States Wealth Report 2015
47%
75%67% 70%
82% 87%
3%
86%
Trust and Confidence Satisfaction with Wealth Manager Multiple Relationships Wealth Manager Understanding
of Needs
Under 30
Over 60
68% 68%
62%
Rising Costs of Healthcare My and My Family's
Health
Assets Lasting Through
Lifetime
Over 60Top Concerns
Key Differences of Prospects Under 30 and Over 60
83%80%
73%
Availability of Quality
Education
Ensuring Children's Well-
Being
Rising Education Cost
Under 30
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