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Rating:Chip Roame: Mutual funds have Nothing to Fear from Alternative Investments Not Rated 3.6 Email Routing List Email & Route  Print Print
Monday, May 14, 2007

Chip Roame: Mutual funds have Nothing to Fear from Alternative Investments

Reported by Erin Kello

"The mutual fund industry is alive and well and does not have anything to fear from ETFs, SMA's or hedge funds", at least that is what Chip Roame of Tiburon Strategic Advisors, told attendees at a ICI GMM session entitled, "Distribution: The Evolving Role of Mutual Funds in Client Solutions."

Roame used the current ETF mania as an example, "Yes, ETFs are growing, but the mutual fund industry is $10 trillion industry and the ETF industry is a $400 billion dollar industry, that's not even close", Roame explained.

Chip Roame
Tiburon Strategic Advisors
Managing Principal


So where does the future of the industry lie? Roame says that Unified managed accounts (UMAs) specifically, Turnkey asset management programs (TAMPs) are where the mutual fund industry is headed.

Retirement income was next on Roame's list of topics. He threw out some interesting facts about life expectancy to illustrate the point that most boomers are not adequately prepared.

"The average life expectancy in America is 77.6 years, but average life-span of someone who actually makes it to retirement is 87 years," Roame said. That makes those who have only enough income to make it to 77 under-prepared.

Roame predicted that the liquefaction of assets by Boomers in the next 20 years will lead to shifting distribution channels, namely to the twin channels of RIA's and independent reps.

Roame used findings by Tiburon to illustrate the facts. Investors in the U.S have $20 trillion in investable assets these are divided more or less evenly among three categories -- 30 percent in retirement plans, 30 percent directly invested, and 40 percent invested with advisers.

As far as companies go Fidelity has the largest share with $6 or $7 trillion unique investor dollars, recently passing the former number 1, Merrill Lynch, according to a study done by Tiburon.

 

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