Chip Roame Tells It Like It Is
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Tuesday, April 09, 2013

Chip Roame Tells It Like It Is

If Eric Bogosian had a clue about finance, he'd probably talk alot like Chip Roame.

Roames, managing principal of Tiburon Strategic Advisors, gave a 90-minute keynote speech to the Tiburon CEO Summit XXIV, the event his firm hosted for over 300 industry C-suiters at the Ritz Carlton Battery Park today.

Roames didn't pull any punches, including poking fun at his hometown, Detroit.

"Detroit has the lowest life expectancy in America,...because they shoot each other. That drives life expectancy down," he said at one point during his presentation.

His home city may have received the gentlest treatment today.

Roames gave attendees his views of what was going on in the industry, the drivers behind everyone's business, culled from his firm's research and from the thousands of conversations he and his colleagues have with industry leaders.

For example, Roames presented 35 observations about the economy and industry. Some of the notable observations included the fact that at the end of 2012, consumer wealth was at the exact same point it was in 2007, $66.1 trillion.

Other observations included that consumers are fundamentally changed, more scared and more scarred for instance. Also core investment strategies are evolving, i.e. those yelling for tactical strategies are embracing buy and hold again.

Fee accounts flows are also shifting to rep-driven and managed ETF programs and ETFs continue to take share. Also, retail direct is doing better than advsors.

Index mutual funds are doing well, he noted, as well as braoder index products, like institutional indexed products. For example, indexing accounts for 40 percent of the institutional market compared to 20 percent of the advsiro market.

Active ETFs are still a wild card, Roames said. Hedge funds are wild cards too.

Roames noted that the financial advisor channel dominates. It is the biggest and the fastest growing. That is why, he said, everyone is flooding the arena.

Financial advisor models are multiplying while independent advisors are slowing taking share. The trend towards independents, Roames said, is more a movement of bodies in comparison to assets.

Wirehouse productivity is high while the breakaway broker trend is still motoring along, he said. Custodians are doing well.

Financial advisor scale models are emerging while advisor target models are succeeding, rather well, he said. Independent brokers-dealers are positioning themselves as custodians, TAMPs or producer groups.

Discount brokers are doing well, with retail direct still outgrowing the advisor.

Digital marketing trends are important, he said, giving a shout out to Brightscope in the audience. "You have to know these guys," he said.

Women's issues are becoming big and you'd be wise to pay attention to them, Roames told his audience.

Meanwhile, Generations X and Y are getting more attention. Everything related to 401ks is under increased regulatory scrutiny. DB plans remained underfunded.

Foundations and endowment markets are essentially stagnant.

Another important trend he noted: financial advisors and self-serve channels are emerging as places for private equity.

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