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Barrons Presentation Serving Mass Affluent
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Barrons Presentation Serving Mass Affluent


How investment advisors can serve the mass affluent profitably and as a fiduciary.

How investment advisors can serve the mass affluent profitably and as a fiduciary.

Published in Economy & Finance , Business
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  • 1. +
  • 2. CASTING A WIDER NET: SCALING TO SERVICE A MASS AFFLUENT CLIENT BASE Top Independent Advisors Summit Phoenix, AZ | March 19, 2014 Presenters: Martin Bicknell + Steven Lockshin
  • 4. AdvicePeriod  4 While not clearly defined, the market is enormous. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Number of HH Investable Assets HNW to UHNW: >$5M Affluent: $2M to $5M Mass Affluent: $500k to $2M Middle Mkt: $100 to $500k Mass Mkt: <$100k 118 M HH $27.5 Trillion Source:  Cerulli   HH (000) Assets ($ BN) 724 $8,354 1,496 $4,675 8,066 $7,342 24,155 $5,484 83,220 $1,654
  • 5. AdvicePeriod  5 And more investable retail assets are coming… Source:  Federal  Reserve  Flow  of  Funds  June  2012,  Cerulli  and  Envestnet   Individuals are retiring As individuals retire, semi-liquid assets become liquid assets resulting in $40+ trillion investable retail assets $20 TRILLION Semi-Liquid Assets $40+ TRILLION Liquid Assets
  • 6. AdvicePeriod  6 Mass affluent consumers present an underserved market. *Identifying the emerging affluent is as much art as science. We identify them as households that typically are headed by adults younger than age 45 who have at least some college education and a minimum annual household income of $75,000. Emerging (7%) Affluent (16%) Wealthy (9%) PwC defines the mass affluent consumer segment to include the following: •  Wealthy: Households with investable assets ranging from $500,000 to $1 million. •  Affluent: Households with investable assets ranging from $100,000 to $500,000. •  Emerging affluent*: Households that are likely to reach the affluent level of wealth within the next 5-to-10 years (and as such, are worth getting to know now). Households High net worth Mass affluent 32% Mass consumer Emerging (2%) Affluent (22%) Wealthy (27%) Investable Assets High net worth Mass affluent 51% Mass consumer Source:  PWC  FS  Viewpoint,  December  2012  
  • 7. AdvicePeriod   •  Given the pricing power of the high net worth client segment, the Emerging Affluent are less likely to result in price compression. •  The Emerging Affluent is an untapped market that has historically been overlooked by advisory firms due to the size of their individual investable assets, but the collective size of this client segment represents an enormous opportunity for firms who can create a business model designed specifically for the needs of the Emerging Affluent. 7 Why focus on the emerging affluent?
  • 8. AdvicePeriod  8 Financial institutions struggle to win the business of the mass affluent. Retail Banks Standardized processes Discount Brokers Lack of physical presences Insurance Companies Restricted customer view Wealth Managers High-cost infrastructure Organizational silos, product pushing, & declining trust Mass Customer Focus Specialized Product FocusModel Focus Migration Threat Source:  PWC  FS  Viewpoint,  December  2012  
  • 10. AdvicePeriod  10 Some examples include…
  • 11. AdvicePeriod   WHAT WE’RE DOING
  • 12. AdvicePeriod  12 AdvicePeriod Key Services/Differentiators: •  Comprehensive Wealth Planning: AdvicePeriod is focused on providing expert advice in all areas of wealth planning (e.g., trust & estate, retirement, cash flow management, portfolio tax minimization, guidance on philanthropy, and risk management) •  Launched in 2014, AdvicePeriod is technology driven, allowing clients of all sizes to access the services of the firm •  Entire infrastructure in the cloud •  Completely paperless; all reporting is rendered online •  Predominantly passive •  Leveraging Fortigent UMA / Betterment Institutional for Mass Affluent client base AdvicePeriod focuses clients on the important decisions necessary to manage their wealth. By combining actionable planning advice with objective investment guidance, AdvicePeriod strives to enable clients to achieve their financial goals and shape their legacy for generations to come.
  • 13. AdvicePeriod  13 AdvicePeriod *A person in a position of authority whom the law obligates to act solely on behalf of the person he or she represents and in good faith. Unlike people in ordinary business relationships, fiduciaries may not seek personal benefit from their transactions with those they represent. ESTATE + TAX PLANNING ASSET ALLOCATION/ PORTFOLIO RE-BALANCING FEES MANAGER SELECTION QUALIFIED EXPERT FIDUCIARY* ADVICE Value that truly impacts your wealth:
  • 14. AdvicePeriod  14 Independence by ConvergentTM Key Services/Differentiators: •  Experienced Professionals: Advisors are well-rounded professionals with extensive experience working with high net worth families. •  Independence Interface: Integrated use of technology is designed to enhance interaction with a client’s wealth advisor. By employing a variety of new innovations, Independence by Convergent™ delivers timely, individual advice and tools that include: −  Face-to-face video conferencing through a tablet issued to each client; −  Access to all documents and reporting tools through a secure online vault; −  Consolidated performance reporting for all your Independence by Convergent™ assets. Independence by Convergent™ delivers to the $1 million investor the strategies and techniques used by the $100 million investor through a revolutionary combination of technology, financial expertise, and personal service.
  • 15. AdvicePeriod  15 Independence by ConvergentTM
  • 16. AdvicePeriod  16 FirstPoint Financial Key Services/Differentiators:. •  Holistic Wealth Planning: FirstPoint shares the core offering of MWA which is holistic wealth planning with fiduciary responsibility and no account minimums. •  Technology Offering: −  Online access to account information −  Ease of transitioning accounts −  Account aggregation −  Online vault −  Access to planning and investment tools FirstPoint Financial is specifically designed to meet the needs of the Emerging Affluent. FirstPoint has leveraged the resources of MWA and scaled it to build the Emerging Affluent service model.
  • 17. AdvicePeriod  17 FirstPoint Financial
  • 19. AdvicePeriod  19 The industry buzz... •  Technology (i.e., Digital Advice) is already influencing the industry. •  Leveraging a digital platform will create operating efficiency (margin) and should help protect against disruption. “Technology will be the key that unlocks the mass-affluent market for financial advisors.” “It’s almost second nature to embrace online tools.”
  • 20. AdvicePeriod   The era of automated advisory is here. 1939 + 1940 Acts Setup regulated brokerage industry 1957 S&P 500 is introduced 1993 1st Internet stock trade completed 1975 SEC deregulates brokerage industry Discount brokers are born; Schwab 1977 Merrill Lynch introduces CMAs 1991 1st Consumer ETF launched Rise of online & discount trading •  Tech driven •  Real time, least expensive execution Advisors •  Customers seek guidance •  Access typically for accounts >$500k Automated management •  Lowest cost DIY solution •  Data-driven advice •  No minimums •  Highly scalable 20 SourceInsert  
  • 21. AdvicePeriod   Innovators Early Adaptors Early Majority Late Majority Laggards Trial Users Everybody Else Rogers’s Market Segments Big Bang Market Segments 21 “Big Bang Disruption” – being early matters. SourceInsert  
  • 22. AdvicePeriod  22 The speed of innovation is increasing, and the cost of failure is decreasing. I skate to where the puck is going to be, not where it has been. - Wayne Gretzky“ ” Data Storage   Maps /GPS   Travel Agents   Video   Music Industry   Taxi  
  • 23. AdvicePeriod  23 How are you using technology to optimize your client experience? What business are we in? If it's advice, then use technology to more efficiently create space to advise you clients! •  Are you truly using technology today? Ask yourself: ­  How often do you update your online client experience? ­  What’s your digital marketing strategy? Retargeting, SEO, SEM, conversion metrics? Do you conduct A/B testing? Multi-variable testing? ­  Do you connect with existing and potential clients through social media? ­  Remembering Kodak •  Are advisors innovating? Do we even have the technical and financial resources to innovate?
  • 25. AdvicePeriod  25 Consumers expect better technology. Technology is changing the way consumers access financial services. Consumers adoption of tech is dramatically outpacing their advisors’ adoption and it’s coming from every direction.
  • 26. AdvicePeriod  26 The firm of the future will meet consumer expectations. •  Technology enabled •  Mobile enabled for consumers and advisors alike •  Extremely for consumers to access their advisors (chat, video- conference, online scheduling, etc.) •  Allows self serve (i.e., what banks did with ATMS, airlines with kiosks, and travel with online web technology) •  Separate advice from product •  Make the complex simple for consumers •  Big data to make better decisions •  Continuous improvement
  • 27. AdvicePeriod  27 What is your value proposition? Commoditization is the industry talk – what happens when consumers figure it out? The primary value in an advisory relationship is the planning and the connection between advisor/client. Everything else should be made efficient. Today we are a poorly trusted industry. Active v. passive is a religious argument beyond this discussion( )
  • 29. AdvicePeriod   Separate advice layer Human Digital Integrated Digital Advisor competitive landscape. 29
  • 30. THANK YOU MARTIN BICKNELL | marty.bicknell@mariner-holdings.com STEVEN LOCKSHIN | steve.lockshin@adviceperiod.com
  • 31. Past Performance Is No Guarantee Of Future Performance. Any opinions expressed are current only as of the time made and are subject to change without notice. This report may include estimates, projections or other forward looking statements, however, due to numerous factors, actual events may differ substantially from those presented. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. Additionally, please be aware that past performance is not a guide to the future performance of any manager or strategy, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, caution must be used in inferring that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. All performance numbers shown herein are net of actual fees and expenses and include the reinvestment of dividends and other income, as reported by the manager and/or by the commercial databases involved. While we believe this information to be reliable, AdvicePeriod bears no responsibility whatsoever for any errors or omissions. Index benchmarks contained in this report are provided so that performance can be compared with the performance of well-known and widely recognized indices. The volatility of these indices may be materially different from that of the fund. You cannot invest directly in an index. Index results assume the re-investment of all dividends and interest. Moreover, the information provided is not intended to be, and should not be construed as, investment, legal or tax advice. Nothing contained herein should be construed as a recommendation or advice to purchase or sell any security, investment, or portfolio allocation. Any investment advice provided by AdvicePeriod is client specific based on each clients' risk tolerance and investment objectives. This presentation is not meant as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client's accounts should or would be handled, as appropriate investment decisions depend upon the client's specific investment objectives. Non-deposit investment products are not FDIC insured, are not deposits or other obligations of AdvicePeriod, are not guaranteed by AdvicePeriod and involve investment risks, including the possible loss of principal. 31 AdvicePeriod   Disclosure