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Wirehouses, B-Ds generating net flows from fee accounts

By Warren S. Hersch

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Wirehouses, regional broker-dealers and independent broker-dealers now capture more than half of their net flows in fee-accounts, according to new research.

Tiburon Strategic Advisors, Tiburon, Calif., disclosed this finding in a summary of results from a new report, “The Future of Wealth Management: Defining the Winning Product, Channel & Tactical Strategies.”  The research explores the future of the financial planning, brokerage, investment management and private banking markets.

The report reveals that packaged fee-account programs have gathered $1.9 trillion, up 2,000% since 1992 and 20% since 2006. Wirehouses have consistently held over two-thirds of the packaged fee-accounts market, but have decreased 12% since 2005 to 56%.

LPL Financial’s reps managed $75 billion in fee-account assets, up over 400% since 2002 due to both internal growth & acquisitions.

Among the report’s additional findings:

  • Active equity mutual funds have realized over $1.0 trillion of outflows since 2008.

  • Fixed income mutual funds have realized over $1.0 trillion of net inflows since 2009.

  • Over two-thirds of fee-based financial advisors are feeling the pressure to revise their investment management strategies.

  • The mix of consumers’ holdings of mutual funds has shifted to over half bonds & money market funds.

  • Long-term mutual funds & exchange traded funds dominated 2010 product net flows.

  • Consumer households hold $7.7 trillion in equities, up 70% since 2002.

  • Consumer households hold $4.2 trillion in bonds, up 90% since 2002.

  • Separately managed accounts & commingled investment funds continue as the second largest investable asset product market with $7.9 trillion assets under management, up 25% since 2008.

  • There are now 1,221 exchange-traded funds (ETFs), up from just 19 in 1997.

  • Exchange traded fund assets are nearly $1.2 trillion, having reached $1.0 trillion in 2010.

  • Hedge funds have $1.8 trillion assets, back above their peak and up 30% since their bottom in 2008-2009.

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