#11 Five Industry Trends Reshaping Financial Advice 2 07.07.2021 | SEC AMAC Michael E. Kitces MSFS, MTAX, CFP®, CLU, ChFC, RHU, REBC, CASL Head of Planning Strategy. Buckingham Wealth Partners Publisher. The Kitces Report, www.kitces.com Blogger. Nerd's Eye View, www.kitces.com/blog Twitterer. @MichaelKitces, www.twitter.com/MichaelKitces Five Industry Trends Handouts/Additional Materials at: kitces.com/SECAMAC The Luddites 1 KITCES ..COM Advancing Knowledge In Financial Planning... © 2013 Michael Kitces | kitces.com Handouts/Materials: kitces.com/SECAMAC Treppe 1#2#3LO Five Industry Trends 5 "Financial Advisor" of the 1970s/80s: STOCKBROKER! 6 ©2013 Michael Kitces | kitces.com Five Industry Trends Total one-way costs 1.60% 1.40% - 1.20% - 1.00% - 0.80%- 0.60% - 0.40% - 0.20%- www 0.00% 1900 wwwww 1910 © 2013 Michael Kitces | kitces.com 65 LAKER Handouts/Materials: kitces.com/SECAMAC Average one-way transaction costs (half-spread + NYSE commission) SHARK 1920 1930 Munde May Day 1975 1940 1950 1960 1970 1980 1990 2000 charles SCHWAB 1975 D Ameritrade 1975 Scottrade 1980 EXTRADE 1982 Handouts/Materials: kitces.com/SECAMAC Source: "A Century of Stock Market Liquidity & Trading Costs" by Charles Jones 3#4Five Industry Trends 7 "Financial Advisor" of the 1990s - MUTUAL FUNDS! 8 Total Mutual Fund Assets (Billions) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 1990 © 2013 Michael Kitces | kitces.com 1991 1992 Five Industry Trends 1993 © 2013 Michael Kitces | kitces.com 1994 8/24/1998 12:00AM Mutual fund supermarkets Equity Funds Bond Funds LET'S FACE IT: Buying a mutual fund can be a pretty confusing business these days, what with the proliferation of funds, fund families and fund surveys. What's the best way to assemble a portfolio based on FORBES' recommendations without being swamped by paperwork or unnecessary charges? 1995 Year Handouts/Materials: kitces.com/SECAMAC Consider opening an account at a financial services organization with a so-called mutual fund supermarket. These programs allow no-load funds from different families to be bought without transaction fees while consolidating holdings in one statement. Charles Schwab popularized the supermarket concept six years ago with its OneSource program. On Wall Street, as elsewhere, hot ideas quickly get imitated. Now more than 25 supermarkets vie for your attention and money. 1996 • The online Mutual Fund Supermarket! Forbes Hybrid Funds 1997 YAHOO! FINANCE 1998 charles SCHWAB EXTRADEⓇ TD Ameritrade Handouts/Materials: kitces.com/SECAMAC 1999 Kiplinger Money MORNINGSTAR st#5Five Industry Trends 9 "Financial Advisor" of the 2000s - ASSET ALLOCATION! 10 Assets Under Management (Millions) ● $250 $200 $150- $100- $50 © 2013 Michael Kitces | kitces.com $0 1998 2000 2002 2004 Five Industry Trends FP50 Long-Term Trends, 2007-2019 $35,000,000 $30,000,000 $25,000,000 The Rise Of The Fee-Based Advisory Model (B/D) $20,000,000 $15,000,000 $10,000,000 $5,000,000 Handouts/Materials: kitces.com/SECAMAC 2013 Michael Kitces | kitces.com 2006 2008 2010 2012 2014 Year $0 Fee Revenue Passes Commission Revenue! 2016 Source: "Moss Adams & Investment News Industry Benchmarking Surveys" 2018 Handouts/Materials: kitces.com/SECAMAC mi 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total Revenue ($000) Fee Revenue ($000) Commission Revenue ($000) Source: Financial Planning Magazine LO 5#6#7#8#9#10