The Fee-based Winter 2009 Semi-annual Report

Every down market witnesses important changes in the acceptance of new and different ways of doing business. These changes have often proven to be the forerunner of important sources of growth and structural change when markets move higher. It is in that context that Advisor Managed, the growing trend of full-service brokerage advisors operating as discretionary money managers, warrants close attention by industry participants. The numbers underscore this view. At the end of 2008, discretionary advisor managed assets stood at just over $28 billion—5% of the full-service brokerage channel’s assets under administration. The growth measures show a three-year 30% CAGR in this segment, compared to -2% for the channel’s overall assets. In terms of future growth potential, of note is the fact that nearly 11% of all client-facing advisors are participating in these programs—and the numbers of converts has been growing strongly. Clearly something is happening here. Over the past few months, Investor Economics researchers have engaged in a comprehensive review of the state of the Advisor Managed business, gathering data and insights on all aspects of the business. The findings of our research are so extensive that they are being presented as special features of two Investor Economics studies—the Winter 2009 issue of The Retail Brokerage Report, which is now available for subscriber download, and the Winter 2009 issue of The Fee-based Report, which is slated for release later in March. These studies will differ in focus, with The Fee-based Report addressing more of the strategic, regulatory and competitive aspects in the broader context of servicing higher net worth clients. In The Retail Brokerage Report, the focus is more on program specifics, and operational, compliance and portfolio management issues.