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The Future of Dealers

The Future of Dealers. Presented by Chris Reynolds CEO & President Investment Planning Counsel Inc. April 27 to 29, 2010. Share the tools. An Industry in flux. Share the tools. Low Growth Market. Aging Advisor base

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The Future of Dealers

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  1. The Future of Dealers Presented by Chris Reynolds CEO & President Investment Planning Counsel Inc. April 27 to 29, 2010 Share the tools

  2. An Industry in flux Share the tools

  3. Low Growth Market • Aging Advisor base “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” Charles Darwin

  4. Regulation Share the tools

  5. Regulation • National Regulator • IROC verses MFDA

  6. Competition Share the tools

  7. Consumer Demand • Consumers want advice and a great client experience • What they are getting is products • Company who gets there act together by providing the best client experience around advice will be the winner Share the tools

  8. Advisor Demand • What do Advisors want from the dealer? Everything • What do they want to pay the dealer? Nothing • Need scale and expertise to compete for top Advisors Share the tools

  9. Branding Joe’s Financial Services VS.

  10. Economics • The Dealer business model has not changed in 20 years • Dealers are competing on price not value • Dysfunctional business model that is bound for failure • Need a new profit model to survive Share the tools

  11. The Math • 2.50% MER on a Mutual fund • 1% Paid to the Dealer • Responsibilities • Compliance and Oversight of all Advisor Activities, All technology, Recruiting, Training, Conferences, Processing, Advisor 411, Lawsuits, • Dealing with Regulators, Accounting, Payroll, Marketing, Branding, Research, Book Financing, Estate Planning, Web Sites, E-Newsletters, Seminars, Business Coaching, etc, etc. • Dealer keeps .20% • Relationship • Dealer “takes” Advisor’s compensation • “I Pay YOU!!!” • Anything that goes wrong = Dealer’s fault • Margin .03% • .80% paid to the Advisor • Responsibilities • Finding Clients, Servicing Clients, Reporting, Managing Staff, Paying Rent, Marketing, Client Communications, Client Events, Processing, Compliance, Branch Management, etc. etc. • Relationship • Advisor is held responsible for all recommendations including the performance of recommended Funds • Anything that goes wrong = Advisor’s fault • According to Media – Advisors are over paid • Margin .40%

  12. Question? Where did the other 1.5% of the MER go? To the Manufacturer! • Relationship: • Wholesaler seen as investment analyst and source of investment information (sometimes coach) • As long as fund performance holds up they earn their fees • Responsibilities: • Manage money to stated mandate and objectives • Administer the assets and hire a custodian • Send annual statement to client • Be your friend (wholesaler) Margin .50% - 1%

  13. Who will Survive? Niche Megazoid Mid Size

  14. Conclusions • Moving to a new age in regulation • Product are commoditized – both Advisor and Consumer • Move to the client experience business • Need size and scale to compete • Must have manufacturing to survive

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