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The Future of Financial Services: Delivering
Advice to All
Daniel Egan, MSc
@daniel_egan @betterment
2010 –
Automated advice era
1990 – 2000
Onlinetrading era
1975 – 1990
Discounttrading era
1924
First open-end mutual fund established
1993
1st Internet stock trade completed
1991
1st Consumer ETF and Target Date Fund launched
2010
1st Automated financial advice service
1975
Discount brokers and index funds are born
1920 – 1950
Rise of the mutual fund era
This is a unique moment in the history of financial advice.
1
You are likely responsible for your retirement, and you want advice.
Defined Benefit Plans
Defined Contribution Plans
7%
69%
0.2%mass market with fiduciary advisors
83%of plan participants
want advice
$10,000average annual cost/client
for fiduciary advice
Investors want advice… but advice is expensive… if you can even access it.
Participants covered by plan type
2
Financial advice is evolving, adapting to our times.
Accessible | Aligned | Intelligent
Accessible
Aligned, intelligent advice will be available to everyone
There is a massive opportunity to make investment advice accessible.
5
$17.4T
$10.8T
$5.2T
$28T85% of assets
118 mm99% of households
116.2mm
2.2mm
0.2mm $10mm+
$2 - $10mm
<$2mm
TraditionalAdvisorTargets
Net Investable Assets per HH:
Households by wealth
$10mm+
$2 - $10mm
<$2mm
Net Investable Assets per HH:
Assets by household wealth
TraditionalAdvisorTargets
Sources: Cerulli: U.S. Retail Investor Advice Relationships 2014; State of U.S. Retail and Institutional Asset Management 2012.
ACCESSIBLE
UnderservedUnderserved
Customer expectations around aligned, holistic advice has expanded into other markets.
6
Participants
Plan sponsorsAdvisors
Clients
$5T 401(k) Market
Self-Directed Customers
$2.5T RIA Market$5T Direct Market
ACCESSIBLE
Customers are migrating to mobile, and they expect to be able to do more than check their balance.
7
ACCESSIBLE
These are the early days for the changes we see coming.
8
Total U.S. consumer financial assets$34T
Total non-pension financial assets$22T
Citi’s projection for robo-advisor market in a decade$5T
Aligned
Customers and regulators will push for aligned business models
Intelligent
Holistic advice and planning will put power in the hands of investors
Customers are saving for multiple goals and expect tailored advice for each of them.
11
INTELLIGENT
Customers are being educated to look for the best long-term, post-tax returns.
12
INTELLIGENT
Personalized tools will increasingly help customers plan how much to save and if they’re on track.
13
INTELLIGENT
Tools will become more powerful, providing more personalized advice.
14
INTELLIGENT
Through behavioral data and analytics, automated advice will increasingly manage customer behavior.
Tax impact preview has
prevented 62% of tax-costly
transactions, curbing
behaviors that lead to long-
term underperformance
15
INTELLIGENT
Daniel Egan@daniel_egan