Tiburon Strategic Advisors, led by Chip Roame, just wrapped up its 17th semi-annual Tiburon CEO Summit in mid-October in San Francisco. (It will host its 18th semi-annual event in April 2010 in New York).
This year, rather than give an overview on industry trends, Roame's group recognized two industry players as part of its inaugural Tiburon CEO Summit Awards. After the event, the consultant spoke with Research about these awards and trends affecting the wirehouse firms today.
Why did Tiburon start giving awards?
Awards given at the conference were based on two themes that I've held close to my heart for a while and have tried to promote at the CEO summits since the beginning.
The awards were based on the logic I believed in when I started Tiburon more than 10 years ago: the brokerage and investments industry, going back 100 years or more, has a history of building products and selling them. The history is not based on interviewing consumers to see what they want that most addresses their needs.
This summit focuses on consumers, includes a consumer panel and strives to get everyone in the industry focused on consumers and their needs. The award to Charles Schwab says that the company focuses on consumers, that it does lots of research and builds consumer-friendly products.
The award to Ken Fisher recognized his challenging of conventional wisdom. This industry can get caught up in myths, theories or data sets. I try to challenge such theories and so does Ken. Everything he does shouldn't work according to conventional wisdom, like his mailings, his 1-800-numbers and his use of professional sales staff.
What do you make of the so-called movement of brokers from the wirehouses (or the captive model) over to the independent model?
The wirehouses have 90,000-plus brokers. A big flow of them could be, say, 10 percent or 9,000. But that is not what is happening today. We saw about roughly 650 go independent in 2008, or about 1 percent.
Of course, recipients of this 1 percent are very pleased. It's a great trend for them.
But this doesn't mean that every wirehouse broker is going independent. Yes, some big, successful brokers are going independent. It is not decimating the wirehouses; that is taking it too far.
Can leaders like Sallie Krawcheck at Merrill, and perhaps Bob McCann at UBS, rebuild the wirehouse brands?
They have certain capabilities, skill sets, brands and other qualities that could allow them to win right now. To say that the wirehouse model or the captive model is the future is taking it too far, I'd say.
But they do have a great brand and a lot of productive brokers who, frankly, don't want to go independent. They have a lot working for them.
Culturally, though, they are getting it all wrong. They are trying to maintain control and haven't grasped yet that consumers are free agents, and brokers are, too. So, if you create the best environment for those brokers and their clients, you will win.
