1 / 116

The Rapid Rise of Online Brokerage & Advice: Robo & Hybrid Models

Explore the evolution of the online brokerage and advice market, from its emergence in the late 1990s to the present day. Discover the key players, market segments, and future predictions for this rapidly growing industry.

dalecarl
Download Presentation

The Rapid Rise of Online Brokerage & Advice: Robo & Hybrid Models

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Online Brokerage & Advice: The Rapid Emergence of Robo & Hybrid Models Tiburon Research June 5, 2019

  2. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  3. Online Brokerage & Advice Emerged in the Late 1990s and Has Subsequently Evolved though its Discount Brokerage, Online Brokerage, & Online Advice Phases Online Brokerage & Advice History Online Brokerage & Advice Emerged Online Brokerage & Advice Today Discount Brokerage Phase Online Brokerage Phase Online Advice Phase 1930 - 1999 2000 - 2005 2006 - 2013 2014 - 2019 2019 Approximate Dates: Key Steps: • 1930: FMR founded as Fidelity Fund • 1943: FMR’s Fidelity Fund was acquired by Edward Johnson II • 1946: Fidelity Fund restructured as Fidelity Management & Research • 1971: The Charles Schwab Corporation founded as First Commander Corporation by Commander Industries • 1971: Chuck Schwab & four others purchased the stock of Commander Industries • 1973: The Charles Schwab Corporation’s predecessor First Commander Industries changed its name to Charles Schwab & Company • 1973: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor Jack White & Company founded • 1974: Fidelity Investments began selling mutual funds directly to individual investors via toll-free telephone numbers • 1975: SEC ended fixed brokerage commissions on May Day • 1975: The Charles Schwab Corporation became one of the first prominent discount brokerage firms after brokerage commissions were deregulated • 1975: The Charles Schwab Corporation opened first branch in Sacramento, CA • 1976: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor First Omaha Securities changed its name to First National Brokerage Services • 1977: The Charles Schwab Corporation opened first office outside of California in Seattle, Washington • 1977: The Charles Schwab Corporation began offering seminars to clients • 1977: Interactive Brokers Group founded 1977: Ibbotson Associates founded • 1978: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor Waterhouse Securities founded • 1979: The Charles Schwab Corporation acquired & began customizing Thomson Beta mainframe brokerage system • 1979: Fidelity Investments introduced first voice activated computer system that responded to investors’ mutual fund questions • 1980: The Charles Schwab Corporation established industry’s first 24 hour quotations service • 1981: The Charles Schwab Corporation became member of the New York Stock Exchange • 1982: The Charles Schwab Corporation became first to offer 24x7 order entry service • 1982: The Charles Schwab Corporation opened first international office in Hong Kong, China • 1982: E*Trade Financial founded • 1983: Bank of America Corporation acquired The Charles Schwab Corporation • 1983: FMR’s Fidelity Investments opened its first investor center in Boston, MA • 1983: The Charles Schwab Corporation’s predecessor The Hampton Company founded • 1983: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor Ameritrade launched its clearing business called Ameritrade Clearing • 1983: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor first national brokerage services changed its name to Accutrade • 1983: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor Resources Trust founded • 1984: The Charles Schwab Corporation introduced Mutual Fund Marketplace • 1984: Fidelity Investments introduced computerized brokerage trading • 1984: Morningstar founded • 1985: The Charles Schwab Corporation opened one millionth client account • 1985: The Charles Schwab Corporation launched its first desktop trading software, called the Equalizer • 1985: Performance Technologies founded • 1985: The Charles Schwab Corporation’s Schwab Performance Technologies founded 1986: The Charles Schwab Corporation Holding Company was formed • 1987: The Charles Schwab Corporation management team acquired the firm back from Bank of America Corporation • 1987: The Charles Schwab Corporation went public • 1987: The Charles Schwab Corporation crippled when stock market crashed shortly after initial public offering • 1987: The Charles Schwab Corporation launched Financial Advisor Services • 1987: Toronto-Dominion Bank Group’s TD Ameritrade’s predecessor Accutrade formed Transterra as the Holding Company for Ameritrade Clearing and the Company’s discount brokerage business • 1989: The Charles Schwab Corporation introduced Schwab Funds • 1989: Fidelity Investments launched Funds Network, its mutual fund supermarket • 1989: Fidelity Investments launched mutual fund wrap account program called Portfolio Advisory Services • 1989: Fidelity Investments launched its mutual fund wrap account program called Portfolio Advisory Services • 1989: Fidelity Investments launched mutual fund wrap account program called Portfolio Advisory Services • 1990: The Charles Schwab Corporation launched International Services business • 1990: Fidelity Investments introduced its Spartan Brokerage in 1990 • 1991: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor First Trust began offering custody services to fee-based financial advisors • 1992: The Charles Schwab Corporation launched no transaction fee mutual fund supermarket Mutual Fund OneSource • 1992: The Charles Schwab Corporation opened call center in Phoenix, Arizona • 1992: The Charles Schwab Corporation launched Charles Schwab Trust Company • 1992: The Charles Schwab Corporation opened first multicultural center in Miami, Florida • 1992: Fidelity Investments launched its Charitable Fund as the first charitable fund to offer compensation to financial advisors who sold the fund in 1992 • 1993: The Charles Schwab Corporation’s Mutual Fund OneSource Select List introduced • 1993: The Charles Schwab Corporation split stock three for two • 1993: Fidelity Investments’ Fidelity Personal Trust Company founded • 1994: Charles Schwab Insurance Services founded • Mid-to-Late 1990s: Leading discount brokerage firms focused on online investing • Mid-to-Late 1990s: The online brokerage industry realized explosive growth due to increased access, low prices, increased service offerings, growing product menus, & increased brand awareness • Mid 1990s: The Charles Schwab Corporation shifted business heavily to the web • 1994: Ameritrade completed first internet trade • 1995: mPower founded • 1995: The Charles Schwab Corporation lowered commissions • 1995: The Charles Schwab Corporation launched eSchwab • 1995: The Charles Schwab Corporation acquired The Hampton Companies • 1995: The Charles Schwab Corporation’s CyberCorp founded • 1995: FMR’s Ned Johnson reduced his ownership stake to 12.5% • 1995: Toronto Dominion Bank Group acquired Waterhouse Securities • 1995: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Ameritrade acquired eight discount brokerage firms, starting with K. Aufhauser & Company • 1996: Financial Engines founded • 1996-1998: Online brokerage firms lowered stock trading commissions substantially • 1996: Fidelity Investments launched its private portfolio services program allowing the incorporation of individual securities into its mutual fund wrap account program • 1996: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Transterra changed its name to Ameritrade Holding Corporation • 1996: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Datek was founded • 1996: E*Trade Financial went public • 1996: Dean Witter acquired Lombard and renamed it Discover • 1997: Jeff Maggioncalda joined Financial Engines • 1997: Fidelity Investments began offering initial public offerings & third-party research • 1997: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Ameritrade went public • 1997: IBM’s CEO Lou Gerstner predicted entire brokerage industry would move to the web • 1997: Quick & Reilly acquired Sure Trade • 1998: Financial Engines raised second round of venture capital • 1998: Financial Engines launched online advice business • 1998: Merrill Lynch's Launny Steffans called do-it-yourself model of investing centered on internet trading a serious threat to Americans' financial lives • 1998: The Charles Schwab Corporation’s market capitalization passed that of Merrill Lynch • 1998: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor TD Waterhouse acquired three discount brokerage firms, starting with Jack White & Company • 1998: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor International Clearing Trust Company founded • 1998: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Dealwise founded • 1998: The American Association of Individual Investors began its survey of discount brokerage firms • 1999: Raymond Sims joined Financial Engines • 1999: Online brokerage firms advertised aggressively • 1999: The Charles Schwab Group CEO Dave Pottruck called itself the new breed of full-service firm • 1999: Online brokerage firms came up with interesting ways to build their brand, including Ameritrade’s $1.0 million Investors Cup • 1999: Mutual fund companies began selling mutual funds directly to clients over the web • 1999: A North American Securities Administrators Association study of day traders concluded that only 11% make money • 1999: The Charles Schwab Corporation, TD Waterhouse, Ameritrade, & other firms created online investment bank Epoch Partners • 1999: SEC Chairman Arthur Levitt said that online brokerage firm advertisements more closely resembled commercials for the lottery • 1999: Foliofn founded • 1999: MB Trading founded • 2000: The Charles Schwab Corporation acquired US Trust Corporation • 2000: FMR reached $1.0 trillion in assets under management • 2000: FMR raised $1.0 billion debt in 2000 • 2000: Peter Lynch sold his $53 million ownership stake in the company in 2000 • 2000: Toronto Dominion Bank Group’s TD Ameritrade’s predecessor Ameritrade entered the fee-based financial advisor custody business • 2000: Foliofn launched folios • 2000: E*Trade Financial launched E*Trade Bank • 2000: Numerous online brokerage firms dropped stock commissions to $0 per trade • 2000: Legislation allowing eSignatures enhanced the growth of online brokerage firms • 2001 & 2002: Several web sites developed to deliver online advice to individual investors • 2001: The Charles Schwab Corporation launched banking & mortgage product offers & began offering FDIC insured accounts • 2001: The Charles Schwab Corporation, Fidelity Investments, & E*Trade Financial led move into mobile account access & trading • 2001: The Charles Schwab Corporation and TD Waterhouse sold Epoch Partners to The Goldman Sachs Group • 2001: Fidelity Investments launched its advisor access program • 2001: Fidelity Investments Launched its Fidelity Life Stage Planning • 2001: TD Ameritrade acquired direct access broker, TradeCast • 2001: Buy & Hold.Com, Sharebuilder.Com, & NetStockDirect.Com emerged as DRIP clearing houses • 2001: The focus of the folio industry shifted from retail to financial advisors • 2001: E*Trade launched folios • 2001: Netfolio was founded • 2001: Netfolio then exited the folio business that same year • 2001: Financial Engines shifted to enterprise model • 2001: Larry Raffone joined Financial Engines • 2001: Morningstar launched Managed Portfolios 2002: Investment Company Institute petitioned the Securities & Exchange Commission to require folios to be regulated in the same fashion as mutual funds • 2002: Harris Direct acquired myCFO • 2003-2004: FTV Capital helped refine Financial Engine’s strategy • 2003: Morningstar acquired mPower • 2003: Fidelity Investments Sold Insurance.Com to Comparison Market • 2004: The Charles Schwab Corporation sold Soundview Capital Markets • 2004-2005: Folios should have benefited from the mutual fund scandals • 2004: Fidelity Investments Reduced its Stock Commissions 40% to $19.95 • 2004: Financial Engines launched professional management business • 2005-2011: The Charles Schwab Corporation’s Talk to Chuck campaign ran • 2005: The Charles Schwab Corporation acquired CyberTrader • 2005: Ameritrade acquired TD Waterhouse and renamed itself TD Ameritrade • 2005: E*Trade Financial acquired Brown & Company • 2005: E*Trade Financial acquired Harris Direct • 2005: E*Trade Financial acquired Kobren Insight Management • 2005: E*Trade Financial Howard Capital • 2005: Morningstar went public • 2007-2010: Fidelity Investments Kathleen Murphy was named One of the 50 Most Powerful Women by Fortune • 2007: Fidelity Investments launched its Wealth Advisor Solutions program to expand its financial advisor access referral program • 2007: Citadel rescued E*trade Financial • 2008-2012: Citadel pushed for a sale of E*Trade Financial • 2008-2012: E*Trade Financial utilized its talking baby advertising campaign • 2008-2010: Zecco Holdings growth stalled in the recession • 2008: Fidelity Investments’ Rodger Lawson led a push for better accountability by cutting expenses, revising compensation system, taking a 2007 year-end reserve, & limiting 2007 payouts • 2008: Fidelity Investments restructured to combine its discount brokerage & 401K businesses under Fidelity Personal & Workplace Investing in 2008 • 2008: Fidelity Investments former employee Jonathan Zang sued Fidelity Investments for wrongful termination after he claimed that the firm should be subject to Sarbanes Oxley Act even though it is privately owned • 2008: Fidelity Investments limited dividend payouts to its top 100 shareholders • 2008: Fidelity Investments’ retail web site rated five stars for its financial planning & asset allocation tools by Kiplinger’s • 2008: Seminar promoter Teach Me to Trade shut down by the SEC • 2009-2010: E*Trade Financial hammered by losses in its banking business • 2009: Fidelity Investments cut the fees on its 529 plan • 2009: E*Trade Financial took a charge to shore up its capital position • 2009: Seminar Promoter Investools paid $3.0 million to settle an SEC complaint • 2006: Financial Engine’s business boosted by Pension Protection Act • 2006: Christopher Jones joined Financial Engines • 2006: Morningstar acquired Ibbotson Associates • 2006: Anne Cappel joined Financial Engines • 2007: Betterment Holdings founded • 2009: SafeCorp Financial Corporation founded • 2009: SafeCorp Financial Corporation formed Personal Capital Advisors Corporation (RIA) • 2010: Financial Engines reincorporated in Delaware • 2010: Financial Engines went public • 2010: Betterment raised $3.0 million Series A venture capital • 2010: Betterment launched at Tech Crunch Disrupt New York • 2010: Betterment named best New York disruptor at Tech Crunch New York Disrupt • 2010: Betterment named best of show at Finovate Fall • 2010: Betterment launched treasury bond portfolio to be less sensitive to interest rate changes • 2010: Personal Capital Corporation raised Series A venture capital • 2010: Motif Investing founded • 2010: Scottrade began obnoxious stockbroker advertising campaign • 2011–2013: Personal Capital Corporation raised Series B venture capital • 2011: Financial Engines introduced Income + • 2011: Debra Babbit joined Financial Engines • 2011: Kaching founded • 2011: Personal Capital Corporation changed name from SafeCorp Financial Corporation to current name • 2011: Craig Birk joined Personal Capital Corporation • 2011: Brokerage firms required to start reporting tax basis • 2011: Bank of America Corporation introduced Merrill Edge • 2011: E*Trade Financial lessoned use of its talking baby advertising campaign • 2011: First investment related applications developed for the iPad • 2011: E*Trade Financial received Wells notice from FINRA • 2012: Financial Engines introduced Total Retirement Advice • 2012: Financial Engines introduced IRA Management • 2012: Financial Engines moved corporate headquarters to Sunnyvale, CA • 2012: Larry Raffone named president of Financial Engines • 2012: Betterment raised $10.0 million Series B venture capital • 2012: Betterment reduced pricing • 2012: Betterment added IRA accounts • 2012: Impulse Save founded • 2012: Personal Capital Corporation closed Personal Financial Advisor Service to new clients • 2012: Rob Foregger resigned from Personal Capital Corporation • 2012: Motif Investing launched • 2012: Loyal 3 announced stock ownership plan via Facebook • 2012: TradeKing Group acquired Zecco Holdings • 2012: Motif Investing won Web Marketing Association’s Web award • 2012: Interactive Brokers Group’s CEO Thomas Peterffy spent heavily to support Mitt Romney for President • 2012: Steven Freiberg resigned as CEO of E*Trade Financial • 2013: Betterment acquired Impulse Save • 2013: Personal Capital Corporation raised Series C venture capital • 2013: Personal Capital opened Denver, CO office • 2013: Personal Capital Corporation discontinued Personal Financial Advisor Service • 2013: Technology Crossover Venutures sold most of its holdings of Interactive Brokers Group • 2013: Robinhood Financial raised $3.0 million second round venture capital • 2014: The Vanguard Group launched Personal Advisor Services • 2014: Fidelity Investments entered into joint venture with Betterment Holdings to refer affiliated financial advisors • 2014: Personal Capital Corporation launched Private Client Group for those with $1.0 million or more • 2014: Interactive Brokers Group acquired Covestor • 2014: Envestnet acquired Upside Holdings • 2015: Financial Engines added call centers • 2015: Financial Engines acquired The Mutual Fund Store • 2015: The Vanguard Group lowered minimum account on Personal Advisor Services from $100,000 to $50,000 • 2015: The Charles Schwab Corporation launched Intelligent Portfolios • 2015: The Charles Schwab Corporation launched Institutional Intelligent Portfolios • 2015: Fidelity Investments began testing Fidelity Go robo advisor service with employees • 2015: Betterment Holdings launched Betterment Institutional • 2015: Betterment Holdings launched Betterment for Business • 2015: Betterment Holdings predicted that it would have three $1.0 trillion businesses by 2025 • 2015: Consumer Reports named Betterment Holdings one of top five brokerage companies for client service • 2015: Betterment Holdings hired Tom Kimberly to lead Betterment Institutional • 2015: Wealthfront lowered minimum account from $5,000 to $500 • 2015: Personal Capital Corporation lowered minimum account from $100,000 to $25,000 • 2015: BlackRock acquired FutureAdvisor • 2015: LearnVest CEO Alexa Von Tobel began as columnist for Money Magazine • 2015: Hedgeable eliminated its $5,000 account minimum • 2015: AT Kearney released robo advisors research report • 2015: Corporate Insight released robo advisors research report • 2015: Cerulli Associates released robo advisors research report • 2015: Silver Lane Advisors released robo advisors research report • 2015: FinaMetrica released robo advisors research report • 2016: E*Trade Financial launched robo advisor called Adaptive Portfolios • 2016: Betterment Holdings raised $100 million series C venture capital • 2016: Wealthfront launched 529 college savings plan • 2016: Personal Capital Corporation raised $75 million series C venture capital • 2016: SigFig raised $33 million series E venture capital • 2016: SigFig partnered with UBS to develop robo advisor for its 7,145 financial advisors • 2016: Pershing offered financial advisors customized robo advisor capabilities • 2016: Pershing added SigFig to its custodial platform as a choice for financial advisors • 2016: SheCapital closed • 2016: Celent released robo advisor research report • 2017: The Charles Schwab Corporation launched hybrid robo advisor • 2017: Betterment launched hybrid robo advisor • 2017: Personal Capital Corporated raised its account minimum from $25,000 back to $100,000 • 2017: Wealthfront added margin lending • 2017: Betterment co-founder Eli Broverman resigned • 2017: Bill Harris resigned & Jay Shah named CEO of Personal Capital Corporation • 2017: Former Wealthfront CEO Adam Nash joined the board of Acorns • 2017: Social Finance (SoFI) launched robo advisor • 2017: AdvisorEngine acquired goals-based financial planning technology firm Wealthminder • 2017: AdvisorEngine acquired practice management firm Kredible • 2018: Edelman Financial Services acquired Financial Engines • 2018: Principal Financial acquired RobustWealth • 2018: BackEnd Benchmarking releases robo advisor report Source: Tiburon Research & Analysis 2

  4. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  5. Online Brokerage & Advice can Specifically be Defined to Include Online Brokerage Firms & Online Advice Firms Online Brokerage & Advice Market Definition Online Brokerage & Advice Market Definition Online Brokerage Firms Online Advice Firms Source: Tiburon Research & Analysis

  6. There are 118 Online Brokerage & Advice Firms, Including 63 Online Advice Firms Online Brokerage & Advice Firms Source: 6/4/19 SuperMoney Web Site; 10/9/18 Personal Capital Corporation Presentation (Shah); 10/5/18 Wall Street Journal; 4/11/18 Nyca Presentation (Morris); 4/10/18 Fiserv Presentation (Nash); 4/10/18 Wealth Simple Presentation (Katchen); 4/10/18 Certified Financial Planner Board of Standards Presentation (Keller); 4/10/18 JP Morgan Chase & Company Presentation (O’Brien); Tiburon Research & Analysis

  7. Online Brokerage & Advice Firms Have Gathered $13.2 Trillion Assets Under Administration, Including $12.7 From Online Brokerage Firms Online Brokerage & Advice Assets Under Administration ($ Trillions) Source: 6/3/19 Guided Choice Web Site; 6/3/19 Robo Advisor Pros Web Site; 6/3/19 Robo Advisor; 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 12/31/18 Interactive Brokers Group Annual Report; 12/31/18 SigFig ADV; 12/21/18 AssetBuilder ADV; 6/30/18 Fidelity Investments Web Site; Tiburon Research & Analysis

  8. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  9. Online Brokerage & Advice Market Growth can Specifically be Measured by the Number of Firms, and their Number of Employees, Clients, Accounts, Net New Accounts, Assets Under Administration, Net New Assets Under Administration, Daily Average Trades, Daily Average Revenue Trades, Revenues, & Net Profits Online Brokerage & Advice Market Growth Measures Online Brokerage & Advice Market Growth Measures Employees Clients Accounts Net New Accounts Assets Under Administration Net New Assets Under Administration Daily Average Trades Daily Average Revenue Trades Revenues Net Profits Source: Tiburon Research & Analysis

  10. There are 118 Online Brokerage & Advice Firms, Up From 73 in 2012 Online Brokerage & Advice Firms Source: 6/4/19 SuperMoney Web Site; 10/9/18 Personal Capital Corporation Presentation (Shah); 10/5/18 Wall Street Journal; 4/11/18 Nyca Presentation (Morris); 4/10/18 Fiserv Presentation (Nash); 4/10/18 Wealth Simple Presentation (Katchen); 4/10/18 Certified Financial Planner Board of Standards Presentation (Keller); 4/10/18 JP Morgan Chase & Company Presentation (O’Brien); Tiburon Research & Analysis

  11. Online Brokerage & Advice Have Gathered $13.2 Trillion Assets Under Administration, Up From $49.9 Trillion in 2009 Online Brokerage & Advice Assets Under Administration ($ Trillions) Source: 6/3/19 Guided Choice Web Site; 6/3/19 Robo Advisor Pros Web Site; 6/3/19 Robo Advisor; 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 12/31/18 Interactive Brokers Group Annual Report; 12/31/18 SigFig ADV; 12/21/18 AssetBuilder ADV; 6/30/18 Fidelity Investments Web Site; Tiburon Research & Analysis

  12. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  13. Online Brokerage & Advice Firms Leaders can be Ranked in Several Ways, Including by their Number of Firms, and their Number of Employees, Clients, Accounts, Net New Accounts, Assets Under Administration, Net New Assets Under Administration, Daily Average Trades, Daily Average Revenue Trades, Revenues, & Net Profits Online Brokerage & Advice Leading Firms Measures Online Brokerage & Advice Leading Firms Measures Employees Clients Accounts Net New Accounts Assets Under Administration Net New Assets Under Administration Daily Average Trades Daily Average Revenue Trades Revenues Net Profits Source: Tiburon Research & Analysis

  14. Fidelity Investments is the Leading Online Brokerage & Advice Firms in Terms of Assets Under Administration Online Brokerage & Advice Assets Under Administration Source: 6/3/19 Guided Choice Web Site; 6/3/19 Robo Advisor Pros Web Site; 6/3/19 Robo Advisor Pros Web Site; 3/6/19 Wall Street Journal; 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 12/31/18 Interactive Brokers Group Annual Report;11/30/18 Top Rated Firms Web Site; 10/18 EXTrade Financial Presentation (Roessner); Tiburon Research & Analysis 13

  15. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  16. Online Brokerage & Advice Firms Have Two Core Segments, Including Online Brokerage Firms & Online Advice Firms Online Brokerage & Advice Market Segments Online Brokerage & Advice Market Segments Online Brokerage Firms Online Advice Firms Source: Tiburon Research & Analysis

  17. Outline • Online Brokerage & Advice Market Evolution • Market History • Market Definition • Market Growth • Leading Online Brokerage & Advice Firms • Online Brokerage & Advice Market Segments • Online Brokerage Firms • Online Advice Firms • Online Brokerage & Advice Future Predictions • Substantial Growth for Online Brokerage & Advice • Convergence of Online Brokerage Firms & Online Advice Firms • Declining Venture Capital Investments • Substantial Industry Consolidation

  18. Online Brokerage Firms’ Market Growth can Specifically be Measured by the Number of Firms, and their Number of Branches, Employees, Clients, Accounts, Net New Accounts, Assets Under Administration, Net New Assets Under Administration, Daily Average Trades, Daily Average Revenue Trades, Revenues, & Net Profits Online Brokerage Firms Market Growth Measures Clients Accounts Firms Branches Employees Net New Accounts Assets Under Administration Net New Assets Under Administration Daily Average Trades Daily Average Revenue Trades Revenues Net Profits Online Brokerage Firms Market Growth Measures Source: Tiburon Research & Analysis 17

  19. There are 55 Online Brokerage Firms, Up from Six in 1991 But Down from the Peak of 77 in 2002 Online Brokerage Firms Source: 10/10/17 Acorns Presentation (Cruttenden); 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 4/18/17 The Charles Schwab Corporation Analyst Call (Bettinger); 4/5/17 FTV Capital Presentation (Bernstein); 4/4/17 JP Morgan Chase & Company Presentation (Gatch); 3/28/17 RBC Conversation (Gordon); 3/27/17 Envestnet Conversation (DePina); 3/27/17 RBC Conversation (Gordon); Tiburon Research & Analysis

  20. Online Brokerage Firms Have Gathered $12.7 Trillion Assets Under Administration, Up from $0.4 Trillion in 1997 Online Brokerage Firms Assets Under Administration ($ Trillions) Source: 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 12/31/18 Interactive Brokers Group Annual Report; 6/30/18 Fidelity Investments Web Site;3/31/18 RBC Correspondent Services Email (Gordon); 10/10/17 Acorns Presentation (Cruttenden); 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; Tiburon Research & Analysis

  21. The Online Brokerage Firms Industry can Specifically be Defined to Include Discount Brokerage Firms, Online Only Brokerage Firms, & Direct Access Brokerage Firms Online Brokerage Firms Market Definition Online Brokerage Firms Market Definition Discount Brokerage Firms Online Only Brokerage Firms Direct Access Brokerage Firms Source: Tiburon Research & Analysis 20

  22. There are 55 Online Brokerage Firms, Including Twelve Discount Brokerage Firms, 39 Online Only Brokerage Firms, & Four Direct Access Brokerage Firms 4 55 39 12 Online Only Brokerage Firms Discount Brokerage Firms Direct Access Brokerage Firms Online Brokerage Firms Online Brokerage Firms Source: 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 8/16 Kiplinger’s Personal Finance; 3/3/16 Brokerage Review Web Site; 2/26/16 Algo Fast Web Site; 1/22/16 Investor’s Business Daily; 3/15 Barron’s; 4/24/12 Thomson Reuters Email (Giannone); 3/12/12 Barron’s; 1/22/11 Later Active Brokers Brochure; 3/13/06 AFTrader.Com Web Site; 3/12/06 Google Web Site; 3/12/06 Hoover’s Web Site; 2/06 AAII Journal; Tiburon Research & Analysis 21

  23. The Leading Online Brokerage Firms can Specifically be Measured by their Number of Branches, Employees, Clients, Accounts, Net New Accounts, Assets Under Administration, Net New Assets Under Administration, Daily Average Trades, Daily Average Revenue Trades, Revenues, & Net Profits Online Brokerage Firms Leading Firms Measures Online Brokerage Firms Leading Firms Measures Clients Accounts Branches Employees Net New Accounts Assets Under Administration Net New Assets Under Administration Daily Average Trades Daily Average Revenue Trades Revenues Net Profits Source: 10/11/16 TD Ameritrade Presentation (Bradley); 9/7/15 Barron’s; 9/9/15 Fidelity Investments Web Site; 3/17/15 Fidelity Investments Web Site; 3/16/15 Wall Street Journal; 10/13/14 Business Journals.Com; 4/30/14 Fidelity Investments Corporate Fact Sheet; 8/6/13 Business Week Web Site; 8/2/13 Privco Web Site; 3/6/13 Fidelity Worldwide Investment Web Site; 3/4/13 Fidelity Investments Web Site; Tiburon Research & Analysis 22

  24. Fidelity Investments Leads the Online Brokerage Firms in Accounts, with 27.2 Million Online Brokerage Firms Accounts (Millions) Source: 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 11/30/18 Top Rated Firms Web Site; 10/18 EXTrade Financial Presentation (Roessner); 8/11/18 Bank of America Press Release; 6/30/18 Fidelity Investments Web Site; 10/10/17 Acorns Presentation (Cruttenden); 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; Tiburon Research & Analysis

  25. Fidelity Investments Leads the Online Brokerage Firms in Assets Under Administration with $7.4 Trillion Online Brokerage Firms Assets Under Administration ($ Billions) Source: 3/6/19 Wall Street Journal; 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 12/31/18 Interactive Brokers Group Annual Report;11/30/18 Top Rated Firms Web Site; 10/18 EXTrade Financial Presentation (Roessner); 8/11/18 Bank of America Press Release; 6/30/18 Fidelity Investments Web Site; Tiburon Research & Analysis

  26. Online Brokerage Firms Include Discount Brokerage Firms, Online Only Brokerage Firms, & Direct Access Brokerage Firms Online Brokerage Firms Market Segments Discount Brokerage Firms Online Only Brokerage Firms Direct Access Brokerage Firms Online Brokerage Firms Market Segments Source: Tiburon Research & Analysis 25

  27. There are Twelve Discount Brokerage Firms, Up from Eleven in 2015 Discount Brokerage Firms Source: 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 8/16 Kiplinger’s Personal Finance; 3/3/16 Brokerage Review Web Site; 2/26/16 Algo Fast Web Site; 1/22/16 Investor’s Business Daily; 3/15 Barron’s; 4/24/12 Thomson Reuters Email (Giannone); 3/12/12 Barron’s; 1/22/11 Later Active Brokers Brochure; 3/13/06 AFTrader.Com Web Site; 3/12/06 Google Web Site; 3/12/06 Hoover’s Web Site; 2/06 AAII Journal; Tiburon Research & Analysis

  28. Discount Brokerage Firms Have Gathered $12.6 Trillion Assets Under Administration, Up From $8.7 Trillion in 2015 Discount Brokerage Firms Assets Under Administration ($ Trillions) Source: 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 6/30/18 Fidelity Investments Web Site; 2/27/18 Wall Street Journal; 12/31/17 The Charles Schwab Corporation Annual Report; 12/31/17 TD Ameritrade Annual Report; 12/31/17 E*Trade Financial Annual Report; 2/27/17 Pensions & Investments; Tiburon Research & Analysis

  29. Fidelity Investments is the Leading Discount Brokerage Firm in Terms of Accounts with 27.2 Million Discount Brokerage Firms Accounts (Millions) Source: 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 11/30/18 Top Rated Firms Web Site; 10/18 EXTrade Financial Presentation (Roessner); 6/30/18 Fidelity Investments Web Site 10/10/17 Acorns Presentation (Cruttenden); 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; Tiburon Research & Analysis

  30. Discount Brokerage Firms’ Future Predictions Include Substantial Growth for Discount Brokerage Firms, Winning Multi-Channel Strategies, & the Rapid Move into Financial Advice Discount Brokerage Firms Future Predictions Discount Brokerage Firms Future Predictions Substantial Growth for Discount Brokerage Firms Winning Multi-Channel Strategies Rapid Move into Financial Advice Cross-Selling Banking, Mortgages, & Insurance Products Expansion into Related Businesses Source: Tiburon Research & Analysis 29

  31. The Charles Schwab Corporation Now Generates Just 7% of its Revenues from Trade Commissions, Down from 60% in 2000 The Charles Schwab Corporation Revenues By Source Trade Commissions Financial Advice & Other Revenues Source: 12/31/18 The Charles Schwab Corporation Annual Report; 5/18/17 Wall Street Journal; 8/15/05 Business Week; 4/1/05 Wall Street Journal; Tiburon Research & Analysis

  32. Online Brokerage Firms Earn Relatively Small Shares of their Revenues from Commissions Online Brokerage Firms By Share of Revenues from Commissions Source: 12/31/18 The Charles Schwab Corporation Annual Report; 12/31/18 TD Ameritrade Annual Report; 12/31/18 E*Trade Financial Annual Report; 3/27/18 TD Ameritrade Email (Schweiss); 5/18/17 Wall Street Journal; Tiburon Research & Analysis

  33. Discount Brokerage Firms are Going About Delivering Financial Advice through Five Methods, Including Online, on the Telephone, in Branches, through Advisor Referrals, and by Way of Acquisitions Discount Brokerage Firms Financial Advice Methods Online Telephone Branches Advisor Referral Networks Financial Advisor Acquisitions Discount Brokerage Firms Financial Advice Methods Source: 9/05 Money; 10/04 Registered Rep; Tiburon Research & Analysis

  34. There are 39 Online Only Brokerage Firms, Up from One in 1995 But Down from its Peak of 66 in 2002 Online Only Brokerage Firms Source: 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 3/1/17 Financial Planning; 8/16 Kiplinger’s Personal Finance; 3/3/16 Brokerage Review Web Site; 2/26/16 Algo Fast Web Site; 1/22/16 Investor’s Business Daily; 3/15 Barron’s; 4/24/12 Thomson Reuters Email (Giannone); 3/12/12 Barron’s; 1/22/11 Later Active Brokers Brochure; 3/13/06 AFTrader.Com Web Site; 3/12/06 Google Web Site; Tiburon Research & Analysis

  35. Online Only Brokerage Firms Future Predictions Include Moderate Growth for Online Only Brokerage Firms & Continuing Focus on Winning Active Traders Online Only Brokerage Firms Future Predictions Moderate Growth for Online Only Brokerage Firms Continuing Focus on Winning Active Traders Online Only Brokerage Firms Future Predictions Source: Tiburon Research & Analysis 34

  36. There are Four Direct Access Brokerage Firms, Consistent Since 2015 Direct Access Brokerage Firms Source: 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 8/16 Kiplinger’s Personal Finance; 3/3/16 Brokerage Review Web Site; 2/26/16 Algo Fast Web Site; 1/22/16 Investor’s Business Daily; 3/15 Barron’s; 4/24/12 Thomson Reuters Email (Giannone); 3/12/12 Barron’s; 1/22/11 Later Active Brokers Brochure; 3/13/06 AFTrader.Com Web Site; 3/12/06 Google Web Site; 3/12/06 Hoover’s Web Site; 2/06 AAII Journal; Tiburon Research & Analysis

  37. Direct Access Brokerage Firms’ Future Predictions Include Moderate Growth for Direct Access Brokerage Firms & a Continuing Focus on Winning Professional Traders Direct Access Brokerage Firms Future Predictions Moderate Growth for Direct Access Brokerage Firms Continuing Focus on Winning Professional Traders Direct Access Brokerage Firms Future Predictions Source: Tiburon Research & Analysis 36

  38. Online Brokerage Firms Primarily Compete on Investment Products & Research, Commissions & Fees, Web Sites & Tools, and Account Minimums & Customer Service Online Brokerage Firms Competitive Factors Online Brokerage Firms Competitive Factors Investment Products & Research Commissions & Fees Web Sites & Tools Account Minimums & Customer Service Source: 8/16 Kiplinger’s Personal Finance; 1/22/16 Investor’s Business Daily;12/14 Kiplinger’s Personal Finance; 2/06 AAII Newsletter; 2/05 AAII Newsletter; 2/04 AAII Newsletter; Tiburon Research & Analysis

  39. Cash Management Accounts (CMAs) Stocks Bonds Mutual Funds Exchange Traded Funds (ETFs) Annuities Options Futures The Traditional Products Offered by Online Brokerage Firms Include Cash Management Accounts (CMAs), Stocks, Bonds, Mutual Funds, Exchange Traded Funds (ETFs), Annuities, Options, & Futures Online Brokerage Firms Investment Products Online Brokerage Firms Investment Products Source: 8/16 Kiplinger’s Personal Finance; Tiburon Research & Analysis

  40. Fidelity Investments, The Charles Schwab Corporation, & TD Ameritrade Offer the Most No-Load No-Transaction Fee Mutual Funds Amongst Online Brokerage Firms Online Brokerage Firms No-Load No-Transaction Fee Mutual Funds Offered Source: 8/16 Kiplinger’s Personal Finance; 2/06 AAII Newsletter; 8/1/05 Registered Rep; 2/05 AAII Newsletter; 1/10/05 Barron’s; 9/20/04 Forbes; 2/04 AAII Newsletter; 11/24/03 Barron’s; Tiburon Research & Analysis

  41. The Charles Schwab Corporation Offers the Most Commission Free Exchange Traded Funds (ETFs) Amongst Online Brokerage Firms, with 226 Online Brokerage Firms Commission-Fee Exchange Traded Funds (ETFs) Source: 8/16 Kiplinger’s Personal Finance;Tiburon Research & Analysis

  42. Motif Investing Offers 150 Pre-Built Motifs, Up from 50 in 2011 Motif Investing Pre-Built Motifs Source: 1/11/18 Investopedia Web Site; 1/2/15 Frugal Rules Web Site; 11/13/12 Motif Investing Web Site; 11/12/12 Motif Investing Press Release; 11/10/12 Motif Investing Web Site; 11/9/12 Motif Investing Press Release; 9/19/12 San Francisco Chronicle; 6/21/12 The Street.Com; 6/9/12 Electronic Investor Web Site; 6/4/12 Wall Street Journal; 6/3/12 Forbes; Tiburon Research & Analysis 41

  43. Commissions & Fees Has Two Components, Including Commissions & Fees Online Brokerage FirmsCommissions & Fees Components Commissions Fees Online Brokerage FirmsCommissions & Fees Components Source: 8/16 Kiplinger’s Personal Finance; Tiburon Research & Analysis 42

  44. Online Broker Commissions Average $8 Per Trade, Down from $46 in 1991 and its Peak 147 in 1994 Online Brokerage Firms Average Online Stock Trade Commissions Source: 11/27/17 Wealth Management (Corporate Insight); 3/1/17 Wall Street Journal; 8/16 Kiplinger’s Personal Finance; 1/14/16 Newsmax Finance;2/06 AAII Newsletter; 2/05 AAII Newsletter; 2/04 AAII Newsletter; 6/11/01 Wall Street Journal; 7/28/00 HD Vest Meeting (Vest); 8/98 Money; 7/15/98 Smart Money; 6/2/97 InvestorGuide; 6/97 Ceres Web Site; 6/97 Comptel Web Site; 6/97 Scottsdale Securities Web Site; Tiburon Research & Analysis 43

  45. Robinhood Financial, Ally Financial, Fidelity Investments, The Charles Schwab Corporation, & TradeStation Offer the Lowest Cost for Online Stock Trades at $0.00, $4.95, $4.95, $4.95, & $4.99 Respectively Online Brokerage Firms By Online Stock Trade Commissions Source: 5/18/17 Wall Street Journal; 5/7/17 Wikipedia Web Site; 2/18/17 New York Times; 8/16 Kiplinger’s Personal Finance; 1/14/16 Newsmax Finance;11/20/12 PR Web Site; 11/12/12 Motif Investing Press Release; 11/10/12 Motif Investing Web Site; 11/9/12 Motif Investing Press Release; 9/19/12 San Francisco Chronicle; 6/21/12 The Street.Com; 6/9/12 Electronic Investor Web Site; 6/5/12 The Motley Fool Web Site; Tiburon Research & Analysis 44

  46. TradeStation Offers the Cheapest Options Market Order Commission for a Ten Contract Order Online Brokerage Firms Online Options Market Order Commission (Ten Contract Order) Source: 5/7/17 Wikipedia Web Site; 2/06 AAII Newsletter; 2/05 AAII Newsletter; 6/7/04 Barron’s; 2/04 AAII Newsletter; Tiburon Research & Analysis

  47. Merrill Lynch Offer the Lowest Cost for of No-Load Mutual Funds Trades Outside of No-Transaction Fee Programs; with The Charles Schwab Corporation, TD Ameritrade, & Fidelity Investments Using High Prices to Nudge Clients into their Proprietary Funds Online Brokerage Firms No-Load Mutual Fund Transaction Fees Source: 5/17/17 Wall Street Journal; 8/16 Kiplinger’s Personal Finance; 2/06 AAII Newsletter; 2/05 AAII Newsletter; 1/10/05 Barron’s; 6/7/04 Barron’s; 2/04 AAII Newsletter; Tiburon Research & Analysis

  48. Online Brokerage Firms Realize Nearly Two-Thirds of their Trades Via Mobile Channels Online Brokerage Firms Trades By Channel Source: 5/22/17 Financial Planning; Tiburon Research & Analysis

  49. Tiburon CEO Summit Attendees Said that the Do It Yourself Trend will Grow Moderately or Even Hugely Over the Next Five Years Tiburon CEO Summit Attendees Do It Yourself Trend Five Year Prediction Huge Growth Moderate Growth Stagnate Source: 7/26/17 Tiburon CEO Summit XXXIII Content Survey; 3/9/17 Tiburon CEO Summit XXXII Content Survey; 11/10/16 Tiburon CEO Summit XXXI Content Survey; Tiburon Research & Analysis 48

  50. Online Brokerage Firms Changed the Transaction Pricing, Episodic Advice, & Robo Advice Online Brokerage Firm Impacts Online Brokerage Firm Impacts Transaction Pricing (Forever Changed) Episodic Advice Robo Advice Source: Tiburon Research & Analysis 49 49

More Related