2012 Industry Profiles and Adviser Opinions

Results from an InvestmentNews survey

KEY FINDINGS
Survey period: October 2012 Total number of qualified respondents: 513

SECTION I: ADVISERS
One-fifth advisers manage between $50M-$99.9M in assets. More than half of advisers are compensated for their services by both fees and commissions. 84.5% of advisers are men 15.5% are women. o Nearly 70% of female advisers made a career switch into the financial advice business, while only half of male advisers made the same switch. 60.1% of advisers are between the ages of 50 and 69. More than 90% of advisers are white. 80% of advisers are married. Nearly three-fourths of advisers identify with an organized religion. More than half of advisers donate 1%-5% of their gross income to charity. Three out of four advisers have clients to whom they provide pro-bono financial advice. 82% of advisers have not served in the military. Half of advisers are Republican. More than 70% of advisers plan to vote for Mitt Romney in the November 2012 presidential election. 72% of advisers have not changed broker-dealers in the last 12 months. 52% of advisers made a career switch into the financial advice business, and two-thirds of them are satisfied with their choice to become a financial adviser. Nearly 40% of advisers say their favorite investment guru is Warren Buffett.

SECTION II: FIRMS

Nearly 60% of advisers do not have a niche practice. The two factors that will most hinder business growth in 2013: economic uncertainty and increased regulation and compliance requirements. The two factors that will most likely contribute to business growth in 2013: adding new clients and an improved economy. Spending in 2013 Increase Decrease No change N/A 34.0% 0.7% 56.9% 8.4% Compliance 56.2% 1.3% 38.0% 4.4% Technology 22.7% 1.1% 46.2% 30.0% Recruitment 52.9% 2.2% 39.8% 5.1% Marketing 34.0% 1.6% 55.8% 8.7% Training Based on 450 responses More than 40% of advisers said the most strategic business initiative for 2013 is increasing referrals. Nearly three-quarters of advisers do not anticipate increasing fees in 2013. 70% of advisers did not add staff in 2012. (Q27, overall results) Nearly 70% of advisers said their business participates in community/volunteer activities, excluding monetary donations. (Q28, overall results) Unusual perks, besides vacation time and other standard benefits (Q29, overall results)

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Quarterly chair massages, lunches out, pedicures (for female staff), flowers on birthdays. Birthdays off and Friday afternoons off Pets in the office Education reimbursement, full pmt for health insurance for all family members, snacks and drinks in our kitchen, lunch catered in once a week, funding our PS plan in full not just 401k I pay for my staff to take yoga classes and I send them on small vacation with their spouses every year.

SECTION III: CLIENTS

82.1% of advisers said the average age of their clients falls between 50 and 69. A quarter of advisers manage clients with an average amount of investable assets between $300K-$499K. o More than a third of reps at wirehouses said the average amount of their investable client assets is at least $900K. 56.2% of advisers said more than half of their clients came through referrals. More than half of advisers said clients communicate most with them by telephone. Over the course of their career, more than a third of advisers lost clients due to relocation o However, for nearly 40% of reps affiliated with an independent broker-dealer, the reason they lost most of their clients was due to a lack of communication.

SECTION IV: POLITICS

Industry scorecard Mary Schapiro's performance as SEC chairman Obama Administration's performance regarding the economy Congress performance regarding the economy Ben Bernanke and the Fed's performance regarding the economy Treasury Secretary Timothy Geithner's performance regarding the economy Excellent 5.6% 8.3% 0.7% 20.7% 7.8% Fair 52.4% 18.8% 10.5% 52.4% 43.7% Poor 42.0% 72.9% 88.8% 26.8% 48.5%

Based on 410 responses More than 60% of advisers believe that a new fiduciary standard would not affect their business Nearly half of advisers think the SEC should regulate large advisers and states should regulate small advisers. 56% of advisers believe the Bush-era tax cuts will expire. About 40% of advisers have been audited in the last 12 months. Nearly 70% of advisers think hedge funds should not be allowed to advertise to the general public.