Tiburon CEO Summit goes high as talk turns to FANG factor on days one and two

Brooke's Note: The RIA business is nothing if not about the power of one person to project themselves into a force of financial good for individuals. Yes, this happens at the mom-and-pop RIA practice level every day. It happens, too, at the Ken Fisher level. It happens at the Chuck Schwab and Ned Johnson level. But the embodiment of that at the advice business executive event level is Chip Roame and his Tiburon CEO Summit  No institution could pull this off so well and for so long. TAMPs, custodians, RIAs, software, robos, IBDs, VCs and PEs large, small and rising are all well represented. Imperfections? No question. Anything better out there along these lines? Not even close. The good news is that though the event is maturing, Chip himself remains the ageless, exuberant uniter, so hopefully this franchise will stick around for the forseeable future.

The Tiburon CEO Summit comes at you in waves punctuated by lulls. But when a Big Barrel rises up, there are plenty of minds agile enough to see it for what it is and hang five on it.

This fall's version of Chip Roame's semiannual event at the Ritz Carlton in San Francisco -- an exquisite but airless chamber with killer Bay scape views inaccessible to dutiful conference session goers -- teetered between the banal, prosaic, oxygen-starved and the lofty, future transcending and inspiring.

Along with the rest of my reportorial kind, I was barred from the antechambers of conversation but put myself in the way of updates and some emails by parking myself and my laptop in the upstairs lounge. See: Chip takes a 90-minute rip at wealth management at the Tiburon CEO Summit

Still, Chuck Schwab's successor perked up the audience, sources say, by saying the future may contain more delivery of episodic advice -- namely advice on demand doled out in chunks timed with life events. It's not clear yet what Schwab's play on this trend might be, though the company does report on financial planning sessions delivered on its quarterly calls.The semantics around planning make this assertion about where "planning" is headed a bit hard to assess.

Top five threats

The idea of dispensing episodic financial advice, summit-goers pointed out, has a back-to-the-future feel in that stock and insurance brokers exercise a version of that in selling products and old-time financial planners, before they took on AUM, essentially delivered advice on demand. See: What Schwab's new 401(k) study tells about the demand for financial advisors to manage retirement assets

But if there was a meta-emphasis at this elite gathering in the luxury hotel cantilevered onto the side of Nob Hill in San Fran, it was the gravitational pull of the topic of the planet's five most valuable companies; the idea that Facebook, Microsoft, Apple, Amazon or Alphabet might make a play for a piece of the financial advice pie. It was a notion was embraced by some and utterly dismissed by others. (These online behemoths are often known by the acronym FANG: Facebook, Amazon, Netflix and Google. Netflix may not apply here, attendees say.)

Sources gave Alex Potts, CEO of Loring Ward, credit for sparking the conversation during the technology panel on day one.

Both sides make compelling cases. The naysayers point out that the possibility was already considered and dismissed  specifically at a Hearsay Social-Pershing event here in San Francisco in 2015. Credible reasons Facebook and Google won't become robo-RIAs and other things I learned at Hearsay Social-Pershing event in San Francisco. They also say that robo-advisors, for all their success, have hardly caught fire by Google or Facebook standards. See: Wealthfront's advice is now an employee benefit for Google employees' non-401(k) savings

Mike Sha, founder and CEO of SigFig, summed up his thoughts on the logrolling surrounding Silicon Valley superpowers barreling into wealth management: "Probably chatter -- there are much more directly complementary financial services areas they are likely to focus on first (e.g. payments). Don't think investment advice is on the shortlist..."

Case for FANG invasion

But on the long end of the second day of the event, Ron Suber, ‎president at Prosper Marketplace, put up a chart and made his case for why the Facebooks and Amazons may be en route to providing financial advice.

Totum Wealth co-founder and CEO Min Zhang leans toward Suber's analysis and remarked that the relatively slow growth of Schwab and Fidelity in the robo business shouldn't be taken as a pure indicator of how well an Amazon would do. Though Schwab and Fido have good big data on investing behavior, they don't have the motherlode connected to broader patterns of buying behavior -- never mind the sheer web presence. 

"I think our top execs are underestimating how easy it is for the FANGs to disrupt financial services since they have the data, tech and resources," she said.

Aspiriant exec Michael Kossman cited an example that came up during the day: the ability of an insurance company to track premium pricing by connecting to driver behavioral data from Metromile.

Steve McLaughlin, managing partner of FT Partners, noted Apple Pay and eBay's purchase of PayPal. Steve was formerly a senior investment banker in Goldman Sachs & Co.'s Financial Technology Group.

A lot to build

John Wotowicz, CEO of inStream Solutions, the financial planning firm whose clients include the 1,500 CPAs who use Buckingham Asset Management's DFA TAMP, BAM, says that though robos may advance, that financial planning is a further reach for them. Building an engine takes years and it fits with difficulty into their product set.

"You have to build brick by brick," he said.

Indeed, one such financial planning robo, LearnVest, hasn't been heard from since being acquired by Northwestern Mutual. See: The real reasons Northwestern Mutual paid a reported $250 million for LearnVest

Seen and heard

Even from my lobby vantage point from where I sat, stood and took photos, covering the Tiburon CEO Summit was like sipping from a fire hose. I caught Chip  himself dashing for the sidewalk simply to take in the sunny day before resuming his duties. Seizing the opportunity, I peppered him with questions about LPL Financial being shopped -- according to Reuters --  by Goldman Sachs -- an article I was banging out between interviews. See: LPL is for sale -- in whole or part -- and Wells Fargo at least makes the list of potential buyers

I caught Eric Clarke, president of Orion Advisor Services LLC, heading into the Ritz restaurant yesterday at lunch with execs from his Boston-based co-owners, TA Associates, and shared good wishes and heads-ups on upcoming dealings.

Tom Bradley, head of TD Ameritrade retail, came by and shook hands in his warm style. Bob Oros, head of Fidelity's RIA business, accompanied by Relura Horton, former colleague and now client and president of San Francisco-based Parallel Advisors, said hello and posed for a photo. Horton was a long-time Fidelity exec who leapt to the RIA world -- a microcosmic example of what continues to happen in the industry.