Realigning Mass Market Wealth
TURNING SMALL ACCOUNTS INTO BIG BUSINESS
In 1964, Marshall McLuhan stated
“The Medium is the Message”.
It became true. In 2019, in financial services, “Client Experience is the Product”.
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MASSIVE DISRUPTION
Massive disruptor AirBnB transformed the hotel space by building a new platform to gain huge market share where no business existed before.
Internet
The Internet has transformed everything.
Computing Power
Computing power on top is changing every industry.
Platform Models
Platform business models already make up 10 of 20 global market cap leaders.
Portal
Portal Functionality & Experience are key.
A TRANSFORMATIVE ERA
1980
Fund Industry Emergence.
Product Sales Culture/High Growth.
1980’s
1990’s
Huge Growth / Bank Dominance.
Compliance / Competition / Technology lag.
2000
2020
Digital Economy / Advice for all.
Canada’s Financial Services Lag The World
THE SHIFT IS JUST THE BEGINNING…
The first wave was a threat to mutual fund or “Mass Market” advisors – robos.
As the second wave begins, technology utilization will determine who the winners & losers are.
A state of
UNDENIABLE CHANGE
Increasing Competition
Reducing Client Fees
Increasing Product Choice
Increasing Compliance Cost
Improve Operating Efficiencies
Find New Revenue Sources
Find Ways to Stay Competitive
Improve Client Connectivity Expectations
Increase Service & Product Options
A dawning Era of
TECHNOLOGY
Innovation and change in financial services.
Top 3 Dealer Concerns
Top 3 Dealer Obstacles
It Appears Rather Hopeless
How do dealers address concerns and obstacles & innovate at the same time?
TIME TO MOVE
Not for status quo
WINNERS
ADAPT TO NEW REALITY LEVERAGE TECHNOLOGY TO INCREASE VALUE TO MASS MARKET & UNLOCK UNFORESEEN PROFIT
- Increase product options (ETFs, GICs, etc.)
- Provide high net worth advice and services to all clients
- Manage escalating compliance more efficiently
- Improve cost management
LOSERS
REMAIN STATUS QUO THEY FAIL TO RECOGNIZE THE “TECHNOLOGICAL TSUNAMI” & THE DISRUPTION THAT IS UNDERWAY
- Remain embattled
- Suffer diminishing assets
- Reduced revenue
- Escalated compliance & administration costs
A future
WHERE DEALERS…
Are Able to Manage Compliance & Admin. Costs
Can Compete w/ Banks, Robos & New Entrants
Have Greater Product Option Availabilty
Enjoy Better Economics
Grow Their Share Of Robust Mass Market Assets
Generate Brand Loyalty Through Real Value
Deliver Powerful Client Connectivity & Experience
Fully Alignment With Regulation and Transparency
Clients
Assets
CONTRARIAN VIEW
INDUSTRY FOCUS IS ON THE HNW MARKET – 20% OF CLIENTS GENERATE 80% OF REVENUE
Agora went a different direction focusing on the largely ignored $800B “Mass Market” investors, paying $16B in annual fees.
The Market
There is $4.1T in our Marketplace. $800B held by Mass Market.
20% of ASSETS <$500,000
79% of HH BELOW $100K
90% of HH BELOW $500K
SOURCE: Investor Economics, Household Balance Sheet 2016 Report
ANALYSIS: Agora
The Average Investor
JOE & JANE
Fund assets continue robust growth – $1.6 Trillion
$800 Billion Market of Assets
$16 Billion fees/year.
It’s not profitable business for
dealers and advisors.
Turning the 80% of unprofitable business into a profit centre, then there is an extraordinary business model there.
AGORA
has solved the problem
Transformed dealer economics.
Reduced client account cost.
Increased revenue dramatically.
Improved Value Proposition.
Average Canadian Joe & Jane’s get more value for their $16B in annual fees.
ABOUT AGORA
Proposition
Mass market gets higher quality wealth management and pays less.
We’ve made mass market accounts super profitable for our clients for the first time.
Business Model
B2B Platform. No advisors. No products. A highly efficient marketplace bringing all parties together.
Recurring Revenue
We don’t make money through transactions, we make it through recurring revenue on assets held at Agora.
Significantly lower Operating Costs on largest segment of their operations.
Automated administration – reduced costs – STP/PaaS.
Significant New Revenue on all mass market accounts.
Winning Formula for Clients
Agora is currently alone offering this capability
DEALER ECONOMICS
Game changer
Unlocking the hidden potential.
85% of clients = bottom half of Assets, contribute almost nothing to bottom line.
Current
| Dealer Revenue | 20 bps |
| EBITDA | 0-1 bps |
Agora’s Small Account Game Changer: Contributions from the 85%
| Dealer Rev. | 10bps + 20 existing bps = 30bps |
| in-Kind | 15 bps -Account Admin. 10 bps -3rd Party PM’s 5 bps -Technology Suite |
| Overall new | 40bps |
| Total dealer economics | 60 bps |
| EBITDA | 11-12 bps |
Redistribution of
MUTUAL FUND FEES
Cost of typical Cdn. Balanced Mutual Fund MER (200 bps)
Pricing includes dealer/advisor compensation
Dealer/Advisor 100 bps (50%)
Fund Company 100 bps (50%)
CURRENT MODEL
NEW MODEL
Redistribution of
MUTUAL FUND FEES
Cost of typical Cdn. Balanced Mutual Fund MER (200 bps) Pricing includes dealer/advisor compensation & redistribution to Agora
Dealer / Advisor 100 bps (50%)
Fund Company 50 bps (25%)
Agora 50 bps (25%)
15bps – Account Admin.
10bps – 3rd Party PM’s
5bps – Technology Suite
20bps – Agora
NO PORTFOLIO MANAGER FEES, NO NOMINEE ACCOUNT FEES, NO TECHNOLOGY OR E-ONBOARDING FEE, NO ADMIN FEES, NO TRANSFER OUT FEES, NO REBALANCING FEES.
VALUE IS THE PATH TO ADVISOR SUCCESS
Advisors have an Achilles heel – Too much admin, compliance, paperwork errors, so…client-facing time suffers.
Agora’s platform offers advisors the time to truly be present and add value to their client’s lives
An advisor can now deliver more advice and HNW wealth management to the mass market
Mass market investors can now get more value at same or lower cost
A future
FULL OF VALUE
Alignment to create a better client experience.
MASS MARKET INVESTORS
- Lower Cost (or nocost) accounts
- Portfolio Management Advice
- Consolidated Reporting
- No Transfer Out Fees
- Technology Expectations Met
FUND COMPANIES
- Lower Operating costs
- Omnibus Accounts
- Dealer Shelf Space
- Robust Support of “Independents”
- Zero Cost participation
- Portfolio Overlay to combat ETF’s
DEALERS
- Lower Operating Costs
- Recruiting/Retention value adds
- Compliance Improvement
- Technology Enhancements
- Continuous Technology subsidy
- No Conflict of Interest
ADVISORS
- Huge Time Saving (admin/compliance/ errors)
- Value Adds for Clients
- Compliance Protection
- Tech Enhancements & Continuing Tech Subsidy
- Retention of Independence
AGORA THE AIRBNB OF WEALTH MANAGEMENT
Agora is a cloud based on-line platform efficiently matching advisors & clients with high quality financial products, services & technology.
It connects dealers & their advisors with suppliers and facilitates the management of assets without owning any products or housing any advisors itself.
Agora cultivates a co-op community by joining dealers together for more efficient adoption and buying power.
Agora’s aspiration:
“Canada’s largest fund provider Agora, owns no funds”
The world’s largest hotelier AirBnB, owns no rooms.
INDUSTRY LEADING
PLATFORM
DEMAND
Efficient Engaged Recurring
40,000+ Advisors
4.9M+ End-Users
$800B+ Assets
SUPPLY PLATFORMS
Broad Diversified Free