Brad Hintz, the respected Wall Street analyst at Bernstein, put out an interesting research report a few weeks ago at a SIFMA conference. He seems somewhat bullish, noting that ETF AUM are back to pre-bear levels; hedge fund assets are flowing in again. He says corporate profits and capital expenditures are rising and that advisors will flee the wirehouses and that the registered investment advisory space will continue to grow. Here are some of his interesting conclusions relating to the financial advisory space:
"Strong corporate balance sheets will provide a solid backdrop for a recovery of US corporate M&A in 2011-12. Equity capital markets volumes will recover in Q4 as volatility declines and recovering earnings builds investor demand for new issues. Asset Management investment flows will finally accelerate in 2011 and retail trading volumes are expected to recover with declining US unemployment and rising investor confidence late 2011 or 2012.
"Like any radical change, new regulation will have its share of winners and losers. (1) With the largest banks hobbled by new regulation, new brokers will enter the marketplace to carve out niche positions. (2) With powerful retail distribution channels having been created in 'shotgun' marriages during the crisis we speculate that the IIA/RIA channel will grow rapidly as the economy recovers and the shackles come off newly captured brokers." He also says that the number of wealthy people is rising again.
Here are some interesting slides from his June 5 presentation (click on slides for a larger view):