Financial-Advisory Industry
                   May Be Ready for Shakeout

                   By PUI-WING TAM
                   Staff Reporter of THE WALL STREET JOURNAL

                   For those thinking about entering the business of doling out financial
                   advice, think again.

                                          A huge shakeout is expected to hit the
                                          financial-advisory industry over the next
                                          decade, leaving just 40 to 50 companies to
                                          dominate the business, according to a report
                   from Undiscovered Managers LLC, a fund-management operation in
                   Dallas.

                   In fact, a huge shift is under way in the market that plays an increasingly
                   important role in how mutual funds are bought and sold. Competition --
                   especially for the business of advising clients with $1 million to $10 million
                   in total assets -- has sprouted to include a growing number of mutual-fund
                   firms and big securities brokerage firms, the report says. This development
                   is changing the economics of the advisory business and will likely
                   encourage consolidation, the report concludes.

                   "What the big guys are saying is they'll do more for the client for the same
                   price. So if you're a bigger competitor, you can easily screw up the smaller
                   guy's business," Mark Hurley, chief executive of Undiscovered Managers,
                   says. "The entrance of the big guys has ominous implications" for
                   financial-advisory firms.

                   Over the past few years, Vanguard Group, the nation's second-largest
                   mutual-fund company, has started offering a broader range of services to
                   investors with more than $1 million in assets, including customized financial
                   planning and trust services. Another newcomer is Strong Funds, a midsize
                   mutual-fund firm.

                   At stake is a huge pot of gold. The financial-advisory business targeting
                   investors with $1 million to $10 million in assets has $700 billion under
                   management, the report said. But Mr. Hurley forecasts this could grow to
                   $8 trillion in total assets in just a few years. By then, the financial-advisory
                   industry will be yielding $50 billion in annual advisory fees, he predicts.

                   So far, the financial-advice business has been relatively fragmented, with
                   more than 11,000 firms, Mr. Hurley notes. Investors with more than $1
                   million in assets tend to have more than one person dealing with their
                   finances. They may have one expert who handles their tax preparation,
                   another who deals with estate planning and yet another who takes care of
                   insurance needs. But new competitors, such as Vanguard and others, are
                   beginning to provide all these services under one roof.

                   The report concludes seven main services likely will be offered under one
                   roof: financial planning, investment management, tax planning, tax
                   preparation, insurance, estate planning and charitable giving. That will leave
                   firms that offer just one advisory service scrambling.

                   The report doesn't detail which firms will be the likely winners. But two
                   traits will help determine survival, the report predicts: the ability of the firm
                   to market its services and size.

                   Write to Pui-Wing Tam at pui-wing.tam@dowjones.com

                                             * * *

                   CD Yields Rose in Latest Week

                   Yields on certificates of deposit rose in the latest week.

                   The average yield on six-month, "jumbo" CDs, which typically require
                   deposits of $95,000 or more, climbed to 4.87% from 4.82%, according to
                   a weekly index prepared by BanxQuote Inc. The five-year jumbos yield
                   jumped to 5.57% from 5.36%, the New York-based information service
                   said.

                   Average yields on small-denomination "savings" CDs in some popular
                   maturities rose. The yield on the average six-month CD edged up to
                   4.34% from 4.32%. The average five-year CD yield rose to 5.10% from
                   5.04%, BanxQuote said.

                   Yields on broker-sold CDs also rose. According to BanxQuote, the
                   average yield on the six-month CD moved up to 5.79% from 5.73%. The
                   average five-year CD inched up to 6.64% from 6.61%.
 
 
 
 

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