Wealth Management Industry in U.S. – Changing Trends, Opportunities, & Strategies
Buy Now : Market Research
The wealth management industry has witnessed dramatic changes in the last two years due to the economic crisis. Registered Investment Advisors (RIAs) have captured the assets of wirehouses or large wealth management firms. Wirehouse advisors showed high productivity (client assets per advisor) in 2009 (an average of $83 million client assets). However, wirehouses lost 0.9% of the assets under management (AUM), while RIA gained 1.5% of the AUM. This indicates a loss of client trust in large wealth management firms, necessitating a shift toward more personalised and customer-oriented services. As clients sustained heavy losses on investments during the crisis, they now demand safe products like fixed-income securities and cash-related products.
The U.S. mass affluent segment represents a significant opportunity for wealth management firms. It constitutes around 33 million households with around $13 trillion wealth, which represents around 43% of the total investable assets in the U.S. The mass affluent segment also includes a significant number of baby boomers (those who born between 1945 and 1960), who have accumulated huge wealth and are about to retire. Baby boomers are expected to constitute 22% of the U.S. population with 60% of investable assets by 2030.
Firms are opting for new operational models in order to recover loses and compete in the changing scenario. They are increasingly forming consolidations and are focusing on client relationship management to retain clients and attract new assets. The retainer fee pricing strategy has also caught up, replacing the traditional transaction fee based model.
