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.

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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 offer the wealth management industry high growth opportunities. This segment constitutes around 33 million households with around $13 trillion wealth, representing around 43% of the country’s total investable assets. However, only 18% of the mass affluent are estimated to have yet availed financial planning services.

Over half of the baby boomer population (those born between 1945-1965) is included in the mass affluent segment. Having accumulated significant wealth, this population is expected to require financial advice for retirement planning in the coming decade, presenting further growth opportunities for wealth management firms. Baby boomers are expected to constitute 22% of the U.S. population, holding 60% of investable assets in 2030.

The recent economic crisis significantly decreased client trust in wealth management firms, resulting in a shift toward personalized services and safer products such as fixed income securities. Firms are opting for new operational models in order to recover losses and compete effectively in the changing scenario. They are increasingly forming consolidations and 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.

Wealth Management Industry in U.S. – Changing Trends, Opportunities and Strategies is a study of the changing trends in the wealth management industry and the changing needs of the investors. The report will provide new insights and give recommendations for wealth management firms intending to capitalize on the mass affluent segment. Intensive bifurcation of the investors on the lines of wealth and product needs will enable product development and provide a roadmap to the future of novel wealth management practices for the mass affluent segment.

Key findings from the report

* In 2009, North American wealth by AUM totalled $35.1 trillion, of which the U.S. contributed 90%-93% with around $31.4 trillion AUM

* The market share of Registered Investment Advisor (RIA) has increased to 12% in 2009, with a year–on-year growth of 1.5%; while the market share of wirehouses has decreased to 38% in 2009, a 0.9% decline from 2008.

* The mass affluent segment includes around 33 million individuals, of which 18% do not have a financial plan.

* Baby boomer segment in which 50% is represented by mass affluent segment and have accumulated significant wealth is going to retire in coming decade ,thus providing opportunity in terms of retirement planning for the wealth management firms

* Client preferences are trending towards secured and safer products like debt and cash related products.

* Declining profit and assets under management due to loss of client trust is encouraging firms to increase focus on CRM and to make their operating model more customer-oriented.

* Wealth management firms are increasingly adopting integrated technologies strategies such as retainer fee based model instead of traditional transactional based model.

SCOPE OF THE STUDY

Strategy formulation

The section talks about current and future trends and addresses the key issues and opportunities in the wealth management industry in the U.S. It also focuses on product strategies adopted by leading players to tap the mass affluent segment. The section analyzes the key players serving wealth management, and discusses their market share.

Case studies

The section discusses the impact on firms profitability or assets under management (AUM) after implementing integrated wealth management solution. With the help of case studies, we have reviewed the role of wealth management solution providers in overcoming the challenges faced by advisory firms.

Vendor analysis

The study provides an in-depth analysis of the vendors that support the wealth management industry. This will help firms select the most competitive service providers. Vendors are benchmarked across product complexity, features, and product and strategy development to help you make the best choice of service partner.

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