Wealth Management Industry in U.S. - Changing Trends, Opportunities, & Strategies
Report Description
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.
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.
EXECUTIVE SUMMARY
1 INTRODUCTION
1.1 Report Catalyst
1.2 Report Structure
2 STRATEGY FORMULATION
2.1 Market Structure
2.2 Market Sizing and Segmentation
2.2.1 Global and U.s. Wealth
2.2.2 Segmentation of U.s. Households by Wealth
2.3 Market Share Analysis , by Private Client Assets
2.4 Market Share Analysis, by Types of Wealth Management Firms
2.4.1 Wirehouses
2.4.2 ria Custodians
2.4.3 Self-clearing Retail Brokerage
2.4.4 Fully-disclosed Retail Brokerage
2.4.5 Online Brokerage
2.4.6 Comparison of Firms by Client Assets
2.5 Wealth Management – Mass Affluent Segment
2.5.1 Financial Institutions Targeting the Segment
2.5.2 Strategies to Attract More Customers
2.5.3 Winning Model to tap Target Segment
2.5.4 Mass Affluent and Baby Boomer Retirement Planning
2.6 Change in Wealth Management Practices Post Financial Crises
2.6.1 Change in Client Behavior & Patterns Post Crisis
2.6.2 Change in Customer Offerings
2.6.3 Increased Focus on crm
2.6.4 Advisors Moving From Wirehouse to ria
2.6.5 Tightened Government Regulations
2.6.6 Change in Operational Model
2.6.7 Change in Technology
2.6.8 Transition to fee Based Approach
3 CASE STUDIES
3.1 Case Study: Hilliard Lyon
3.1.1 Objectives
3.1.2 Challenges Faced by Hilliard Lyon
3.1.3 Overcoming the Challenges
3.1.4 Outcome of Implementing Sungard’s Wealthstation
3.1.5 Conclusion
3.2 Case Study: Northstar Systems International
3.2.1 Objectives
3.2.2 Challenges Faced by Client
3.2.3 Overcoming the Challenges
3.2.4 Outcomes to the Client
3.2.5 Conclusion
4 VENDOR ANALYSIS AND PROFILING
4.1 Vendor Benchmarking
4.1.1 Functional Benchmarking
4.1.2 Tactical Benchmarking
4.1.3 Benchmarking by Customer Segments
4.1.4 Wealth Management Vendor Ranking
4.2 Vendor Profiling
4.2.1 Adviceamerica
4.2.1.1 Products and Services
4.2.1.2 Recent Developments
4.2.2 Advent Software
4.2.2.1 Products Offerings and Services
4.2.2.2 Recent Developments
4.2.3 Investedge
4.2.3.1 Products and Services
4.2.3.2 Recent Developments
4.2.4 Northstar System International
4.2.4.1 Products and Services
4.2.4.2 Recent Developments
4.2.5 Sungard Data Systems Inc.
4.2.5.1 Products and Services
4.2.5.2 Recent Developments
4.2.6 Thomson Reuters
4.2.6.1 Products and Services
4.2.6.2 Recent Developments
4.2.7 Xeye (odyssey Group)
4.2.7.1 Products and Services
4.2.7.2 Recent Developments
APPENDIX
LIST OF TABLES
Table 1 Financial Institutions Catering to Mass Affluent Segment
Table 2 Profit Share of Various Product Categories ($billion)
Table 3 Baby Boomers Share in Total U.S. Population (2010 – 2030)
Table 4 Functional Benchmarking of Wealth Management Solution Providers
Table 5 Benchmarking Wealth Management Vendors, by Customer Segments Served
Table 6 Market Share and aum by Private Client Assets (2008)
Table 7 Market Share and aum by Private Client Assets (2009)
1 INTRODUCTION
1.1 Report Catalyst
1.2 Report Structure
2 STRATEGY FORMULATION
2.1 Market Structure
2.2 Market Sizing and Segmentation
2.2.1 Global and U.s. Wealth
2.2.2 Segmentation of U.s. Households by Wealth
2.3 Market Share Analysis , by Private Client Assets
2.4 Market Share Analysis, by Types of Wealth Management Firms
2.4.1 Wirehouses
2.4.2 ria Custodians
2.4.3 Self-clearing Retail Brokerage
2.4.4 Fully-disclosed Retail Brokerage
2.4.5 Online Brokerage
2.4.6 Comparison of Firms by Client Assets
2.5 Wealth Management – Mass Affluent Segment
2.5.1 Financial Institutions Targeting the Segment
2.5.2 Strategies to Attract More Customers
2.5.3 Winning Model to tap Target Segment
2.5.4 Mass Affluent and Baby Boomer Retirement Planning
2.6 Change in Wealth Management Practices Post Financial Crises
2.6.1 Change in Client Behavior & Patterns Post Crisis
2.6.2 Change in Customer Offerings
2.6.3 Increased Focus on crm
2.6.4 Advisors Moving From Wirehouse to ria
2.6.5 Tightened Government Regulations
2.6.6 Change in Operational Model
2.6.7 Change in Technology
2.6.8 Transition to fee Based Approach
3 CASE STUDIES
3.1 Case Study: Hilliard Lyon
3.1.1 Objectives
3.1.2 Challenges Faced by Hilliard Lyon
3.1.3 Overcoming the Challenges
3.1.4 Outcome of Implementing Sungard’s Wealthstation
3.1.5 Conclusion
3.2 Case Study: Northstar Systems International
3.2.1 Objectives
3.2.2 Challenges Faced by Client
3.2.3 Overcoming the Challenges
3.2.4 Outcomes to the Client
3.2.5 Conclusion
4 VENDOR ANALYSIS AND PROFILING
4.1 Vendor Benchmarking
4.1.1 Functional Benchmarking
4.1.2 Tactical Benchmarking
4.1.3 Benchmarking by Customer Segments
4.1.4 Wealth Management Vendor Ranking
4.2 Vendor Profiling
4.2.1 Adviceamerica
4.2.1.1 Products and Services
4.2.1.2 Recent Developments
4.2.2 Advent Software
4.2.2.1 Products Offerings and Services
4.2.2.2 Recent Developments
4.2.3 Investedge
4.2.3.1 Products and Services
4.2.3.2 Recent Developments
4.2.4 Northstar System International
4.2.4.1 Products and Services
4.2.4.2 Recent Developments
4.2.5 Sungard Data Systems Inc.
4.2.5.1 Products and Services
4.2.5.2 Recent Developments
4.2.6 Thomson Reuters
4.2.6.1 Products and Services
4.2.6.2 Recent Developments
4.2.7 Xeye (odyssey Group)
4.2.7.1 Products and Services
4.2.7.2 Recent Developments
APPENDIX
LIST OF TABLES
Table 1 Financial Institutions Catering to Mass Affluent Segment
Table 2 Profit Share of Various Product Categories ($billion)
Table 3 Baby Boomers Share in Total U.S. Population (2010 – 2030)
Table 4 Functional Benchmarking of Wealth Management Solution Providers
Table 5 Benchmarking Wealth Management Vendors, by Customer Segments Served
Table 6 Market Share and aum by Private Client Assets (2008)
Table 7 Market Share and aum by Private Client Assets (2009)
LIST OF FIGURES
Figure 1 Wealth Management Market Structure
Figure 2 Wealth and Population Distribution of U.s. Households (2009)
Figure 3 High Networth Individuals and Wealth (2005 – 2013)
Figure 4 Market Share Analysis of top Players (2008 – 2009)
Figure 5 Market Shares of Wealth Management Industry Segments, by Client Assets (2009)
Figure 6 Market Shares of top Wirehouse Firms (2009)
Figure 7 Market Shares of ria Custodian Firms (2009)
Figure 8 Client Assets of top Firms in Self-clearing Retail Brokerage (2007 – 2009)
Figure 9 Market Shares of Self-clearing Retail Brokerage, by Client Assets and Number of Advisors (2009)
Figure 10 Market Shares of top Online Brokerage Firms, by Client Assets (2007 to 2009)
Figure 11 Changing Share of Industry Segments (2008 to 2009)
Figure 12 Client Assets and Number of Financial Advisors (2009)
Figure 13 Total Client Assets by Types of Wealth Management Firms (2007 – 2009)
Figure 14 Distribution of Wealthy Households and Their Respective Wealth (2009)
Figure 15 Firms Targeting Mass Affluent Segment
Figure 16 Accumulation and Distribution of Baby Boomer Assets
Figure 17 Customer Survey: Preparedness of Wealth Management Firms to Handle Influx of Retiree Assets (2009)
Figure 18 Customer Survey: a Comprehensive Plan Addressing Lifetime Goals (2009)
Figure 19 Customer Survey: Wealth Management Firms’ Focus on Relationship Management (2009)
Figure 20 Customer Survey: Wealth Management Firms’ Satisfaction With Current Tools to Serve Clients (2009)
Figure 21 Shifting Client Focus Towards Safer and Traditional Products
Figure 22 Assets Invested in Wealth Management Products (2007 – 2008)
Figure 23 Client Satisfaction Index of Wealthy Households
Figure 24 Change in Wealth Management Advisors’ Headcount (2004 – 2008)
Figure 25 Comparison of top Business Objectives of Wealth Management Firms (2009 and 2011)
Figure 26 Preferred use of crm for Various Operations
Figure 27 Demand for Various Wealth Management Solutions (2007 – 2009)
Figure 28 Comparison of Various Vendors on Strategic Aspects
Figure 29 Ranking of Vendors Offering Wealth Management Solutions
Figure 1 Wealth Management Market Structure
Figure 2 Wealth and Population Distribution of U.s. Households (2009)
Figure 3 High Networth Individuals and Wealth (2005 – 2013)
Figure 4 Market Share Analysis of top Players (2008 – 2009)
Figure 5 Market Shares of Wealth Management Industry Segments, by Client Assets (2009)
Figure 6 Market Shares of top Wirehouse Firms (2009)
Figure 7 Market Shares of ria Custodian Firms (2009)
Figure 8 Client Assets of top Firms in Self-clearing Retail Brokerage (2007 – 2009)
Figure 9 Market Shares of Self-clearing Retail Brokerage, by Client Assets and Number of Advisors (2009)
Figure 10 Market Shares of top Online Brokerage Firms, by Client Assets (2007 to 2009)
Figure 11 Changing Share of Industry Segments (2008 to 2009)
Figure 12 Client Assets and Number of Financial Advisors (2009)
Figure 13 Total Client Assets by Types of Wealth Management Firms (2007 – 2009)
Figure 14 Distribution of Wealthy Households and Their Respective Wealth (2009)
Figure 15 Firms Targeting Mass Affluent Segment
Figure 16 Accumulation and Distribution of Baby Boomer Assets
Figure 17 Customer Survey: Preparedness of Wealth Management Firms to Handle Influx of Retiree Assets (2009)
Figure 18 Customer Survey: a Comprehensive Plan Addressing Lifetime Goals (2009)
Figure 19 Customer Survey: Wealth Management Firms’ Focus on Relationship Management (2009)
Figure 20 Customer Survey: Wealth Management Firms’ Satisfaction With Current Tools to Serve Clients (2009)
Figure 21 Shifting Client Focus Towards Safer and Traditional Products
Figure 22 Assets Invested in Wealth Management Products (2007 – 2008)
Figure 23 Client Satisfaction Index of Wealthy Households
Figure 24 Change in Wealth Management Advisors’ Headcount (2004 – 2008)
Figure 25 Comparison of top Business Objectives of Wealth Management Firms (2009 and 2011)
Figure 26 Preferred use of crm for Various Operations
Figure 27 Demand for Various Wealth Management Solutions (2007 – 2009)
Figure 28 Comparison of Various Vendors on Strategic Aspects
Figure 29 Ranking of Vendors Offering Wealth Management Solutions
