New Realities in Wealth Management: Firms at a Standstill, Investors in Flux
Report Summary
New Realities in Wealth Management: Firms at a Standstill, Investors in Flux
In terms of asset growth, 2011 might be considered a lost year for the brokerage and RIA market.
Boston, May 2, 2012 – A new report from Aite Group explores changes in the U.S. wealth management industry from the financial crisis of 2008 through the end of 2011. This research is based on Aite Group interviews with firm executives and a December 2011 Aite Group survey of 1,014 U.S. investors. The report examines various segments of the wealth management industry and details investor attitudes and actions by age demographic and wealth band.
2011 was yet another challenging year for wealth management firms. While the year began promisingly, market volatility brought on by the euro crisis wiped out gains mid-year. As a result, 2011 was the first year since the 2008 financial crisis that the brokerage and RIA market saw a decrease in client assets, though performance varied somewhat across wealth management industry sub-segments. Wealth management firms and their financial advisors have had to work hard to reclaim assets that investors, driven by their low appetite for risk, have turned into bank deposits since the start of the crisis.
“The shaky financial markets have not only hampered investor confidence, but have also failed to provide support to wealth management firms hoping for appreciating client assets,” says Alois Pirker, research director with Aite Group and co-author of this report. “While wealth management has become an increasingly interesting revenue source for challenged financial services firms (e.g., retail banks), success in this line of business was difficult to achieve in 2011.”
“Approximately 60% of investors have made changes to their investment providers over the last few years, with younger investors constituting 65% of those who made changes,” says Sophie Schmitt, senior analyst with Aite Group and co-author of this report. “Across generations, investors cite fees charged by investment providers as a reason for shifting assets, whereas young affluent and high-income investors cite a quest for robust online tools.”
This 47-page Impact Report contains 36 figures. Clients of Aite Group’s Wealth Management service can download the report.