Wealth management promises to be a thriving if competitive market over the next few years, with many smaller practices taking on the bigger players in a push to grow their assets under management (AUM) and generate higher revenues
Wealth management promises to be a thriving if competitive market over the next few years, with many smaller practices taking on the bigger players in a push to grow their assets under management (AUM) and generate higher revenues.
As the recession of the late 2000s stretched into a prolonged period of slow economic growth, interest rates on savings have bottomed out, investment returns have lagged behind previous rates and regulatory restrictions have tightened.
“All this has made the planning of retirement funds, investments, insurance, mortgages, children’s educations, inheritance, tax management and other financial matters a greater challenge than ever before for many people,” says John Easton, the director of wealth management CRM for Maximizer Services Inc.
A range of factors are fueling wealth management growth, including:
- the front end of the baby boom generation transitioning into retirement;
- the last of baby boomers entering their 50s and the home stretch of their careers; and
- people working longer than ever.
Research shows that the financial services industry is booming in the face of this change and uncertainty.
According to an independent study commissioned by Maximizer Services Inc. last year, 92% of North American financial advisors grew their AUM in 2013 and 96% projected positive growth in 2014. The report, based on a survey of more than 900 advisors in the U.S. and Canada, showed that 62% of firms saw double-digit AUM growth in 2013, with a similar proportion estimating the same level of growth in 2014. A 2013 Investment News/Moss Adams study found that revenues for financial advice firms had grown at a 19% clip over the previous 10-year period.
In addition, a study by Capgemini and RBC Wealth Management shows that the number of high net worth individuals in North America grew by 16% in 2013, following a 12% increase in 2012. The research also showed that the confidence these individuals have in the wealth management industry surged globally in 2014, with roughly three-quarters expressing high levels of trust in 2014, up from 61% the year before.
“All this signals that there are great opportunities for wealth management firms to take advantage of,” says Easton, “but the market remains intensely competitive with the global giants thriving, and smaller, independent firms looking for ways to keep up and carve out their own share of the growth.”
The top 209 global wealth management firms saw AUM grow by 20% on average in 2013, more than double the previous year’s rate, according to a study by wealth management market research specialist Scorpio Partnership. It is not, however, a straightforward matter for many smaller, independent financial advisor practices to simply punch above their weight or scale up quickly to take on a much larger AUM load.
Most are simply not set up for rapid and substantial growth.
“There are foundation blocks that smaller firms need to put in place to make the leap to a medium-sized business capable of taking more assets under management, expanding staff numbers, attracting successful new partners and increasing revenues,” says Easton.
“The key elements necessary to foster substantial practice growth include effective organization, systemization, automated processes, an adequate technology budget, a productive approach to marketing, and tools that enable wealth management firms to evaluate and adjust performance – including a properly configured Customer Relationship Management (CRM) platform.”
Establishing these would position the owner or management team to scale up for expansion and achieve a level of growth the firm can absorb and sustain.
As the recession of the late 2000s stretched into a prolonged period of slow economic growth, interest rates on savings have bottomed out, investment returns have lagged behind previous rates and regulatory restrictions have tightened.
“All this has made the planning of retirement funds, investments, insurance, mortgages, children’s educations, inheritance, tax management and other financial matters a greater challenge than ever before for many people,” says John Easton, the director of wealth management CRM for Maximizer Services Inc.
A range of factors are fueling wealth management growth, including:
- the front end of the baby boom generation transitioning into retirement;
- the last of baby boomers entering their 50s and the home stretch of their careers; and
- people working longer than ever.
Research shows that the financial services industry is booming in the face of this change and uncertainty.
According to an independent study commissioned by Maximizer Services Inc. last year, 92% of North American financial advisors grew their AUM in 2013 and 96% projected positive growth in 2014. The report, based on a survey of more than 900 advisors in the U.S. and Canada, showed that 62% of firms saw double-digit AUM growth in 2013, with a similar proportion estimating the same level of growth in 2014. A 2013 Investment News/Moss Adams study found that revenues for financial advice firms had grown at a 19% clip over the previous 10-year period.
In addition, a study by Capgemini and RBC Wealth Management shows that the number of high net worth individuals in North America grew by 16% in 2013, following a 12% increase in 2012. The research also showed that the confidence these individuals have in the wealth management industry surged globally in 2014, with roughly three-quarters expressing high levels of trust in 2014, up from 61% the year before.
“All this signals that there are great opportunities for wealth management firms to take advantage of,” says Easton, “but the market remains intensely competitive with the global giants thriving, and smaller, independent firms looking for ways to keep up and carve out their own share of the growth.”
The top 209 global wealth management firms saw AUM grow by 20% on average in 2013, more than double the previous year’s rate, according to a study by wealth management market research specialist Scorpio Partnership. It is not, however, a straightforward matter for many smaller, independent financial advisor practices to simply punch above their weight or scale up quickly to take on a much larger AUM load.
Most are simply not set up for rapid and substantial growth.
“There are foundation blocks that smaller firms need to put in place to make the leap to a medium-sized business capable of taking more assets under management, expanding staff numbers, attracting successful new partners and increasing revenues,” says Easton.
“The key elements necessary to foster substantial practice growth include effective organization, systemization, automated processes, an adequate technology budget, a productive approach to marketing, and tools that enable wealth management firms to evaluate and adjust performance – including a properly configured Customer Relationship Management (CRM) platform.”
Establishing these would position the owner or management team to scale up for expansion and achieve a level of growth the firm can absorb and sustain.
