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Registered investment advisers capture the assets of wirehouses

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Registered investment advisers have captured the assets of wirehouses or large wealth management firms over the past two years, a report on the US wealth management industry shows.

The report on Bharatbook says wirehouse advisers showed high productivity (client assets per adviser) in 2009 with an average of USD83m client assets.

However, wirehouses lost 0.9 per cent of the assets under management, while registered investment advisers gained 1.5 per cent 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 report says.

The US mass affluent segment represents a significant opportunity for wealth management firms. It constitutes around 33 million households with around USD13trn wealth, which represents around 43 per cent of the total investable assets in the US. The mass affluent segment also includes a significant number of baby boomers, who have accumulated huge wealth and are about to retire. Baby boomers are expected to constitute 22 per cent of the US population with 60 per cent 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. According to the report, the retainer fee pricing strategy has also caught up, replacing the traditional transaction fee based model.

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