It’s a good time to run money for the well-heeled, who are stashing record amounts with advisers and brokerages.
Indeed, at the end of last year, assets at big and small wealth management firms totaled more than $17 trillion. And that, said an industry observer, was a record number.
And it is also a long way from the market meltdown of 2008, the Euro crisis and the Madoff scandal that spooked investors. That’s when industry assets slipped below $11 trillion, said industry research consultant Aite Group.
“Client assets have grown every year save for one, 2011, since the crisis took hold in 2008,” according to the report, “New Realities in Wealth Management: Let the Good Times Roll?”
Aite said double-digit asset growth was recorded last year at both big brokerages (wire houses such as Bank of America, UBS, Wells Fargo and Morgan Stanley) and RIAs (registered investment adviser firms), which are independents.
However, Aite believes the advisory firms are more profitable and that their assets are growing at a faster pace.
Despite the asset growth, there are still fears on the horizon for the money-management business and the affluent investors it serves — usually those with $1 million to $5 million of investable assets, Aite said. But, just as some question if the bull market is due for a downturn, questions persist about the big money managers and whether their good times will continue.
“How long will this asset growth continue?” asked Alois Pirker, one of the authors of the Aite report. “We also still have a lot of clients who are still cautious and keeping money in cash.”
While assets are vigorously growing, Pirker noted that the profit margins on asset management at wire houses have not been strong.
The faster growth rates are in the independent financial adviser part of the business.
Lewis J. Altfest, an adviser who has run his own Manhattan firm for the past 30 years, said it is the result of investors “feeling more comfortable with straightforward advice from independent firms.”