Boston, July 26, 2011 – A new report from Aite Group examines recent changes in market share, client assets, and advisor headcount across wirehouses, fully disclosed broker/dealers, independent registered investment advisors (RIAs), and online brokerage firms at both firm and industry segment levels. It updates Aite Group’s 2009 and 2010 reports, New Realities in Wealth Management: Ready for the Sea Change? and New Realities in Wealth Management: Has the Dust Settled? The report also discusses business trends in the advisor community based on an extensive Q1 2011 Aite Group survey of more than 430 U.S. financial advisors.
The wealth management industry in the United States had high hopes pinned on 2010. While the year started out as expected, with a stock market recovery on track, the May 6, 2010 flash crash caused the Dow Jones Industrial Average to plunge by about 900 points, shaking the confidence of retail investors and depressing both trading volumes and revenue at wealth management firms through 2010. In the end, 2010 performance varied across the wealth management industry sub-segments; while wirehouse firm assets remained 8% below their 2007 high-water mark, other industry segments, including independent RIAs and online brokerages, fared much better. Today, the government debt crisis in the United States and several Western European economies continues to scare retail investors. These events contributed to the significant reduction in asset growth at many leading wealth management firms in the most recent quarter.
“Q2 2011 is yet another time characterized by low trading volumes, and firms like UBS, Credit Suisse, and Morgan Stanley Smith Barney are already rethinking their current staffing levels,” says Alois Pirker, research director with Aite Group and co-author of this report. “Overall, the path to recovery remains lengthy and littered with many challenges for wealth management firms.”
“Financial advisors and online brokerage firms are banking on fee-based investment solutions to achieve more impressive growth in 2011 and beyond,” says Sophie Schmitt, senior analyst with Aite Group and co-author of the report. “The verdict is not yet out on whether investors will embrace this investment management approach as many investors remain cautious in a volatile and uncertain economic environment.”
This 35-page Impact Report contains 29 figures. Clients of Aite Group's Wealth Management service can download the report.