August 1, 2011

Recovery Slow for Wealth Management Assets: Aite Report

Wirehouse assets languished last year, while other segments bounded upward

The U.S. wealth management industry had high hopes pinned on 2010, but the year proved challenging characterized by low trading volumes and so-so economic indicators. As a result, a report released Tuesday by Aite Group found, the overall market size of the brokerage and advisory industry had not fully recovered from its losses by year-end. 

The industry increased by 11% to $13.5 trillion in 2010, still below the $13.6 trillion asset level recorded at the end of 2007, Aite said.

The report, “New Realities in Wealth Management: From Dusk Till Dawn,” is based on an extensive Q1 2011 Aite Group survey of more than 430 U.S. financial advisors.

The study found that 2010 performance varied across wealth management sub-segments. Wirehouse firm assets remained 8% below their 2007 high-water mark, but other industry segments did much better:

  • The RIA segment and other self-clearing retail brokerage firms outside the wirehouse space surpassed their end-of-2007 asset levels by 21% and 16%, respectively.
  • Online brokerage firms’ client assets grew by 50% between the end of 2008 and the end of 2010.

As for 2011, the report said the U.S. debt crisis and similar difficulties in several Euro zone economies have alarmed retail investors. Moreover, the second quarter is again seeing low trading volumes, prompting the likes of UBS and Bank of America Merrill Lynch to rethink their staffing levels.

“Overall, the path to recovery remains lengthy and littered with many additional challenges for wealth management firms,” the report said.

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