The wealth management industry is rapidly changing and has entered into the mature stages of its evolution. The average wealth management firm is not only much larger, but is also a more prominent competitor with a well-established brand, presence and reach into the very top levels of the high-net-worth market.
Many firms are owned by institutional investors, such as private equity and publicly owned firms. New structures of ownership and branding are emerging, providing new resources and capabilities while altering the competitive landscape. Finally, the patient efforts of organically grown firms have paid off in building large, competitive organizations.
The criteria for being a top firm are rising, the expectations of clients are growing and the competition is intensifying. Our industry is changing, and the top wealth management firms find opportunity in that change.
Results From the 2012 Top Wealth Manager Survey
This is the 12th year that AdvisorOne and Investment Advisor (and its predecessor publications) have surveyed the wealth management industry, which we define as registered investment advisory firms that provide wealth management services to individuals. (The average participant in the 2012 Top Wealth Manager Survey has $978 million in assets under management (AUM), employs a team of 52 people and works with an average client with $4.7 million in assets. In contrast, nine years ago the average participant had $371 million AUM and a staff of 13. This tremendous growth has resulted in the emergence of new local, regional and even national brands that are in contention for the most desirable clients and are achieving high levels of awareness in their target markets.
(Data for the 2012 Top Wealth Managers was self reported by the firms themselves online at AdvisorOne this summer, with firm data as of 12/31/2011; each participant firm was given the opportunity to confirm their submissions. See the About the Top Wealth Managers Survey sidebar and the 2012 Top Wealth Manager home page at AdvisorOne.com for additional information and findings from the survey, along with profiles of the top 10 firms.)
However, while assets are growing steadily, management challenges persist:
Growth, net of market, is relatively slow
We may be seeing early signs of fee pressure
Many firms may be adding smaller clients to supplement their growth
There are no significant productivity gains in the last three years; the only way to grow further is to hire more people
Still, 2012 is another year of growth and change for the top wealth managers in the country. It is a year to make a difference. In an industry that is rapidly consolidating and becoming more competitive, the top firms are distancing themselves from the pack by combining a well thought-out, competitive strategy with a careful, internal cultivation of culture and people. We will see their plans in the financial information and other data provided in this survey.