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Household investable assets top $28 trillion

by Warren S. Hersch

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Consumer households have $28.6 trillion of investable assets, $72.2 trillion of total assets, and $58.4 trillion of net worth, according to a new report.

Tiburon Strategic Advisors, Tiburon, Calif., published this finding in a study, “The Future of Wealth Management: Defining the Winning Product, Channel, and Tactical Strategies.” The research explores the future of the financial planning, brokerage, investment management, and private banking markets. And it forecasts product, channel and tactical strategies. Among the report’s key findings:

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Consumer Wealth and Growing Baby Boomer Issues

  • Consumers households have $29.2 trillion in investable assets, down from 2011
  • Consumer households have $13.2 trillion in retirement plan assets, up slightly in 2011 and almost back to the 2007 peak of $13.4 trillion
  • The number of consumer households with over $5.0 million in financial assets dropped 30% in 2008 to 840,000 and then recovered less than half that amount in 2009-2010
  • Consumer households have $23.1 trillion in personal assets, again down further in 2011
  • Consumer households have $7.3 trillion in private business valuations, up slightly in 2011
  • Consumer households have $58.4 trillion of net worth, off slightly in 2011 and still off 15% since the peak of $65.2 trillion in 2007

Rapidly Evolving Investment Approaches

  • Wirehouses, regional broker/dealers, and independent broker/dealers are now all capturing over half of their net flows in fee-accounts
  • Packaged fee-account programs have gathered $1.9 trillion, up 2,000% since 1992 and 20% since 2006
  • Active equity mutual funds have realized over $1.0 trillion of outflows since 2008
  • Fixed income mutual funds have realized over $1.0 trillion of net inflows since 2009
  • Over two-thirds of fee-based financial advisors are feeling the pressure to revise their investment management strategies
  • The mix of consumers’ holdings of mutual funds has shifted to over half bonds and money market funds
  • Long-term mutual funds and exchange traded funds dominated 2010 product net flows
  • Consumer households hold $7.7 trillion in equities, up 70% since 2002
  • Consumer households hold $4.2 trillion in bonds, up 90% since 2002
  • Separately managed accounts and commingled investment funds continue as the second largest investable asset product market with $7.9 trillion assets under management, up 25% since 2008
  • There are now 1,221 exchange traded funds, up from just 19 in 1997
  • Exchange traded fund assets are nearly $1.2 trillion, having reached $1.0 trillion in 2010
  • 529 plans have $135 billion assets under management, up over 1,000% since 2002
  • Variable annuities’ assets under management saw a decrease in growth in 2010 after a strong 2009

Independent Advisors and Consumer Empowerment Movements

  • Consumer households control almost three-quarters of investable assets, two-thirds of that invested via financial advisors
  • There are 319,456 financial advisors, down 19,000 or about 5% since 2005
  • Independent advisors have steadily been growing as a channel at the expense of the wirehouses and regional broker/dealers
  • Independent broker/dealers and insurance companies account for the largest shares of financial advisors
  • Wirehouses and other captive brokerage firms have been surpassed (temporarily) by the banks in assets and may soon be caught by independent advisors
  • The wirehouses still have the most successful financial advisors with $94.2 million average assets under administration