The huge U.S. wealth management asset pool will become much bigger in the next 15 years, according to projections from the Deloitte Center for Financial Services released Monday.
Household assets will increase from $87 trillion in 2015 to some $140 trillion by 2030, $64 trillion of this amount in investable assets. Wealth managers will vie for between $150 billion and $240 billion in management fees.
The report notes, however, that wealth managers would be remiss to shift their focus from their current client base of baby boomers and Generation X in favor of millennials.
Indeed, the wealth market is likely to become increasingly segmented by unique generational needs, Gauthier Vincent, a principal with Deloitte Consulting LLP and the leader of Deloitte’s wealth management practice, said in a statement.
The report notes that “generational segmentation is not a marketing gimmick,” and that traditional strategies will not meet clients’ changing needs. Instead, diversity in wealth offerings and business models will be critical to success for industry players.
(Research released earlier this year by Cerulli Associates showed that segmentation was critical to an advisory firm’s growth, productivity and profitability.)
The Deloitte report forecasts how generational wealth will evolve through 2030 across today’s silent generation, baby boomers, Generation X and millennials, and provides strategic considerations for financial services firms as they look to adjust their business models to accommodate changing demographics.
Researchers forecast that boomers would continue to be the wealthiest generation in the U.S. through 2030 and would remain the largest fee pool for financial services firms.
According to the report, boomers will account for 50.2% of net household wealth by 2020, when their share of wealth will start to decline slowly, to 44.5% by 2030, and precipitously after that as mortality rates increase.