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Managed Assets Grew 11% in 2020: Cerulli

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What You Need to Know

  • The retail segment of professionally managed assets accounts for 49% of the total.
  • Institutional investors are increasingly reliant on intermediaries, including financial advisors.
  • RIAs had the fastest growth among retail intermediaries.

U.S. professionally managed assets grew by 10.7% in 2020 to $59.3 trillion, according to research released Thursday by Cerulli Associates.

Total assets now boast a 10-year compound annual growth rate of 8%.

Most addressable assets reside in the institutional channel. The biggest client segments are insurance general accounts; corporate 401(k) plans, and state and local government defined benefit plans. Assets in these segments, respectively, total $7.3 trillion, $6.9 trillion and $4.5 trillion.

Collectively, these three channels comprise more than 60% of the total institutional addressable market.

The retail segment of professionally managed assets accounts for 49% of the total, according to the report. The two largest retail client segments, retail direct investor platforms and the wirehouses, experienced 13.7% asset growth in 2020, to $6.9 trillion and $5.5 trillion. 

The report said, however, that the retail direct investor platform channel has been growing faster in recent years. It has a 16.8% five-year compound annual growth rate, compared with 9.5% for the wirehouses.

Most of the U.S. retail and institutional professionally managed assets move through a third-party intermediary, according to the report. Institutional intermediaries accounted for 53% of institutional channel assets as of year-end 2020.

The report noted that as institutional investors increasingly seek greater portfolio customization, enterprise risk management and access to co-investment opportunities, they are increasingly reliant on intermediaries — investment consultants, outsourced chief investment officers or financial advisors — to select investment products and/or manage their portfolios.

“Institutional investors demand more than returns and want an investment partner that exceeds performance expectations and more,” Cerulli associate director Brendan Powers said in a statement. 

Retail intermediaries accounted for 75% of total retail channel assets at the end of 2020. The strongest channel growth occurred among hybrid RIAs and independent RIAs. 

In response to this evolving dynamic, Cerulli said asset managers should devote time and resources toward considering how they plan to address the retail segments. 

“From platform-level product placements to the introduction and adoption of asset allocation model portfolios, retail channels are increasingly demanding the levels of sophistication and dedicated service formerly reserved for institutional gatekeepers,” Powers said.

According to the report, open-end mutual funds and institutional separate accounts continue to hold more than half of U.S. professionally managed assets. However, higher asset growth rates of other vehicles highlight an increasingly vehicle-agnostic approach to consuming investment strategies:

  • Open-end mutual funds: 2020 assets, $18.2 trillion; y-o-y growth rate, 11.5%
  • Institutional separate accounts: $12.8 trillion; 15%
  • ETFs: $5.4 trillion; 24.2%
  • Collective investment trusts: $4.6 trillion; 19.4%
  • Money markets: $4.3 trillion; 19.3%
  • Model-delivered retail separate accounts: $695 billion; 26.3%