Thinking About The 'Concentration of Assets' In the Advisory Industry Hot

0.0 (0)
Write Review


The phrase "the concentration of assets in the wealth management industry continues to increase" set me off, because it sounded so much like what's going on in the country politically right now.


As the number of advisors shrinks, each advisor handles, on average, more client money.


But while the goal is often to focus on fewer, bigger accounts, that is not always the reality for every advisor.


Many advisors are taking a broad approach, using technology and innovative office structures to serve a lot more small accounts more efficiently.


Others are simply fighting hard for every dollar they can get.


And the wirehouses have been capitalizing on their national brands -- despite frequent scandals and embarrassments -- to chase the richest Americans up the social pyramid.


The typical wirehouse advisor now serves $94 million in client assets, up 10% over 2009 levels. 


"Hybrids" and traditional RIAs have, on average, $63 million to $64 million in AUM apiece. And independent brokerage affiliates are down in the $18 million range.


Now I plead a lot about the mass affluent market because I see the typical American family as vastly underserved and in desperate need of solid advice. It would be a decent -- in all senses of the word -- career to focus on these people, if the business model could support it.


What numbers like this make me wonder about is whether the "mass affluent" market is in better or worse shape now than it was three years or five years ago. 


If, as the Occupy Wall Street people have it, the middle class has lost ground, then this market is no longer as rich an opportunity as it was.


Efficiencies need to be even bigger to make it work and each account will simply have to work harder to justify taking the time away from prospecting for and retaining a high-net-worth client instead. 


In that case, the question is how independent advisors who want to grow should orient their business to compete for the rich who are getting richer.


Naturally, if the middle class is alive and well -- as the banks are hoping and might actually believe -- then the opportunity is clear. Betting on small business is a win/win scenario.


How are you doing it?

This Website Is For Financial Professionals Only

User reviews

There are no user reviews for this listing.
Already have an account? or Create an account