Practical analysis for investment professionals
27 January 2015

Outlook for the US Wealth Management Industry: “The Most Exciting Time”

January is drawing to a close, and the private wealth themes we noticed in 2014 are poised to grow more influential in the months ahead. Greater attention is being paid to financial technology (fintech) and the online landscape of wealth management, with wirehouse advisers becoming more active in their use of social media to gain new clients and attract more assets. Demographic shifts mean that more women are likely to be the high-net-worth (HNW) clients of the future, but they are also more likely to change financial advisers due to communication problems. In the coming year, it will be more important for advisers to engage with clients by using a broader spectrum of communication styles and platforms.

As 2015 gets under way, we asked April Rudin, founder and president of The Rudin Group, to share her thoughts on the outlook for the US wealth management industry:

CFA Institute: How would you describe the landscape of the wealth market in the United States? 

April Rudin: It is probably the most exciting time to be a wealth manager in the United States, given the opportunities to leverage the seismic wealth transfer from baby boomers to next gen, and tech tools that enhance the client experience and highlight the role of advice in the client relationship. The landscape of the market is a fairly well-known and traveled terrain, but there are new elements emerging that may provide interesting new paths — including robo-advice models, equity and debt crowd-funding, the mainstreaming of alternatives, and other forces being driven by regulatory, technological, and general investment trends.

What are the major trends you see?

One of the major trends in wealth management is the rise of the independent fee-based adviser. Organic growth in the RIA [registered investment adviser] channel, as well as the continued exodus of wirehouse brokers to the independent space, is gradually shifting the balance of power in this space. This in turn drives the argument for a fiduciary, rather than a suitability, standard of practice, which plays directly into the CFA mission. Other related trends include the impact of tech and regulation, the JOBS Act in particular, which will drive new business models and attract the oversight of regulators. But in all of these cases, the role of CFA [Institute], as an educator and a powerful voice representing the best interest of the investing public, may never be more critical.

Overall, is the market growing? Why? 

Overall, the market is growing. Advisers’ average age is around 55, new wealth is being created at a much younger age, and the value of advice is not going away, particularly in the private wealth space. So-called “robo-advisers” are simply tools for the 21st century wealth manager, family office, or RIA.

What segments (RIAs, family offices, etc.) are growing? Is there a market share shift? 

RIAs and family offices (especially single-family) are growing. The next generation of wealth holders seeks independent advice and transparency over their advisers and investments.

Who are the major players now?  Do you see that changing in the future? 

The major players remain the incumbent wirehouse brokers and, increasingly, the large discount and direct brands, like Schwab, Vanguard, and Fidelity. While the wirehouse position is large and entrenched, the trend to independence is growing — in fact, the smarter brokerages are building fee-based and “independent” characteristics into their offerings. But over the near term, we can see continued growth from discount and direct models, and a proliferation of the trends (robo, alternatives, etc.) being supported by them as well. Schwab and Vanguard’s recent forays into robo are a clear example of this. But in the longer term, I would venture to say that the real winners in the provision of “investment advice” and “asset management” to the masses will be the Apples, Googles, and Facebooks of the world — who have the brand, tech savvy, and consumer trust to expand into the realm of finance.

Is there growth in discretionary vs. non-discretionary assets under management (AUM)? 

This question really points at so many underlying issues on advice, fiduciary responsibility, etc. It is important for wealth managers to understand/distinguish for clients what the risk/benefits are here. I have seen significant growth in investors wanting non-discretionary accounts from their advisers. Advisers need to create important dialogue with their clients around this issue.

Broadly speaking, what types of assets are advisers managing for high-net-worth (HNW) clients?

Today’s HNW investor has an eye for “doing good while doing well,” so impact investments are important and are passions of HNW investors. Many advisers need to learn more about the alternatives marketplace, including the new platforms that allow HNW/accredited investors to directly access deals without using advisers. Also, new digital investments like bitcoin are popular among today’s HNW individuals. Advisers must continually be ahead of their clients instead of lagging behind.

Based on what you’ve heard and where you sit, what types of analytic tools do you think would be beneficial?  What are the “critical” needs?  

The types of analytic tools today are simply a precursor to what will be available in the future. Advisers who make investments in fintech, especially client-facing ones, will be well-positioned for their future clients. Reporting software, graphical user interfaces, mobile devices, even 3-D printing, will enable wealth managers to communicate complex portfolios to HNW clients with compromised attention spans. Advisers need to “up” their tech game and be informed of tools that will enhance their ability to communicate with clients and future clients.

The 2015 CFA Institute Wealth Management Conference, which is open to CFA Institute members and non-members, will be held in New Orleans, Louisiana, on 4–5 March. 

If you liked this post, don’t forget to subscribe to the Enterprising Investor.

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©

About the Author(s)
Lauren Foster

Lauren Foster was a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

3 thoughts on “Outlook for the US Wealth Management Industry: “The Most Exciting Time””

  1. Paige Smith says:

    It is interesting to learn that one of the major trends in wealth management currently is the rise of the independent fee-based adviser. In a time where the economy is crashing and wealth management is taught less and less you can make bank with common sense and organization. Learning how to budget in this worlds economy is a rare jewl.

  2. Mark Daniels says:

    This is common sense, but I am still surprised that the article mentioned “new wealth [was] being created at a much younger age.” New technology has increased that a teenager may soon have tremendous wealth. The younger one starts, the wealth management industry will definitely take control of that situation.

  3. Peter Brown says:

    Hi Lauren,

    Another interesting trend is the rise of robo-advisors, which by 2020 will manage about $2.2 trillion in assets (see below). While less likely to be helping HNWI, they may well open up the possibility of new money and Millennials entering the investment market.

    Who knows, maybe the wealth management industry will also become automated in the coming decades, like much of industry and eventually, much of everything?


Leave a Reply

Your email address will not be published. Required fields are marked *

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.