Asset managers move into wealth management as the rich get richer


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“Follow the money” is a pretty good rule of thumb for any fictional black sleuth, but it works just as well in the world of financial services.

A new report from Bain & Company suggests that asset managers and brokerages are increasingly embracing this mantra, shifting into wealth management as the world’s Richie Riches continue to become Richie Richers.

Rich way the wind blows

The collection of asset managers now positioning themselves in wealth management lines up like a hand of tarot cards predicting a lucrative future. Last month, one of the largest US asset managers, Charles Schwab, rebranded its private client unit Schwab Wealth Advisory to promote its wealth management offering. The average program client invested $2 million.

Earlier this year, Royal Bank of Canada disclosed plans to buy Brewin Dolphin, Britain’s largest wealth manager, for £1.6bn. Last year, JPMorgan bought online wealth manager Nutmeg for $1 billion. The long-term prospects for managing the wealth of the rich, according to the Bain researchers, clearly show their motivation:

  • Wealth management is expected to grow 2% faster than asset management each year through 2030, buoyed by successful figures from the retail investment boom and a wave of expected inheritance beneficiaries.
  • The total wealth management industry, which includes asset management and financial planning, will grow 67% from $137 trillion under management last year to nearly $230 trillion in 2030 , according to Bain’s forecast. Asset management, a relatively saturated business, will grow less than 40% from $109 trillion to $152 trillion, according to forecasts.

“If you have wealth management capability, you have a much more valuable business,” said John Waldron, chief operating officer of Goldman Sachs. FinancialTimes.

All investors are not created equal: Unfortunately, Bain found that one of the main drivers of growth in wealth management is increasing global inequality and the concentration of wealth. The investable assets of high net worth individuals will double in almost all regions of the world by 2030, the firm estimates. Unless you’re one of the lucky few, it’s best to save those Groupons.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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