The investable assets of U.S. consumers have fully recovered from the financial meltdown of 2008, presenting wealth managers with one of the best opportunities within the financial services industryparticularly for those who serve the wealthiest clients. That's the view of Chip Roame, managing partner of Tiburon Strategic Advisors, which uses research and case studies on hundreds of corporate, venture capital and private equity clients to take the current pulse of the investment industry. "Wealth management is possibly the best opportunity in financial services" right now, said Roame, who presented his latest findings at his firm's Tiburon CEO Summit XXV in San Francisco in October.
The non-retirement investable assets of Americans rose to $34 trillion in the second quarter of this year, according to the latest federal data, up more than 40% from the same period in 2008. Retirement assets, meanwhile, have risen more than 30% since the nadir of the recession to $18 trillion, according to Roame. And U.S. net worth reached $75 trillion in the second quarterup 20% since 2008. "Now that's a recovery," Roame said. even as he acknowledged that the U.S. economic recovery of the last five years has been uneven.
While assets have surpassed levels held just before the mortgage crisis hit in 2008, financial behemoths such as BlackRock and Bank of America have no more than a mid-single-digit share each of the asset management industry, Roame said. "This is the opportunity; it's still a fragmented industry. You don't have to be huge to succeed."
But, he said, firms that cater to high net worth clients have an advantage. While the average U.S. household has $268,000 in investable assets, most of that money is concentrated in the top 8% of households. The median household has just $8,200 to invest, Roame said, citing the latest government data.
Roame sees another opportunity in the growing number of Americans who are managingor attempting to managetheir own investment portfolios, and may be splitting their asset management across multiple firms. They may not be pleased with the results, he noted, since research shows that actively managed accounts tend to, on average, underperform a portfolio based on strategic asset allocation.
"Tactical doesn't work," Roame said.It's particularly problematic for baby boomers, less than 2% of whom have an inheritance of any significance coming, he said. "If you're waiting for the inheritance boom, it ain't gonna happen." he added.