April 2016, Boston. Wirehouses and banks control nearly three-quarters of all high-net-worth (HNW) assets in the United States, according to global analytics firm Cerulli Associates.
“As of year-end 2014, wealth managers controlled approximately $8 trillion in HNW and ultra-high-net-worth (UHNW) client assets,” states Donnie Ethier, associate director at Cerulli. “The longtime market leaders – the wirehouses, private banks, and trust companies – have maintained their reign with a collective marketshare of 72%.”
“Wirehouses, private banks, and trust companies remain the three largest HNW channels, respectively,” Ethier explains. “Wirehouse assets lessened from past years; however, this is not always due to a loss of assets. Instead, it can be due to a change in Cerulli’s methodology, including redistributing a wirehouse’s assets to an affiliated channel. An example is separating U.S. Trust’s marketshare from Merrill Lynch.”
The wirehouses and banks must stop relying on intra-channel recruiting (e.g., wirehouse-to-wirehouse) or these channels will likely experience moderate growth. Moreover, heirs of their existing clients may be the biggest wildcard as they will likely boost growth within the independent and direct channels.
State-chartered trust companies and multi-family offices (MFOs) have experienced significant growth. These are exclusive, independent practices focused on sophisticated estate planning. These firms are often established around the softer elements of wealth, including family governance and succession planning.
Traditional registered investment advisors (RIAs) are also now included in Cerulli’s HNW asset sizing because, similar to several broker/dealers and investment councils, they may not qualify as MFOs but are successful among HNW families.
Cerulli’s report, High-Net-Worth and Ultra-High-Net-Worth Markets 2015: Understanding and Addressing Family Offices, focuses on analysis of the HNW and UHNW marketplace in the U.S. and examines services provided by wealth managers, including family offices, wirehouses, banks, and RIAs.