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US Retail Asset Management Gained Market Share: Shift To Fee-Based Advice Continues - Cerulli

Tom Burroughes, Group Editor, November 5, 2020


A new report examines the $51.5 trillion market (as of end-2019) for professionally managed assets in the US, unpacking the data to show trends such as retail business, and the growth of fee-based advisory models.

The retail end of the US market for professionally managed assets gained ground in the previous decade, figures from Cerulli Associates showed.

In 2019, the market stood at $51.5 trillion. The split of US professionally managed assets continues to favor institutional client channels (53.8 per cent) over retail client channels (46.2 per cent), although retail client channel market share has increased by 5.2 percentage points since 2009.

Retail and institutional distribution is increasingly intermediated by third parties. In retail client channels, the share of assets that move through the third-party distribution channel has increased from 72.8 per cent in 2014 to 74.3 per cent in 2019. Similarly, the share of institutional client assets moving through third-party distribution has climbed from 45.6 per cent to 53.6 per cent.

The data appears in the Cerulli report entitled The State of US Retail and Institutional Asset Management 2020.

Broker-dealer-affiliated financial advisors are shifting to fee-based business models and increasingly adopting asset allocation model portfolios, emphasizing a focus on financial planning and all-encompassing advice, the report said.

“In this case, platform shelf space and model inclusion will be gate-kept by the home office,” Brendan Powers, associate director, said.

Open-end mutual funds (31.7 per cent) and institutional separate accounts (22.4 per cent) hold 54.2 per cent of US professionally managed assets. However, both vehicles’ five-year compound annual growth rates lag those of model-delivered and manager-traded dual-contract separate accounts, exchange-traded funds, and collective investment trusts, the report said.

“Investors are increasingly open to vehicles beyond traditional open-end mutual funds and institutional separate accounts. Cost, transparency, and customization are becoming increasingly important attributes,” Powers said. “Looking forward, asset managers should be focused on building out new investment vehicle capabilities to the extent that they can provide more flexibility to clients in selecting how they want to consume the strategies their firm offers.”

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