wealth management

Size of Investment and Wealth Management Market

Autonomous Research has estimated the size of the US wealth management industry to be $376 billion in revenue in 2016. This figure is derived from investable assets of $37 trillion, which are defined as household net worth less illiquid assets such as residence and private company shares. The resulting industry pricing is slightly below 1% in fees across the ecosystem. Investable assets are derived based on the distribution of households in the United States, of which there were 124 million.

The overall market is separated into the following segments: (1) retail households with <$100k, (2) emerging affluent households with $100k-250k, (3) mass affluent households with $250k-1mm, (4) high-net worth households with $1-10mm, and (5) ultra high-net worth households with $10mm or more. Different firms use slightly different terminology and cut-offs for these populations. Our methodology reflects how most industry participants structure their service offerings and channels to target the quantified segments. The first chart shows households, investable assets and revenue pools by household segment.

On the second chart, we looked at the asset management side of the equation. Asset management is the manufacturing part of the investment management industry. Within fund management in particular, we find an 8.3% CAGR between 2008 and 2015, which is the period defined by the recovery from the financial crisis. For the same period, exchange traded funds grew at a 21.7% CAGR. The story that passive index investing and ETF investing have grown faster than the rest of the industry is shown here quantitatively. Whereas mutual fund growth is beginning to stall, ETF growth continues to expand.