3 Important Wealth Management Statistics

Wealth Management

 Plancorp Team By: Plancorp Team
Wealth Management Statistics - Facts, Tips & Basics

Entrusting the management of your portfolio to a financial advisor is a tough decision, but there is hard data that highlights the benefits that a seasoned wealth manager can provide. In the U.S. alone, there are over 330,000 financial advisors, and that number is expected to reach nearly 400,000 by 2031.

The industry is growing because wealth managers deliver value to their clients. In a recent study by Canadian research group Cirano, 61% of investors who worked with an advisor strongly agreed that they had better-quality investments and higher returns because of their advisor's guidance

So what else does the data say about wealth management?

General Wealth Management Statistics

Wealth management is often associated with investment or financial advice. But it goes much further than simple investment recommendations. Wealth management is a holistic process that involves meeting with a client, analyzing their whole financial situation, and devising a plan with tailored solutions for each individual’s situation.

According to a recent study of the growing field, the wealth management industry is expected to expand from $1.25 trillion in assets under management (AUM) in 2020 to $3.43 trillion in AUM by 2030. That’s a nearly 175% increase in 10 years. It's even more surprising given tough economic times. Though many feared that COVID-19 would have lasting impacts on the financial industry, the instability COVID caused actually drove many investors to seek professional guidance because the true value begins to show when markets are volatile. 

This remarkable growth is due in part to the higher number of high net worth individuals (HNIs) working with a wealth manager, but also the success and interest of people at all asset levels working with wealth managers and various types of financial advisors to improve their finances.

Examples of Statistics for General Wealth Management

A study by the International Longevity Centre UK on the value of financial advice showed that HNIs who were advised by a wealth manager accumulated 17% more in liquid financial assets than their peers who did not receive financial advice.

The study also found that advised HNIs had 6.7% more savings and were almost 10% more likely to have equity investments in the market than their peers who didn’t have financial advice.

Another statistic from the study is even more telling. Among investors who weren’t HNIs and described themselves as “just getting by," the individuals who received financial advice accumulated 39% more liquid financial assets than their peers. 

Client and Advisor Statistics

A wealth manager does so much more than provide financial advice. Wealth management is a process, and during the stages of wealth management, an advisor will get to know their client’s full financial situation.

Wealth managers reduce their client's stress levels by taking on the burden of active portfolio management, as well as major tax, estate planning, and retirement considerations. This holistic approach is one of the main factors that differentiates wealth managers from financial advisors. In a recent survey by Orion, 61% of investors with an advisor felt they had peace of mind.

Examples of Statistics for Clients and Advisors

In a study done by the Certified Financial Planner Board of Standards, investors were surveyed on their concerns about a recession. The study found that 67% of investors who were working with an advisor believed they were prepared to weather a recession. In contrast, only 32% of investors who were managing their own money felt confident about their chances.

Seventy-seven percent of investors felt confident that their advisor would successfully manage their finances in a recession. There was a marked increase in optimism in investors who worked with a financial professional, and they generally agreed that their household was better prepared for future economic turmoil because of the guidance their advisor provided.

There are also signs that younger and less wealthy investors are beginning to understand the value that financial advisors provide. In a 2022 Fidelity Investor Insights Study, 63% of millennial and Gen Z investors agreed that working with an advisor was the key to financial success.

Technology and AI Statistics

Technology and analytics are becoming an increasingly important part of every industry, and wealth management is no exception. Wealth managers have access to powerful tools that can analyze your portfolio and your financial situation and help your advisor make better, data-driven decisions. For example, a financial independence analysis uses a probability model that projects your patterns and portfolio against 1,000 possible market outcomes.

AI has emerged as a powerful component of cutting-edge technology, and it’s shaping the future of the wealth management industry. Experts believe that AI will be able to optimize asset allocation, detect fraud faster, and streamline tax analysis. The appropriate adoption of this technology can empower your wealth manager to focus on helping you make strategic decisions and live better as opposed to spending most of their time in a spreadsheet crunching numbers or making trades that enable your plan.

Examples of Statistics for Technology and AI

Simple but effective technology like e-signature software has been adopted by 92% of wealth managers, and virtual meetings and electronic communications have increasingly become the norm.

But wealth management technology goes far beyond Zoom calls. New portfolio management tools can dig deeper than ever before. Robotic process automation (RPA) can handle routine tasks and allow wealth managers to focus on the bigger picture. 

But there is a downside to emerging technology. The recent rise of so-called "robo-advisors" can signal an alarming trend depending on your situation. A Deloitte report found that there were over 100 robo-advisory firms in 15 countries, and it's estimated that by 2025, robo-advisors will manage around $16 trillion in AUM.

While robo-advisors may be able to make investment recommendations based on algorithms or assist those early in their saving and investing track with budgeting, it’s a far cry from the holistic and proactive solutions that a wealth manager can provide when your needs outpace plug-and-play options. The best solution for crucial wealth management tasks will always include a combination of powerful technology and human expertise.

The Impact of Wealth Management

There is substantial data to support the role wealth managers play in guiding their clients' financial lives. A savvy wealth manager is worth their fees because they can provide better returns, more financial security, and better peace of mind.

If you’re thinking about working with a wealth manager, reach out to an advisor to learn about how they can help. 

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Plancorp started with a unique philosophy: Always put your clients’ interests ahead of your own, and you’ll build a successful business. That was in 1983, but the sentiment still drives every decision we make. After 40 years of helping individuals, families and business owners plan for financial independence, our commitment to serving as financial life advocates is stronger than ever. More »