Professionally managed money in the US grew to more than $21 trillion in 2004, reflecting a compound annual growth rate of 7.9 per cent between 1995 and 2005, according to Boston-based research house .
A Cerulli research report titled Evaluating Asset Manager Addressable Marketplaces released late last month said that asset managers had done a remarkable job of gathering assets from both individuals and institutions over the past decade, but that they might have difficulty in securing similar levels of growth over coming years.
It said this was because there was simply a smaller pool of investable assets upon which to draw, and that asset gathering was increasingly becoming a take-away game as the asset base swelled.
The Cerulli report said that asset growth had favoured retail investors over the 10 year period, with retail assets growing at a compound annual growth rate of 10.4 per cent, compared to 5.9 per cent for institutional clients.
“As of year-end 2004, institutional clients accounted for $10.72 trillion and retail clients accounted for $10.70 trillion in total assets under professional management in the US.
“As advice is increasingly critical to the distribution of asset management, unaffiliated, third-party distribution increased significantly in both the retail and institutional markets.
“Approximately 64 per cent of total retail assets under management came through unaffiliated distribution, up from 60 per cent in 1999, while 50 per cent of US institutional client assets came through third parties, up from 46 per cent in 1999,” the Cerulli report said.
Looking at retirement incomes, the report said that defined benefit plans represented the bulk of retirement assets in the US, accounting for around 42 per cent, while asset growth in defined contributions plans and individual retirement accounts had far outpaced defined benefit plans.
“Although in decline relative to other retirement segments, the sheer size of this asset pool warrants attention from US asset management firms,” the Cerulli analysis said.
It said that the waning importance of the defined benefit plan within the retirement continuum had affected the private sector more acutely than the public sector, as public plans had been less willing to shift retirement burdens to employees continuing to offer defined benefit plans.
The report said that the need for advice solutions was omnipresent.
