Special report: 2010 annual top wealth manager survey

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Special Report: 2010 Annual Top Wealth Manager Survey

The top Wealth Managers are looking to restart growth, find new clients and new markets, and reinvigorate their strategy and their people.

Wealth Manager Web | July 8, 2010 | By Philip Palaveev
[pic]Managing a Top Wealth Manager today is a lot like driving a racecar--it is all about the art of knowing when to push the brake andwhen the step on the accelerator. A little too soon and you can crash, a little too late and you can be left behind. Just surviving is not enough--the top Wealth Managers in the U.S. are looking to restart their growth, find new clients and new markets, and reinvigorate their strategy and their people.

The 2010 Annual Top Wealth Managers Survey received 348 completed surveys from the nation'slargest independent wealth management firms. The respondents collectively manage $309 billion in assets under management (AUM), service 129,000 clients and employ 6,215 people.[pic]

Collectively, they influence a large portion of the high-net-worth client base and serve as thought leaders for their investment industry peers. What brings them together is the desire to excel at their professionand the ambition to achieve business excellence and meet the needs of their clients. The financial crisis of 2008 and 2009 took some clients, assets and opportunities away from them--the top firms are eager to regain what they lost and drive forward again.

Growth is vital for an advisory firm. Growth creates opportunity and opportunity attracts talented people. Talented people, in turn, attractmore clients and more opportunities. When the momentum is lost, the opposite becomes true--the lack of opportunities causes people to leave, and as people leave, capabilities and clients soon follow. The race is already on as to which firms will be able to restart their growth the fastest and thus create the most opportunity; they will be the ones that will be able to attract the most talent andconsequently see the most growth in the next cycle.

Assets under management (AUM), has already recovered from the lows in 2008 and early 2009, and on average firms have more AUM today than they have had in their history. As of the end of 2009 the average AUM for participants was $877 million--a 24% increase from the lows of December 31, 2008. Most of that recovery was due to market performancewith a relatively small contribution from business development: on average, the firms increased their client count from 352 to 367.

While the assets have returned to the pre-crisis level, revenues are slow to follow. On average, participating firms had $3,059,000 in revenue in 2009 compared to 3,198,000 in 2008. Staff productivity has not yet recovered, even though many firms went through staffreductions and painful layoffs.

The storm is over but the challenge is not. When asked about their biggest concerns today, firms overwhelmingly cite their ability to grow, the regulatory climate and productivity initiatives such as technology and operational support. The firms also recognize the importance of preserving their team and attracting talented employees again. The financial resourcesare there and very few firms are expressing concerns over profitability, in sharp contrast with the 2009 survey in which that was the overwhelming concern.

The executives of the Top Wealth Managers in 2010 and 2011 will have to find a way to:

? Time the expansion of staff and reinvestment in the firm with the recovery in the market. Revenues are returning but the volatility of the marketmakes all firms nervous about premature expansion.

? Manage employee issues brewing under the surface very carefully. In many firms, employees have not received bonuses and raises for two years. Firms that embark on growth early will have the ability to lure away the best talent that may be tired of waiting. They will have to take the risk of "pushing the gas pedal too early," though.

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