Introduction
The US wealth management market is vast, complex, and ever-evolving. With approximately $47 trillion in assets as of 2023 and a CAGR of 11.2%, it remains an attractive and competitive sector. However, navigating this industry requires an understanding of its segmented nature, shifting asset allocations, technological advancements, and the evolving role of financial advisors. This article explores current trends, vendor challenges, and opportunities in the wealth management space.

The structure of the US wealth management market
Wealth management in the US is not a monolithic entity; rather, it consists of multiple segments that operate differently. Broadly speaking, these segments include:

• Broker-dealers: traditionally commission-based but increasingly shifting towards advisory models. The largest broker-dealers, AKA wirehouses, have traditionally been the leaders in technology innovation. Smaller broker-dealers need to rely on correspondent clearing firms for innovation.
• Registered Investment Advisors (RIAs): offering fiduciary advice with a strong focus on personalized financial planning. Similar to the broker-dealer segment, the largest of RIAs are defining distinct enterprise architectures, while the long tail of small RIAs have to rely on RIA custodians when it comes to technology innovation.
• Bank Trusts: providing wealth management services within banking institutions.

Each of these segments has its own procurement processes, regulatory environment, and client expectations, making market entry and expansion a strategic challenge for firms.

Shifting asset allocations and market dynamics
A notable trend in recent years is the shift from brokerage to advisory services. Historically, assets under management (AUM) grew at twice the rate of net new client assets, reflecting a strong trend toward fee-based advisory services. Additionally, the market is seeing an increased broadening of its service model (as shown in the recent Q4 2024 report from Bank of America Merrill Lynch)

• Multi-product strategies: Around 62% of wealth management clients also engage in banking and lending services.
• Alternative investments: These have tripled in popularity compared to five years ago.
• Digital engagement: Approximately 85% of clients interact with their wealth management services through digital channels.

The evolving and expanding role of financial advisors
The scope of financial advisory services has broadened significantly beyond traditional investment planning. Advisors are increasingly expected to provide holistic guidance, including:

• Family counseling
• Elder care planning
• Travel and healthcare advisory

This evolution has led to a shortage of time and resources, making efficiency and technology-driven solutions more critical than ever. Advisors must balance personalized service with scalable solutions to cater to a broader client base.

Vendor trends in wealth management: challenges and opportunities
Wealth technology (WealthTech) vendors face unique challenges in entering and scaling within the market. Key barriers include:

• Inertia: Large firms are resistant to change due to existing technological investments.
• In-house solutions: Many wealth management firms build their own technology solutions rather than relying on third-party vendors.
• Market saturation: The biggest players often have multiple vendors for similar functionalities, making differentiation crucial.

To succeed, vendors must clearly define their competitive advantage and determine where they fit within the value chain – whether as deep specialists, integrators, or ecosystem enablers.

The challenge of adoption
Technology adoption remains a significant hurdle. Firms must move beyond initial adoption to fostering advocacy, where users actively promote and push for continued investment in new technologies. Key adoption challenges include:

• Resistance from advisors: Many advisors opt out due to time constraints, existing preferred tools, or skepticism about new solutions.

• Integration difficulties: New technologies must seamlessly integrate with existing systems to gain traction.

• Enterprise vs. RIA adoption: Many vendors start with RIAs but struggle to transition into the enterprise market, which has more complex needs and procurement processes

The rise of integrated wealth platforms
One of the most significant shifts in the industry is the move toward integrated wealth platforms. Over the past two decades, firms have optimized technology within specific business lines. Now, the trend is shifting toward platform-wide strategies where:\

Firms consolidate operations into a single, integrated platform.

• Vendors must ensure their solutions align with these evolving platforms.
• Outsourcing plays a growing role, with firms leveraging third-party platforms rather than developing everything in-house

This transformation presents a major opportunity for vendors that can position themselves as essential components of these broader platforms.

Understanding client needs and competitive positioning
To succeed in the wealth management market, vendors must:

• Understand their differentiation: Overpromising or trying to be everything to everyone dilutes credibility.
• Identify real client pain points: Firms must assess whether they are solving an urgent, unmet need.
• Consider market readiness: Understanding the stage of the buyer’s journey is critical to sales success.
• Conduct rigorous market research: Vendors must evaluate whether their solution is unique or if competitors already offer similar functionalities.

The importance of feedback loops and continuous improvement
Engaging with end-users and incorporating feedback is crucial for product success. Wealth management firms and vendors should:

• Actively listen to client concerns: Resistance to a product may indicate usability issues rather than a lack of need.
• Demonstrate responsiveness: Firms that adapt based on feedback build stronger client relationships.
• Leverage advisor engagement: Some firms, such as Merrill, have successfully used advisor input to refine their offerings.

Conclusions
The US wealth management market is dynamic, with shifting asset trends, evolving advisor roles, and increasing technology integration. Success in this market requires a deep understanding of its segmentation, adoption challenges, and the strategic role of technology. For vendors, differentiation, integration with existing ecosystems, and responsiveness to client needs will be key to navigating and capitalizing on these trends in the years ahead.

Contributors:

Name: Alois Pirker
Title: CEO and Founder
Company: Pirker Partners
Email: alois@pirkerpartners.com
LinkedIn: https://www.linkedin.com/in/aloispirker/

Name: Kendra Thompson
Title: Founder
Company: Epok Advice
Email: kendra.thompson@epokadvice.com
LinkedIn: https://www.linkedin.com/in/kendrathompson/