- Robos: It Is No Longer a Question of Whether but How to Use Them
- With Looming M&A Deals, Should Advisors Stay or Go?
Is the Solo Advisor the New Old School?
Half of the fastest growing metropolitan areas measured for population and investable dollars of individuals with more than $1 million to invest are located in those two states, according to Capgemini's U.S. Wealth report for 2015.
Wealth grew over 15% in Houston, 12.5% in San Jose, 12.4% in Dallas and 12.3% in San Francisco
Expect more of the same in 2016, says David Wilson, head of Capgemini Financial Services strategic analysis group.
"These markets are some of the most dynamic for wealth creation in the U.S.," Wilson explains. "They include the dynamic technology scene in the Bay Area and the robust economies we see in Houston and Dallas, which are not just about oil and gas. These markets are all benefitting from robust economic growth, low unemployment and strong performing asset classes such as real estate.
Following the Money: Cities Where Wealth is Growing Fastest
The bad news: Those numbers include increasingly younger clients. The long-term outlook for wealth managers who will deal with this youthful generation is "scary" because that group is less loyal to its advisors, says David Wilson, head of Capgemini Financial Services strategic analysis group.
The best news: Advisors can do something about it. Here's what younger clients want, according to Capgemini:
* Digital automated advice platforms.
* Access to credit and mobile applications.
* Digital interaction with their advisors.
* Diverse portfolios that include real estate and global investments.
* Attention to the social impact of their investments.
Strong valuations for RIAs, reliable cash flow, low interest rates and pent-up demand are also driving the market, according to industry executives.
Look for tech-savvy firms and RIAs with between $250 million and $500 million in assets to be targets, pursued by larger firms, roll-ups and private equity buyers.
Private equity firms are poised to snap up IBDs. Case in point: Lightyear Capital — which once owned Cetera and sold the large independent broker-dealer to RCS Capital for $1.5 billion in 2014 — appears to be on the verge of acquiring AIG Advisor Group.
Other big-time PE firms to watch for include Lovell Minnick Partners, Hellman & Friedman, TA Associates and Aquiline Capital Partners.
What does a fiduciary duty even look like or mean for a robo advisor? SEC Commissioner Kara Stein asked an audience at Harvard Law School in November.
"It will be interesting to see just how far broker-dealers will push the envelope to allow their advisors more freedom on social media," says Mark Elzweig, who runs a recruiting firm under his own name in New York. "Employee advisors need to be able to compete with independents and RIAs who have broader latitude.
Criminals are breaking into firms servers and lurking for weeks, even months. They harvest account numbers and other customer information, then either send realistic-looking emails or call advisors directly to request wire transfers or stock transactions.
In coming months, advisors must be clear with clients how the firm will handle cybercrime and who is liable after a fraudulent transaction. Counterfeit transactions are not automatically refunded. First, it must be determined if the security breach was the fault of the client, the bank or the advisory firm. Only then can the transaction be potentially reimbursed or reversed. Also, advisors must be especially wary of all phone calls that request an emergency transfer of funds.
Image: Charles Schwab