A list of new commandments for money management.
4 min
J. Pierpont Morgan would be proud that many of the historical tenets of the asset- and wealth-management industry still form the bedrock of how money is managed in modern times. The fund’s 150-year track record is a testament to our industry’s founding principle: While the world may change, clients’ desire for investment expertise and personalised service won’t.
With that in mind, here are 10 key themes that we look forward to helping our clients navigate in the future.
1) Price. Ever since I entered the asset-management industry, sceptics have warned that fee pressure will destroy profitability and detract top talent from the profession. Fees in every industry compress at some point. Successful firms of the future will thrive by either providing commodity-like products at scale for near-zero cost, or delivering hard-to-access insights and exposures that command a premium. Our industry must strive for continuous improvement on both ends of the spectrum.
2) Scale is a matter of survival. With compressed pricing, heavy regulatory controls, and immense spend on data, analytics, and risk-management tools, firms need a relentless focus on operational efficiency, a rigorous control framework, and a disciplined prioritization process around investments for the future. In this context, scale is key. Mergers and acquisitions and outsourcing of sub-scale and noncore capabilities to service providers will enable smaller firms to refocus their efforts back into their most important asset: talent.
3) Actively advising clients. If we learned anything from the Covid-19 crisis, it is the need for sound advice in volatile times. During that time, thousands of actively managed funds outperformed their passive alternatives across asset classes and portfolios. While markets may be efficient, manager selection is key and clients need guidance. The average industry return of a balanced portfolio over the past two decades was 6.4% annually, while the actual experience of the average retail investor was only 2.9%, a stark reminder of how critical hands-on advice is.
4) Impact and purpose. Portfolio managers and research analysts have become essential for investors seeking to make an impact in the world through their assets. Over 80% of surveyed CIOs expressed intent to invest in environmentally and socially conscious companies. Analyzing CEOs and their management teams is no longer just about inquiring about their financial and operational expertise and vision, but also about the impact they make on their communities and the planet. Rising demand for companies that drive positive change will create a virtuous cycle of asset allocation for good.
5) Personalization. Today’s investors want to be intentional, not passive, in investing. They care about taxes and want to overweight companies that can make a difference. They want to avoid whole sectors, or actively own and vote on a company’s strategic plans. Giving clients the freedom to pursue their very specific objectives in a highly customized manner will continue to drive innovation in our industry.
6) Stable and predictable incomes. Millions of investors around the world have come to rely on their investment portfolios as a stable source of income. With individuals enjoying longer life spans and more active lifestyles, especially during retirement years, asset managers need to adapt their strategies to provide for a stable and predictable flow of income every month. Along the same lines, saving needs to start at a young age. Today, less than 40% of Americans have enough savings to pay for an unexpected $1,000 expense in cash. It is our collective responsibility to educate and advise on what is required to cover all of life’s events and milestones.
7) Understanding China. The pandemic has highlighted the interconnectivity of the world and how important China is to supply chains and new innovations. Against this backdrop, it is irresponsible to be a fiduciary of client capital and not have a deep understanding of places like China. It is hard to imagine having a true grasp of competitive global forces without on-the-ground insights of the economies, cultures, and politics of re-emerging global marketplaces. After 100 years of being on the ground in China, J.P. Morgan is poised to become the first foreign asset manager to acquire full ownership of a Chinese fund manager, pending regulatory approval. That kind of commitment will contribute massively to our global research network.
8) Technology drives everything. To adapt to the velocity of progress and change, technology is providing our industry access, speed, and agility like never before. With more technologists than Google and Facebook combined, J.P. Morgan invests over $12 billion annually in technology to help empower our clients and employees to work faster and more seamlessly in ever-changing markets. We need to be forward thinking and have the ability to be a disruptor. Agile, collaborative partnerships between technologists and their businesses will drive innovation and speed to market at an exponential pace.
9) Access. With a global footprint and a full suite of investment vehicles, asset managers must continue to focus on enabling first-time investors to invest in previously inaccessible areas. We are finding ways to provide more opportunities, more choice, and more power to people. Investments once only available to the largest investors in the world are now being accessed by the everyday investor. Democratization of markets should create better outcomes for investors of all sizes.
10) A new flexibility. Our industry adapted quite seamlessly to a previously unimaginable work-from-home scenario. As such, increased flexibility will broaden talent pools and should promote greater diversity. While never losing the apprenticeship nature of our business, we should continue to find new ways of working with one another to generate even greater success.
In coming years, the industry’s winners will remain obsessed about their fiduciary responsibilities. As stewards of capital, the ability to leverage technology and scale to deliver the same extraordinary experience for every investor, with $100 or $100 million, is now within reach.
Reprinted by permission of Barron’s. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: May 14, 2021.
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A survey of people with at least $1 million in investable assets found women in their 30s and 40s look nothing like older generations in terms of assets and priorities
A survey of people with at least $1 million in investable assets found women in their 30s and 40s look nothing like older generations in terms of assets and priorities
2 min
Millennial women’s wealth is outpacing men’s as a new generation inherits and grows their assets at a wider scale than ever before, according to RBC Wealth Management.
In a survey of roughly 2,000 men and women with at least $1 million in investable assets, millennial women respondents had an average of $4.6 million, compared with $3.8 million for women of all age groups and $4.5 million for all men.
Inheritance is one part of the picture, as baby boomers are expected to transfer $124 trillion to the next generation, but so is the progress millennial women have made in the world of business, investment and lucrative professional careers as they close the gap with men.
“Millennial women are catching up, or have outpaced the males as far as their wealth building,” said Angie O’Leary, head of wealth strategies at RBC. “We know that’s coming from a more diversified set of investments, such as entrepreneurship, real estate and of course, investments [in financial markets].”
Millennial women, now in their 30s and 40s, tend to differ from earlier generations of women more than they do from men in terms of their source of wealth. While investments were the largest driver of wealth across all categories, millennial women cited business ownership, innovation, and executive roles far more than Gen X or boomer women.
More than 60% of millennial women cited business ownership and more than 40% mentioned executive roles, but neither exceeded 22% for either Gen Xers and Boomers. Younger women also grew their fortunes from professional sports or arts 39% of the time, compared with just 6% and 1% for Gen Xers and Boomers, respectively.
In terms of inheritance, the gap between generations was smaller. About 37% of men and 35% of women cited family money as a source of wealth overall, breaking down to 44% of millennials, 30% of Gen X and 33% of boomer women.
With women controlling so much wealth, their spending and investments as a group are evolving and extending into areas previously considered stereotypically male such as real estate, cars and watches, O’Leary said. “Women are starting to look a lot like their male counterparts when it comes to investments, real estate, philanthropy,” she said. “That’s a really interesting emerging female economy.”
In real estate, for example, single women made up 20% of home buyers in 2024 up from 11% in 1981, when the National Association of Realtors began tracking the data. By contrast, single men make up 8% of the market and have never exceeded 10%, according to NAR.
While men and women shared largely similar priorities overall in terms of well-being, relationships, legacy and personal drive, younger generations of women were successively more likely to value drive and personal power, and successively less likely to rank relationships and social bonds—though that could also be a function of age and stage of life.
“This generational shift suggests evolving societal norms and responsibilities, where younger women seek personal achievements, while older cohorts value nurturing connections and community stability, affecting their financial and lifestyle choices,” the report said.
