A Current Snapshot of Wealth Managers’ Investment

With so much of the conversation in the RIA space focused on robo advisers and passive investing, we decided to take a big picture look at the current wealth management landscape to uncover how prevalent some core approaches to investment management actually are.

From ADV filings, we selected established RIAs with $500 Million to $4 Billion in overall AUM whose client bases are primarily HNW individuals. From this universe of some 500+ companies, we classified each company’s investment approach into one of three categories:
• Proprietary Active Managers – companies who buy securities (e.g. stocks, bonds) directly to build customized portfolios
• Open Architecture Active Managers – companies that build portfolios using active external managers selected in an open architecture manner
• Passive Managers – companies that use primarily passive or index management
The results are shown in the table below. (Note: we were unable to determine the investment approach for about 20% of the companies in the universe we analyzed.)


Our data shows that active proprietary management still leads as the primary investment management approach among this group of mid-sized wealth managers. Open architecture, using mostly active managers is not too far behind, with passive managers still accounting for a relatively small 10% of companies and assets. Our conclusion is that there is room in the marketplace for multiple approaches to managing money as long as managers can build and defend the case for the approach they choose.