Experts Say Untapped Wealth Lies in Wait

Paul Schaeffer, managing director of Strategy & Innovation at SEI Investments has a few words for those folks who think the growth curve in the investment management industry has reached its apex: you're not looking nearly close enough.

In his opening address to the 2005 SEI Investments Executive Conference in Oaks, Penn. , yesterday, Schaeffer said smart investment managers should be positioning themselves today for the influx of Baby Boomer retirement money that will arrive tomorrow.

"Investment management is a great business to be in [and] it will get even better as the largest demographic cohort in history brings a flood of assets into the market and looks for new investment products," he said.

But at the same time, Schaeffer and his colleagues warned, firms must tinker with their business strategies, products and operations to meet a rapidly changing market.

For example, Chip Roame, managing principal of Tiburon Strategic Advisors, noted that the amount of investable assets held by U.S. consumers is expected to grow from $17 trillion today to more than $30 trillion in 2010.

Geoff Bobroff, president of Bobroff Consulting, added that the mass affluent population--those households with between $100,000 and $1 million to invest--has been largely untapped. Right now, he said, they're sitting on about $8 trillion worth of investable money.

"While this segment is off the radar screen of most advisors, who need bigger accounts to be profitable, it holds enormous potential for firms that can leverage information technology to provide quality, scalable advice," he said.

The executives also revealed that investment managers should bundle product offerings targeting the aging population; that they must take advantage of the maturing hedge fund market; and that organizational scale doesn't always equal competitiveness.