Just a little off the top, please. 

Edward Jones is the latest brokerage to trim fees in an industry that has long withstood the price wars that plagued other segments. Come October, one of the nation’s largest brokerages is shaving prices — albeit by just a hair — for its mass affluent clientele. Annual fees will shrink to 1.2% of assets under management, down from 1.25%, for customers that invest between $500,000 to $1 million with the company, according to filings. Minimum monthly fees tacked onto smaller accounts are also getting eliminated. 

An Edward Jones spokesperson said fee transparency is a top priority and that transitioning away from different pricing tiers helps the company offer “increased flexibility.” 

Party in the Back

We wouldn’t call it a fire sale, but any savings passed on to clients can lead to larger compounded returns. Fees tend to tick up for clients with fewer assets, and can decrease for wealthy investors. Edward Jones charges just 50 basis points for accounts over $10 million, according to reports. The company has nearly 20,000 advisors that handle some $2.1 trillion in assets, which puts it on par with powerhouse wires like Morgan Stanley and Merrill Lynch.

“On the surface, it appears that small cuts like this have the potential to attract more assets,” said Cecilia Williams, COO at the wealth manager Halbert Hargrove. “If it encourages an investor to regularly add to their account and stay disciplined, they can see the power of compounding at work over long time periods.”

The 1% fee has been a standard in the financial industry for decades, but not everyone is certain it will continue. Morningstar CEO Kunal Kapoor said market returns are expected to drop significantly over the next decade, which will put increased scrutiny on the value advisors provide their clients — and the fees that they charge them. “Are we crying ‘wolf’ again?” Kapoor asked in June. “Let me assure you of this: The wolf shows up eventually.”

High and Tight: While financial advisors haven’t been hit with the same fee pressures as other financial services segments (à la the fund industry over the past decade), firms are trying to stay competitive. In some cases, advisors are having to introduce additional services to justify the same rates. It’s the inverse of price cutting, but can still add extra value for clients. 

“Over the last decade, we’ve seen lots of headlines signaling fee compression, but what we’ve really experienced is the industry evolving to provide more value for their fees,” Williams told The Daily Upside.

Swiss wealth management giant UBS closed up some of its business lines in India about a decade ago, but it may be ready to take another shot at the Billionaire Raj.

The Swiss bank wants to expand its wealth management business in India and is considering buying a stake in a local firm to give it a foothold in the prized economic region, according to Bloomberg. With India’s economy and upper class growing, UBS won’t be the only foreign company scrambling to compete with home-grown firms.

Rupee Rush

India’s GDP is projected to add $730 billion annually through 2028, according to the Boston Consulting Group, and by the end of last year, India’s top 1% of earners owned roughly 40% of the country’s wealth, the highest concentration in six decades. Plenty of that wealth is being courted by local groups like ICICI, Kotak Mahindra Bank, and Axis Bank. But foreign investors are throwing their hats in the ring, too.

BlackRock agreed to a joint venture with India’s Jio Financial Services in July as a means of entering the country’s asset management industry. In 2022, Bain Capital acquired a roughly 25% minority stake in IIFL Wealth Management (now 360 One WAM), which recently raised $500 million for its debut secondary fund. And just this month, South Africa’s Sanlam said it will add a joint venture to its partnership with Shriram Capital Group to offer wealth and advice services in the subcontinent. It wouldn’t be out of the ordinary for UBS to go down the joint wealth venture route in India as it does the same with firms in China and Japan. 

Putting Up Numbers: If you look at India’s stock market, it’s no wonder wealth managers are ready to pounce:

• Just like UBS, local investors are also aggressively diving into India’s market. As of the end of August, assets in Indian mutual funds reached a record $794 billion, according to the Association for Mutual Funds in India.
• Proceeds from IPOs in India reached $4.7 billion in the first half of the year, a 127% increase from H1 2023, Ernst & Young reported. 
• The Sensex, the Bombay Stock Exchange’s S&P 500, and the Nifty 50 indices are up 13%, 21%, and 15% year-to-date, respectively. 

Also, China’s slowing economy and rising geopolitical tensions have caused businesses like Apple and Samsung to diversify beyond the Middle Kingdom, finding a new home for some of their operations in India.

It’s true: The rich really are getting richer.

Assets under management at family offices are expected to rise 73% to $5.4 trillion globally by 2030, according to a new Deloitte report. That’s in line with the wealth of ultra-rich families with their own investment offices, which is expected to top $9.5 trillion over the same time frame, a 189% increase from 2019. 

“The rapid rise in private wealth around the world is spurring demand for family office structures,” said Deloitte family office leader Christina Staples. The number of family offices is expected to grow from 8,030 single-family offices today to more than 10,720 in the next five years. 

“Affluent families want the ability to customize their family and wealth management services to match their unique needs, and family offices can cater to this by offering a range of bespoke services around tax and wealth planning, risk and investment management, family education, governance, and more,” Staples told The Daily Upside.

Moving On Up

The growth in family offices is a result of rising wealth concentration, the Great $84 Trillion Wealth Transfer, and fairly healthy markets for private equity and mergers and acquisitions, according to the report. And simply put, there are just more rich people in the world:

• UBS’ latest global wealth report found that by 2023 there were around 22 million people in America worth more than seven figures. The US alone accounted for 38% of all millionaires in the world.
• By 2028, the country’s number of millionaires is expected to grow by another 3.5 million, a 16% increase.
• The influx of new money around the world is changing the face of wealth, Deloitte said, with 41% of offices servicing first-generation families, those who originally created the wealth. 

Driver’s Seat: Women are set to inherit some $9 trillion over the next 20 to 25 years, and they are also taking on more leadership roles at family offices in the process. Women currently serve as the principals of 15% of family offices worldwide, Deloitte reported. Those figures are highest in Oceania and Africa, where women serve as principals for 22% and 21% of family offices, respectfully. They were the lowest in North America at 12% and the Middle East at 10%.