Managed Assets in Retail Channel Returning to Parity With Institutional

Core Insights - The retail channel for professionally managed assets in the U.S. is nearing parity with the institutional channel, driven by client demand and strong equity markets [1] - Retail client channels held $36.6 trillion in assets, while institutional channels held $37.1 trillion, marking a combined all-time high of $73.7 trillion for professionally managed assets in the U.S. [2][3] - The retail channel's resurgence is attributed to corporate defined benefit plans transferring assets to insurers and 401(k) savers rolling over assets into individual retirement accounts [3] Retail and Institutional Asset Management - The retail channel had previously surpassed the institutional channel in 2020 and 2021 but declined after the 2022 stock market pullback; however, analysts expect retail to overtake institutional assets again [3][4] - The year-over-year growth rate in 2024 indicates a return to long-term growth trends favoring retail channels, with expectations for continued growth as corporate DB plans pursue pension risk transfers [4] Subsegments Analysis - In the institutional channel, the largest subsegments include corporate defined contribution plans at $8.9 trillion, insurance general accounts at $8.7 trillion, and state and local government defined benefit plans at $5.9 trillion [4] - In the retail channel, the largest subsegments are direct investor platforms at $10.5 trillion, wirehouses at $6.1 trillion, and independent RIAs at $3.5 trillion [5] - The total independent and hybrid RIA channel is estimated at $5.9 trillion, with a caution regarding consolidation of assets to "mega firms" due to private equity-fueled M&A [5] Industry Trends - The asset management industry is increasingly focusing on serving the retail channel, particularly the RIA sector, with an emphasis on improving penetration of alternative assets [5] - Institutional client channels account for 61.5% of less-than-fully liquid alternative investments, while retail accounts for 38.5% [5]