Asset and Wealth Management Trending Themes

We are pleased to bring you the tenth edition of "The Monthly Market Pulse - Trending Themes in Asset and Wealth Management."

This edition delves into three pivotal trends significantly shaping the asset and wealth management sector:

1. A New Financial Crisis Await Americans as Retirement Savings Shortfall Reveal Disturbing Trend: This trend discusses how Americans are facing a growing retirement savings crisis, with over half fearing they will outlive their savings and most middle - and lower-income retirees relying heavily on Social Security. Financial firms are responding by launching innovative income and investment products to help close the widening retirement gap.
2. Scale or Specialize: The Mandate for Survival in Wealth Management M&A: This part examines the rapid consolidation in wealth management industry, driven by private equity and technology investments, resulting in dominant mega-platforms and shrinking numbers of mid-sized firms. Survival now requires firms to either scale aggressively or specialize in niche services, as staying in the middle has become untenable.
3. Strategic Shift: Unlocking Value Through Tokenization of Money Market Funds: This section investigates how asset managers are rapidly adopting tokenization to modernize money market funds, enabling faster, cheaper, and more transparent transactions while expanding investor access. With major institutions like Goldman Sachs, BNY Mellon, and BlackRock leading the shift, tokenized MMFs are emerging as high-quality collateral and a key driver of financial innovation

These interconnected trends underscore a dynamic environment where evolving client expectations, a focus on comprehensive service, and a fundamental shift in investment vehicle preferences are collectively shaping the opportunities and challenges for Asset and Wealth Management firms aiming for future growth. This collective evolution signals a profound transformation across the sector, pushing firms to rethink traditional models and embrace new approaches to remain competitive and relevant.

A New Financial Crisis Await Americans as Retirement Savings Shortfall Reveal Disturbing Trend

Introduction

• The retirement savings landscape is evolving amid a widening savings gap fueled by rising costs and a growing number of competing financial priorities for individuals and families
• According to Goldman Sachs’s annual retirement survey & insights report published in Oct 2025, 58% of respondents (working and retired Americans) believe they may outlive their retirement savings. This concern known as longevity risk has emerged as a key issue for many individuals, underscoring a gap between present financial confidence and the long-term sustainability of retirement funds. Despite favorable market conditions and higher account balances, a substantial portion of the workforce remains worried about potential shortfalls in their future income
• In addition, a recent Vanguard report on retirement outlook released in Oct 2025, states that only the top 30% of baby boomers by income are financially prepared for retirement. Many low- and middle- income baby boomers will rely heavily on social security, which highlights the urgent need to address the depletion of the social security trust fund

Setting the Context: The new economics of retirement emphasizes the need for strategies that account for income volatility, escalating costs, while harnessing benefits of prudent portfolio design

• Retirement income sources are pivotal in determining how retirees transform their accumulated savings into steady, sustainable cash flow. Insurance-based products, such as annuities, offer guaranteed income and often yield higher payout rates compared to traditional systematic withdrawal approaches
• Individuals who have access to innovative products (such as TDFs with private market strategies), personalized retirement plan demonstrate significantly higher savings-to-income ratios compared to those without one, across both workers and retirees. This suggests that, at similar income levels, planners are more effective at accumulating and preserving wealth

Industry Response & Adaptation: Retirement providers are looking to arrest retirement savings shortfall by offering innovative product lines which provide personalized & superior portfolio returns

• In Jul’25, MissionSquare (a recordkeeper with ~$65B DC Assets) teamed up with Income America to offer participants an in-plan guaranteed lifetime income solution. Beginning at age 65, participants can choose to receive 5% of their base income every year
• In Sep’25, Goldman Sachs and T. Rowe announced a partnership to launch new public-private investment products. The firm intends to promote the following solutions:

1. Personalized Advice Solutions and Advisor Managed Accounts: Collaborating to deliver a scalable platform for advisors and other RIAs to offer managed retirement accounts at scale (in-plan & out-of-plan). Integrating retirement planning and advice from the firms into the T. Rowe Price recordkeeping and individual investor platforms
2. Target Date Funds (TDFs): Incorporate private market strategies from Goldman Sachs
3. Model portfolios: Introduce a series of co-branded portfolios incorporating direct indexing, ETFs, mutual funds, and private market vehicles

Evalueserve Perspective

• Retirement providers could build in-plan income solutions, giving participants the option to convert a portion of their balances into income streams within defined contribution plans
• AWM firms could Integrate alternative investment strategies, including private equity and real estate, which may offer higher long-term growth and improved diversification compared to traditional asset classes

Scale or Specialize: The Mandate for Survival in Wealth Management M&A

Introduction

The wealth management industry is undergoing a structural transformation characterized by unprecedented consolidation among both Registered Investment Advisors (RIAs) and Independent Broker-Dealers (IBDs). This M&A surge is driven by private equity investment, competitive infrastructure demands, and the relentless pursuit of scale.

This trend is moving at a record pace, accelerating the shift toward large-scale platforms:

• RIA Consolidation and AUM Growth: RIA M&A activity surged in Q3 2025, culminating in 125 deals and $1.2 trillion in transacted AUM, pushing year-to-date activity up 44%, as per Echelon Partners’ 3Q25 RIA M&A Deal Report.
• PE Catalyst: The same study highlights that Private equity (PE) firms remain the primary catalyst for market aggregation, with 231 PE-backed RIA deals recorded year-to-date, already surpassing the full-year 2024 record of 215.
• IBD Consolidation: In the IBD space, the top 10 firms now control nearly 80% of all assets, underscoring continued consolidation, as per Cerulli Associates.

Setting the Context: The M&A activity is structurally changing the market, driven by powerful economic factors and resulting in distinct channel dynamics.

Consolidation Drivers and RIA Expansion: Echelon Partners notes that the strategic acquisitions involving PE-backed buyers now account for 75.4% of all deals in Q3, up 8 percentage points from Q2. This capital inflow fuels the RIA channel's expansion:

• Record Deal Volume: 345 RIA deals were recorded through Q3, already surpassing the full-year total for 2024.
• Rise of Mega-Platforms: The market saw 13 mega-deals involving sellers with $20B+ in AUM, signaling the establishment of platform-scale RIAs capable of competing across multiple markets.

IBD Channel Contraction: According to Cerulli Associates, the IBD channel is experiencing intense contraction as firms seek massive scale to absorb rising regulatory and technological costs.

• Firm Count Decline and Dominance of the Top 5: The number of IBD firms has dropped sharply from 124 in 2014 to just 79 by end-2024. The top five IBDs - LPL Financial, Ameriprise, Osaic, Raymond James, and Commonwealth, now hold 57% of the IBD asset market share, up from 49% a decade ago.
• Technology Barrier: Larger IBDs are investing heavily in technology, compliance infrastructure, and advisor support, creating significant competitive barriers for mid-tier firms.

This dual-channel consolidation is structurally reshaping the industry into a barbell model. The market is increasingly dominated by mega-platforms (large, integrated RIAs and IBDs focused on efficiency and infrastructure) on one end, and highly specialized, niche specialists (boutique firms focusing on specific demographics or asset classes) on the other.

Industry Response & Adaptation: Leading firms are making aggressive strategic moves to define their position on the 'barbell.'

• RIA Mega-Mergers Creative Planning and SageView (announced in Oct’25, expected to close in Dec’25): Creative Planning’s acquisition of SageView created a $640 billion AUM platform, combining retirement plan consulting with wealth management to serve both institutional and retail clients. Corient’s Double Alliance (announced in Sep’25, expected to close in first half of 2026): Corient, backed by CI Financial, announced a dual acquisition strategy to form a $430 billion UHNW platform, positioning itself as a global leader in bespoke wealth solutions. Mercer Advisors and Singer Burke (Sep’25): Mercer’s acquisition of Singer Burke added deep tax and family office capabilities, reinforcing its $20 billion+ presence in the UHNW space.
• IBD Consolidation in Action LPL Financial acquired Commonwealth Financial Network (Aug’25) and Atria (Oct’24), rapidly expanding its advisor base and platform capabilities. Osaic (formerly Advisor Group) consolidated its subsidiaries and acquired Lincoln’s wealth business (May’24), reinforcing its position as a top-tier IBD.

Evalueserve Perspective

Based on the accelerating consolidation and the resulting 'Barbell Model,' firms must adopt one of two clear strategic paths to ensure long-term viability:

1. Embrace Extreme Specialization: Firms that cannot achieve mega-platform scale should focus on becoming highly specialized, niche providers (e.g., expertise in illiquid alternatives, complex trust planning, or specific client demographics like tech entrepreneurs). This allows them to command premium client value and fees that the large platforms cannot match.
2. Act Decisively on Scale: Mid-market firms currently caught in the "squeezed middle" must urgently decide to either secure a private equity partnership for immediate, aggressive scale expansion or intentionally niche down. Remaining in the middle, facing both rising technology costs and mega-platform competition, is strategically unsustainable.

Strategic Shift: Unlocking Value Through Tokenization of Money Market Funds

In the dynamic and rapidly evolving landscape of digital finance, asset managers are strategically embracing tokenization to modernize money market funds (MMFs). Tokenization converts fund ownership into digital tokens on a blockchain, delivering faster, more transparent, and operationally efficient transactions.

• A recent Calastone report projects the market for tokenized mutual funds to reach $600 billion globally by 2030, highlighting the growing momentum behind this transformation. Supporting this trend, the Financial Times reported that tokenized Treasury and MMF products surged by 80% in 2025, reaching a total of $7.4 billion, underscoring the accelerating adoption of blockchain-based financial instruments.
• Beyond market size, tokenization offers compelling operational benefits. An earlier Calastone study found that using tokenization and Distributed Ledger Technology (DLT) could reduce asset managers' operating costs by 23%. This translates to savings of 0.13% of Assets Under Management (AUM) and could lead to total industry savings of $135.3 billion across major fund structures (UCITS, UK, and US 40 Act funds).

Setting the context: Tokenized MMFs enables fractional ownership and 24/7 accessibility, allowing managers to reach a broader, global base of investors, including high-net-worth individuals and smaller institutional segments that were previously difficult to access.

• While the tokenisation ecosystem is still taking shape, one of the most powerful emerging use cases for MMF tokenisation is the deployment of tokenised MMFs as collateral to secure obligations, such as in derivatives trading or securities lending. This innovation has the potential to alleviate systemic liquidity risks during periods of financial stress by providing real-time settlement capabilities.

Industry Response & Adaptation: Asset managers are rapidly viewing the tokenized MMF trend as a major opportunity to modernize the infrastructure, reduce costs, and penetrate new client segments:

• July 2025: Goldman Sachs and BNY Mellon collaborated to allow institutional clients to access tokenized MMF shares on a private ledger using Goldman's GS DAP platform and BNY Mellon's LiquidityDirect. This pilot focuses on using tokenized fund shares as collateral.
• June 2025: Major crypto exchanges began accepting BlackRock’s BUIDL—the firm’s first tokenized MMF, originally launched in March 2024 in partnership with Securitize. The fund experienced rapid growth, surpassing $2 billion in assets under management within months, signalling strong investor demand for blockchain-based financial products.
• May 2025: BNP Paribas launched tokenized MMF shares in collaboration with Allfunds Blockchain, aiming to improve operational efficiency by enabling instant order execution, real-time fund data access, and faster settlements.

Evalueserve Perspective

To capitalize on this strategic shift, asset managers should focus on three key areas:

• Expand Collateral Utility: Actively position tokenized MMF shares as high-quality collateral within both the Decentralized Finance (DeFi) and Traditional Financial (TradFi) tokenization ecosystems (e.g., for derivatives, repo markets, or margin calls). This is key to expanding the client base beyond traditional fund investors.
• Establish Direct Distribution: Utilize blockchain technology to create new, direct distribution paths that can bypass some traditional intermediaries, further reducing costs. Managers should collaborate with leading blockchain platforms, tokenization technology providers (like Securitize), and digital asset exchanges for seamless investor access.
• Prioritize Education and Trust: Provide clear guidance and education on how tokenized MMFs function, their specific benefits, and how they fit into broader portfolio and collateral strategies. Transparent communication is essential for building trust and driving broader institutional adoption.

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Pratyush Prabhat, Mayank Buttan; Pankaj Aggarwal, Rishabh Hingar; Almas Akram ; Bhavna Matta ; Pallavi Sinha