A new climate for wealth managers

From brokerages to independent broker-dealers to registered investment advisory firms, the wealth management industry had a banner decade from 2012 to 2021. Then came last year. The bull stock market ended. Bonds were a disaster. While higher interest rates in 2022 helped buffer some of the corporate pain by driving higher interest income, the time of easy growth aided by rising markets may be limited, McKinsey says.

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Meanwhile, in the new economic environment, cost-cutting is set to grow.

"The growth in the size and complexity of the industry's cost base represents a vulnerability for wealth managers," a new McKinsey study says. ”In a decade-long bull market, strong growth masked some underlying issues in the industry, and many firms have not capitalized on the opportunity to expand margins through more scalable infrastructure and new business models."

Read more: 7 steps for resilient growth in turbulent markets, from McKinsey

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