Money Management Firms Thrive, While Banks Struggle

Friday, 18 Oct 2013 09:59 AM

By Dan Weil

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At the same time that big banks are suffering from declines in mortgage lending and bond trading revenue, money management firms are gaining momentum amid growing assets, The Wall Street Journal reports.

Money managers are particularly benefiting from this year's surge by stocks, which has seen the Standard & Poor's 500 Index rise 23.3 percent, according to the paper.

BlackRock, the world's biggest money manager reported Wednesday that its profit surged 14 percent in the third quarter from a year ago, as assets increased to a record $4.096 trillion.

Editor’s Note:
New Video: Obama Plans to Redistribute Seniors’ Wealth

Charles Schwab reported net income soared 17 percent in the third quarter from a year earlier, while client assets jumped 13 percent.

On the bank side, JPMorgan Chase, Wells Fargo, Citigroup and Bank of America Corp. all reported revenue decreases for the third quarter.

"Trends within asset management are certainly getting better," Dan Fannon, a research analyst at Jefferies Group, tells The Journal. "Asset levels are up a lot because the market is up."

With asset levels up, money managers can rake in the fees.

One element of the money management business that concerns Vanguard Group founder John Bogle is that six firms, including Vanguard, control about half of the market. And "they are still coining money," he tells Pensions & Investments.

"It's actually kind of frightening what's happening. I'm not sure it's good for the industry or good for investors that one firm can be so dominant."

Editor’s Note: New Video: Obama Plans to Redistribute Seniors’ Wealth

Related Stories:

American Banker: Poaching Required in Wealth Management Business

Banks Seen as 'Not Safe Enough' Five Years After Crisis Started

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