Vanguard and Charles Schwab, the leading fully integrated product and distribution firms, experienced organic asset growth of more than 10% in the year to March 31, compared with all other firms, which had a combined organic growth of 2%, according to Broadridge Financial Solutions.
Broadridge's Fund Distribution Intelligence showed that firms with diversified and fully integrated product and distribution platforms are dominating asset gathering.
"A diversified product mix — index funds, ETFs and actively managed funds — combined with digital distribution in the form of robo-advice is a wining hand today, and gaining momentum," Frank Polefrone, senior vice president of Broadridge's data and analytics business, said in a statement.
"More and more firms are following this model of diversification, whether it is traditional distributors such as Edward Jones and Raymond James entering the asset management business, or asset managers such as Blackrock and T. Rowe Price establishing robo-advisor platforms. The move to a fully integrated approach of asset management, distribution and advice seems to be underway among large financial services firms."
Raymond James Financial recently announced it was buying Scout Investments and its Reams Asset Management division.
Broadridge's data showed that direct online (formerly referred to as "discount brokerage") was the fastest growing channel on a percentage basis for the last 12 months.
Propelled by the success of Vanguard's Personal Advisor Services and Charles Schwab's Intelligent Portfolios, the online channel's overall assets have skyrocketed by 61% in the past year, with ETF and mutual fund growth up 36% and 76%, respectively.
Broadridge noted that Schwab had recently reported that its two-year-old Intelligent Portfolios grew to $16 billion, while Vanguard's Personal Advisor Services reportedly exceeded $50 billion in assets by the end of 2016.
Growth Surges
The online channel currently accounts for some $500 billion in overall assets, according to Broadridge. In the first quarter, net new asset growth increased by $39 billion, or 8.6%.
The new data showed that online channel growth exceeded that of the independent and wirehouse broker-dealer channels on both a percentage and net-new-dollars basis in the first quarter of 2017, and was slightly behind the RIA channel, which had net new assets of $52 billion.
Passive products — index funds and ETFs — accounted for the majority of growth for both the RIA and the online channels.
Broadridge said the right mix of passive and active products was also affecting market share growth across all distribution channels.
Both Vanguard and Charles Schwab have two-thirds of their assets in passive products, with the remaining third comprising actively managed mutual funds — the exact opposite for the overall market.
