The two trends have delivered a torrent of new assets to mutual fund managers, at the expense of traditional institutional managers. The need for advice has become a prominent concern of investors who worry about long-term retirement security, and the ability to provide advice, usually in the form of asset allocation guidance, is promoted as a value added service. The asset management industry's balance of power is liable to change as the relative importance of advice increases versus superior portfolio performance - but not necessarily to the benefit of the large distribution organizations. Fee-based advisors are assuming greater control over retail clients' assets and serve in turn as gateways to distribution organizations. Today the industry is characterized by strong growth as much as by differentials in growth rate between sectors.
Sectoral differences arise in part because assets flow from one sector to another.
Revenue growth in excess of asset growth rates. Retail investment formats attract funds that were otherwise held in personally directed brokerage accounts, bank savings products, or as liquid assets. Competitors for retail mutual fund business, whether in direct or load channels, have refined their ability to reach new clients. As a result, the demand for individual asset management services is increasing more rapidly than the aggregate of household financial assets. The concentration of retirement flows into defined contribution plans has come at the expense of defined benefit programs.