Asset Managers in Wealth Management: Early Steps for a Successful Transition

Assets under management are soaring to record highs, but asset managers find themselves at a critical juncture. Despite AUM surging, structural challenges and operating costs are compressing margins. In order to drive profitability, leading asset managers are investing in a new avenue for growth: offering wealth management services to high-net-worth clients.

The rewards of transitioning from pure asset management into holistic wealth management promise to be sizable, but achieving lucrative outcomes hinges on getting the transition right.

Since different asset managers encounter different challenges in their transition journeys, the questions below can help crystalize priorities:

• Have you fully modeled the true cost and time-to-profitability of entering wealth management, including technology build, staffing, compliance infrastructure, and advisor ramp‑up?
• Can your current technology support goals-based planning, tax optimization, and a modern client portal? Or would it require extensive customization and ongoing investment?
• Beyond compensation, do you have a clearly articulated advisor value proposition, beyond compensation, that can compete with top RIAs and wirehouses?
• Have you assessed your operational and compliance readiness specifically against retail wealth standards, not just institutional or product distribution standards?
• If clients were to experience your brand through a wealth relationship tomorrow, would that experience be intentional, consistent, and differentiating?

Asset managers that can answer “yes” to these questions are well positioned to pursue wealth management on their own. Those that cannot may still have a viable path forward but the model, timeline, and risk profile will matter far more than the ambition itself.

Let’s take a closer look at the pain points illuminated by these questions and the choices asset managers face in addressing them.

Reducing Time-to-Market Without Enterprise Rebuild Risk

Serving HNW clients requires the right technology. Your wealth platforms should empower advisors to provide the tailored, personalized engagement that sophisticated clients expect, including tools for proposal generation, risk modeling, customer relationship management and digital client portals. Unfortunately, legacy systems built for institutional portfolio management fall short of high-net-worth demands. That leaves asset managers facing two choices: either they commit to internal builds or they invest in a third-party platform with purpose-built wealth infrastructure.

As they weigh their options, asset managers should consider their budgets and their timelines. Internal builds tend to span three to five years before comprehensive platforms are fully operational and meet wealth management standards. The cost of building a platform over several years, combined with the costs of years-long delays in providing offerings for HNW clients, can severely impact the return on investment of an internal build. Not surprisingly, just 4 to 5% of asset managers choose to build wealth management systems internally.¹

Instead, many turn to wealth business providers for help. Asset managers who join shared wealth management platforms benefit from shared platform economics. It’s significantly less expensive to work with a service provider who offers key capabilities at scale than to develop those capabilities alone. In addition, asset managers don’t have to endure years-long delays (and incur the associated costs) of offering what their HNW clients need; platform providers can provide swift and efficient onboarding and training. In other words, asset managers can launch critical wealth management capabilities without building any of them, and they can do it fast.²

Monetizing HNW Relationships Beyond Products

HNW clients come with diverse financial needs: balancing wealth growth with wealth preservation, planning for multiple wealth goals, pursuing tax optimization strategies, navigating trust and estate planning and more. In the last decade, those needs have only grown more complex, prompting expansion among practices serving HNW clients: they averaged 12 services in 2024, up from 10 in 2017. This means asset managers promoting an investment-led model are already falling short of clients expectations.

Offering the products and services necessary for HNW needs isn’t necessarily the biggest obstacle for asset managers; rather the key challenge often lies in delivering those products and services consistently. Achieving consistent delivery at scale requires methodology and workflow infrastructure, including standardized planning processes, advisor training, specialist support, and documentation.

A wealth business provider can equip asset managers with full advice architecture: planning processes and standards, advisor enablement and coaching, tax, estate, trust and lending capabilities, and goals-based planning tools. As a result, asset managers don’t need to build methodologies from scratch and can focus, instead, on leveraging those methodologies to reliably deliver the services that clients expect.

Competing For Top Advisors Without Compensation Inflation

The tightening talent market threatens to thin the ranks of advisors at asset management firms. With well over 100,000 advisors retiring in coming years, workforce growth is at an anemic 0.3%, and the failure rate for first-year advisors hovers just above 70%.2 Altogether, this indicates that talented advisors have their pick of institutions and the flexibility to ignore lesser offers.

More often than not, compensation alone isn’t the answer. Rather, a differentiated platform can offer a compelling incentive for advisors. High-caliber, planning-oriented advisors — the ones who drive HNW growth — evaluate platforms on technology, depth of planning capabilities, practice management support, succession planning infrastructure, and the value proposition they can articulate to prospective clients.

Fortunately, working with a wealth business provider can help. The right provider can offer access to a differentiated platform with strong onboarding and transition support, helping make asset managers competitive with top RIAs and wirehouses in attracting top advisors.

Preventing Margin Erosion From Retail Compliance Overhead

The regulation of wealth management is categorically more complex than that of institutional or product distribution. And compliance requirements in the space are only intensifying, with governments implementing more rules for anti-money laundering, AI governance, consumer protection and third-party technology oversight.³

In addition to regulatory complexity, wealth management businesses are also contending with operational complexity in areas such as trading, billing and onboarding. Such complexity compounds over time, driving sustained cost pressures: Compliance costs alone can account for 1.1-1.7% of total costs, rising as high as 2.5% for the largest firms.⁴

Successfully managing regulatory and operational complexity requires comprehensive infrastructure. Key facets of such infrastructure include retail compliance and supervision, best interest standard documentation and oversight, billing and fee transparency systems, advisor and client service centers and ongoing regulatory monitoring. Installing such infrastructure requires resources and staffing typically not found in-house at most asset managers.

Experienced wealth business providers, however, can offer extensive support to meet asset managers’ compliance and operational needs, providing an operational backbone for everything from custodial operations to client onboarding. Such services can empower asset managers to offload a substantial amount of day-to-day complexity, freeing them to focus more bandwidth on core competencies.

Scaling Wealth Offerings Without Diluting Brand Equity

The strength of a brand can make or break a financial firm. It can mean the difference between thriving as a respected name in the financial services landscape or being absorbed into a larger firm as M&A activity continues to sweep through the industry. In fact, EY's 2025 Global Wealth and Asset Management Outlook identifies brand as an increasingly important differentiator as profitability pressures rise.

The importance of branding can leave asset managers hesitant to embrace outsourcing models. Some harbor concerns that working with wealth business providers can entail ceding brand identity. However, the right collaboration can elevate the level of service that an asset manager provides HNW clients while also reinforcing the strength of their brand. Specifically, a collaboration where the asset manager brand remains front and center, elevated by the reputation of LPL as their provider. The asset manager’s firm name and market identity are preserved while it focuses on touchpoints and efforts that actually drive perception. Armed with the resources they need, advisors can engage with clients more effectively, offer high-quality advice, and convey values that can all serve to strengthen brand reputation.

As clients experience brand moments that matter, shining through their advice and service quality, the outsourced capabilities that help support such moments operate with the provider working quietly in the background.

A Successful Transition Begins With the Right Support

A smart platform strategy, comprehensive infrastructure for holistic advice, talented advisors, skilled compliance and operations management, and strong brand identity are all building blocks for a smooth transition to wealth management. In each of these areas, the right provider can offer crucial support and help asset managers lay the groundwork for a wealth management business that excels in attracting and serving today’s HNW clients.

With more than 30 years’ experience in retail wealth management and as one of the industry's leading wealth management platforms, LPL Financial is distinctly positioned to help asset managers capture new opportunities in today’s financial services landscape. By taking the right steps early on — and working with a trusted provider to do it — asset managers can position themselves to scale a wealth management business and services for HNW clients. In doing so, asset managers can demonstrate that their growth doesn’t have to stop at AUM; it can be just the beginning.

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