|No.100 January 1, 2006|
|Evolution of the US Retail Securities Market (Volume 1)
--Financial institutions prepare for retiring baby boomers--
There, where most social insurance systems such as pensions and medical insurance are already being handled by the private sector, the burdens of living expenses on retirees are much heavier than are those in Japan. Accordingly, there is an extremely high need for savings to support post-retirement living and their maintenance and management.
With this situation forming the background, when we see the household financial assets that are on deposit, we find a significant shift to securities investments among older people, in particular, baby boomers. This shift is considered to reflect an investment stance of "long-term investment" to support life after retirement.
In response, securities firms have shifted the focus of their services from investment services simply to build up assets to advisory services related to the utilization, maintenance and inheritance of assets, etc. with the aim of acquiring baby boomers as clients. Among these new services, securities accounts for which brokerage commissions are not charged, but for which fees are charged based on the balance of deposited assets, are successfully meeting the asset management needs of baby boomers. This is because such accounts can improve the client's outlook for the planning of funds.
In one type of these fee-based securities accounts, separately managed accounts (SMAs), which are called wrap accounts in Japan, the balance of account has been rapidly increasing in the United States. In particular, unified managed accounts (UMAs), which provide consolidated management for SMAs and other securities accounts, have facilitated the response by registered representatives of securities firms in expanding investment areas as well as offering baby boomers a wide array of asset management options. UMAs are expected to become the core product of asset management accounts in the future.