Big Banks Rediscover Money Management

Money management may be dull, but it’s a coveted kind of dull. UBS is cutting back on investment banking as it focuses on overseeing wealthy clients’ assets. Goldman Sachs, JPMorgan Chase, and Wells Fargo, three of the five biggest U.S. banks, say they’re considering expanding their asset-management divisions. They’re looking to grab market share from fund companies such as Fidelity Investments. “Asset management is a terrific business,” says Ralph Schlosstein, chief executive officer of Evercore Partners, a New York-based boutique investment bank that last month agreed to buy wealth manager Mt. Eden Investment Advisors. “Asset managers earn fees consistently without risking capital. Compare that to other businesses in the financial services.”

Investment banking and trading revenue at the 10 largest global investment banks fell at least 17 percent in each of the past two years, according to data from analytics firm Coalition. The total money overseen globally by banks has consistently hovered at about $58 trillion for the last five years, meaning managing investor money accounted for a greater percentage of fees. The median share of net revenue from asset and wealth management for a sample group of banks tracked by consulting firm Johnson Associates increased to 28 percent in 2012 from 23 percent five years ago. The share contributed by trading declined to 43 percent from 49 percent over the period, and investment banking fell to 14 percent from 15 percent.