Savings-to-Wealth Convergence: Don’t Forget Banks

The convergence of workplace retirement plan assets to wealth managers may also have room to run in a sector of finance beyond workplace retirement plans: U.S. banks.

According to a new report from consultancy Cerulli Associates, U.S. banks are often missing out on the chance to convert domestic savers into wealth management clients. In research released Wednesday, the firm noted that U.S. bank deposits have grown nearly 110% to $3.2 trillion, or 8% annualized, since 2013; meanwhile, wealth management assets have grown 81% to $739 billion, or 6% annually.

The data point comes even as workplace retirement plan advice has embarked on a major convergence into wealth management, with traditional retirement advisories building adjacent wealth practices and some wealth managers add on plan advisement. Cerulli itself has pointed out this convergence in analysis and client materials, calling on advisers to “seize the opportunity at the intersection of [defined contribution] and wealth management.”

In Cerulli’s research, the firm found a trend toward more customers only using banks for traditional services, not additional wealth advisement. In 2024, the number of clients using a mix of traditional banking services and wealth management fell to 44% from 70% back in 2017.

“We do believe that given the large dormant potential client base at banks (i.e., retail depositors), they’re well positioned to grow in the coming years so long as they’re able to 1) identify clients that are a good fit/have a need for more wealth management services and 2) have robust structures in place to incentivize/promote/facilitate referral activity from bankers to advisers,” Matt Zampariolo, a Cerulli research analyst and lead author of the analysis, wrote via email.

Banks can work to increase wealth clients by putting additional services front-and-center along with leveraging internal referrals across its division, Zampariolo noted in teh report.

“Internal referrals are a core competitive advantage of operating as an adviser within the channel and banks should implement best practices to incentivize this activity,” he wrote.

Fiduciary responsibility toward client needs will of course be part of discussions, just as it is when considering qualified plan clients transitioning to higher-fee wealth services. According to Cerulli, incentive programs such as one-time bonuses for referring a depository client to an adviser are the most popular among bank executives. That is followed by non-monetary incentives such as recognition programs.

“Banks have an irreplicable opportunity to be the first and final stop on an investor’s financial journey,” Zampariolo wrote.

Banks, similar to qualified retirement plan advisories, are sitting on very large asset pools. According to Cerulli, private banks account for about $3.6 trillion in client assets as of 2023, having added more than $200 billion since the end of 2022.