Market for Wealth Management Compliance Systems 15% Jump by 2011

Investment advisors are expected to spend the most as they are among the fastest growing but most regulated group of advisors. But hedge funds are also likely to increase spending.


By Melanie Rodier
Wall Street & Technology
May 30, 2007

The market for wealth management compliance systems will jump 15 percent annually from today’s $178 million to $318 million by 2011, according to a new report from Boston-based Celent. Chief compliance officers (CCOs) at hedge funds, broker-dealers, institutional asset managers, retail financial advisers and trust companies all use automated compliance products to monitor and track their firms’ and individual employees’ compliance.Celent says registered investment advisers will spend the most on compliance systems as they make up the largest number of wealth investment firms and are among the fastest growing but most heavily regulated. Hedge funds, which may face heightened regulation, also are expected to increase spending on compliance systems, from $41.5 million to $78.8 million annually. In addition, compliance will become an essential component of primary back-office systems, such as trade order management systems, as well as e-mail surveillance and retention systems, workflow tools and document retention systems, the research firm notes.

According to Celent, CCOs are primarily using three types of compliance systems: trade compliance systems; operational risk compliance systems; and pure wealth management compliance systems, which track elements ranging from the suitability of client investments compared to objectives and risk profiles, to ensuring that gifts to clients are within regulatory parameters.

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