Global retirement assets will hit nearly $57 trillion by 2020, with slightly more than half of that total in North America, according to a forecast from PricewaterhouseCoopers.
Most of the growth will be in defined contribution plans, although the report said traditional pension plans will remain viable until mid-century. Total worldwide assets under management will top $100 trillion in the next six years.
That growth offers an opportunity to asset managers, but first will come changes in the way advisors operate. Those changes will include greater reliance on technology, streamlining of platforms and fees, and greater reliance on alternative investments, such as exchange traded funds.
In North America, pension fund assets are forecast to rise 5.7 percent each year to $30 trillion in 2020 compared to $19.3 trillion at the end of 2012. Retirement assets, the report said, came to $21.3 trillion in 2004.
The U.S. and Europe be home to the largest pool of funds, although Latin America and the Asia Pacific region will see annual growth of about 10 percent.
The expected growth in retirement assets will come from countries of “fast-growing GDP and prosperity,” the report said, and assets will rise as both developed and developing countries encourage workers to save for retirement.
A recent report from Towers Watson showed that pension assets for 13 countries equaled 83 percent of GDP at the end of 2013. In the U.S., it was 113 percent.
Wealth managers, PricewaterhouseCoopers said, will be under pressure as new skills will be needed to meet the needs of clients. As baby boomers age, they will need help in spending their retirement funds and transferring wealth to a younger generation.
The report said asset managers will need to maintain the trust of the general public and only those that avoid “attracting the ire of investors, regulators and policymakers” will be able to do so.