Trending Themes in Asset and Wealth Management
We are pleased to bring you the twenty-first edition of "The Monthly Market Pulse - Trending Themes in Asset and Wealth Management". This edition delves into three pivotal trends significantly shaping the asset and wealth management sector:
- Roth Takes Center Stage: 401(k) Plans Enter a New Savings Era - Roth 401(k)s are becoming a mainstream retirement savings feature as rising adoption and new catch-up requirements reshape plan design and administration
- Active Fixed-Income ETFs Gain Momentum as Investors Look Beyond Broad Bond Beta - Active fixed-income ETFs are gaining momentum as investors increasingly favor specialist, actively managed strategies over broad bond-market exposure
- Redefining the Advisor Value Proposition Through Outsourced Models and Tech-Enabled Portfolio Construction - Advisors are shifting from self-built portfolios toward outsourced models and technology-enabled solutions, freeing capacity for more personalized and holistic financial advice
These interconnected trends underscore a dynamic environment where evolving client expectations, a focus on comprehensive service, and a fundamental shift in investment vehicle preferences are collectively shaping the opportunities and challenges for Asset and Wealth Management firms aiming for future growth. This collective evolution signals a profound transformation across the sector, pushing firms to rethink traditional models and embrace new approaches to remain competitive and relevant
Roth Takes Center Stage: 401(k) Plans Enter a New Savings Era
Introduction
Roth 401(k) saving is moving from an optional plan feature to a central part of workplace retirement strategy. Growing participant adoption is converging with new catch-up contribution requirements, creating a significant operating test for plan sponsors, payroll providers, and recordkeepers
- Fidelity’s Q2 2026 Building Financial Futures report, published in Sep’26, found that 96.8% of corporate DC plans offered Roth contributions, while 19.3% of participants contributed to a Roth 401(k) and 52.1% of plans allowed in-plan Roth conversions (Sample size: 27,300 corporate DC plans and 25.8 million participants as of Jun’26)
- The findings show that Roth is becoming part of mainstream plan design. At the same time, the 2026 Roth catch-up requirement is increasing the need for accurate wage identification, payroll coding, contribution routing, and participant communication
Setting the Context
Three developments are accelerating the shift toward after-tax retirement saving and raising the operational stakes for the DC ecosystem:
- Growing participant use is making Roth increasingly relevant to plan design and engagement. Vanguard's How America Saves 2026 found that 98% of plans offered Roth contributions and 18% of eligible participants used them in 2025, up from 15% in 2021. Roth usage is particularly relevant among younger savers, reinforcing the opportunity for sponsors to incorporate Roth more prominently into plan design, education, and participant engagement (Sample size: About 1,300 plans and nearly 5M participants)
- Catch-up contributions are entering a new regulatory regime. In 2026, the general employee contribution limit for 401(k), 403(b), and governmental 457 plans increased to $24,500, from $23,500 in 2025, while the standard catch-up limit for participants aged 50+ increased to $8,000, from $7,500. Participants aged 60–63 can contribute an even higher $11,250 catch-up amount. These higher limits coincide with the SECURE 2.0 Roth catch-up requirement, increasing the importance of accurate compensation data and contribution processing, making accurate compensation data critical when determining which contributions must be processed as Roth
- Implementation cuts across multiple parts of the retirement ecosystem. Employers must align plan documents, payroll feeds, election logic, testing, corrections, and participant communications. Breakdowns between systems could create contribution errors and a poor participant experience
Industry Response & Adaptation
Retirement providers are increasingly helping sponsors navigate the convergence of changing participant behavior and growing regulatory complexity
- Fidelity (Sep'26): Used Q2 workplace analysis to benchmark Roth adoption, conversions, and participant behavior, giving sponsors data to assess plan design and communication priorities
- ADP (Jul'26): Updated its guidance on the IRS final catch-up regulations, urging employers to review plan design, Roth availability, amendment timing, and coordination between payroll and retirement systems
- Vanguard (Jun'26): Reported that 91% of plans had adopted the higher catch-up limit for participants aged 60-63 by year-end 2025, demonstrating sponsors' capacity to implement complex contribution changes at scale
Evalueserve Perspective
The competitive differentiator will increasingly shift from simply offering Roth to administering it seamlessly. For recordkeepers and plan sponsors, three priorities stand out:
- Strengthen payroll-to-recordkeeping integration: Create a shared payroll-recordkeeping readiness plan covering wage data, eligibility, contribution sources, error handling, reconciliation, and year-end reporting
- Make Roth easier for participants to understand: Use plain-language, targeted communications to explain why some catch-up contributions are directed to Roth and how after-tax contributions affect take-home pay and future withdrawals
Measure the participant experience, not just compliance: Track adoption, failed transactions, corrections, call volumes, and participant drop-off. These measures can identify operating gaps and show whether Roth features are improving tax diversification without adding avoidable friction
Active Fixed-Income ETFs Gain Momentum as Investors Look Beyond Broad Bond Beta
Introduction
The U.S. fixed-income ETF market is entering a new phase as investors move beyond broad Treasury and aggregate-bond exposure toward active and specialist fixed-income strategies. Asset managers are using the ETF wrapper to distribute capabilities such as securitized-credit analysis, municipal bond selection, short-duration management, and impact investing, providing access to differentiated fixed-income expertise with the liquidity and transparency of ETFs
- S. fixed-income ETF inflows reached $446B through 11 Sep'26, already exceeding the $439B recorded in full-year 2025, according to ETF Trends
- P. Morgan Asset Management reported that active fixed-income ETFs continue to gain share globally, capturing 36% of fixed-income ETF flows despite representing only 18% of assets (as of Apr'26). The firm also projects that global fixed-income ETF assets could surpass $7 trillion by 2030, with active strategies accounting for nearly 30% of the market
- Demand spans cash alternatives, investment-grade credit, international bonds, and core fixed income, highlighting broad investor adoption across fixed-income segments
Setting the Context
Several structural trends are driving adoption of actively managed fixed-income ETFs and expanding the role of ETFs within fixed-income portfolios
- Active fixed-income ETFs are attracting an outsized share of flows. According to ETF Data Watch (Sep'26), active strategies represented only 24.1% of fixed-income ETF assets but captured ~41% of monthly inflows, highlighting growing demand for manager expertise alongside ETF efficiency
- Investors are increasingly seeking differentiated income sources and risk-adjusted returns as interest-rate and credit conditions remain uncertain. Active managers can dynamically allocate across sectors, durations, and credit opportunities that broad-market bond indices may not fully capture
- The trend is also creating a new growth channel for traditional active managers. Capabilities historically offered through mutual funds or institutional mandates are increasingly being packaged into ETF structures to broaden investor access and distribution
Industry Response & Adaptation
- TCW (Sep'26): Converted its securitized-credit strategy into the TCW Securitized Income ETF (TIZE), providing investors access to mortgage-backed securities, collateralized loan obligations (CLOs), and other structured-credit sectors through an actively managed ETF
- Nuveen (Sep'26): Launched the Nuveen Impact Bond ETF (NUIB), combining investment-grade credit exposure with measurable environmental and social objectives, demonstrating how managers are differentiating fixed-income ETFs through specialized outcomes
- MFS (Sep’26): Introduced the MFS Active Short Muni Bond ETF and MFS Active Short Duration Income ETF, applying active credit analysis, security selection, and duration management across municipal bonds, corporate debt, and structured-credit sectors
- Rowe Price (Sep'26): Introduced the T. Rowe Price Securitized Income ETF, expanding its active ETF lineup and bringing institutional securitized-credit expertise into an ETF format
Evalueserve Perspective
The next phase of fixed-income ETF competition is likely to be defined less by access to broad bond beta and more by managers' ability to translate differentiated fixed-income capabilities into scalable ETF propositions.
- Expand specialist ETF capabilities: Asset managers may increasingly use ETFs to distribute securitized-credit, municipal-bond, multisector, and short-duration strategies more broadly
- Compete on outcomes, not exposure: Differentiation is likely to come from income, tax efficiency, downside protection, and sustainability rather than benchmark replication
Use ETFs as a strategic distribution vehicle: Rather than viewing ETFs solely as a product format, traditional active managers can increasingly use the wrapper as another distribution channel for established investment capabilities, helping broaden their potential investor base
Redefining the Advisor Value Proposition Through Outsourced Models and Tech-Enabled Portfolio Construction
Introduction
The wealth management landscape is undergoing a structural shift as financial advisors increasingly redirect their focus from manual portfolio construction to client engagement and planning services. As demand from wealthier client segments grows, advisors need to scale personalized advice while expanding into advanced areas like tax and estate planning
- As wealth professionals adapt to these changing dynamics, technology platforms are evolving to streamline workflows, optimize portfolios, and support the delivery of more personalized advice at scale
- Advisors now spend 59% of their time on client relationships versus 34% on portfolio construction, underscoring the growing importance of outsourced portfolio management, according to Escalent’s 2026 Advisor Brandscape report
Setting the Context
Recent research highlights a broader effort to improve operational efficiency while supporting increasingly personalized and evolving client needs
- Reliance on self-built portfolios declined from 52% in 2024 to 44% in 2026, while adoption of outsourced investment solutions continued to increase. More than half (54%) of advisors use asset manager model portfolios and 35% leverage third-party models provided by external firms, as per Escalent
- Additionally, GenAI adoption increased from 49% in 2025 to 68% in 2026, with advisors increasingly leveraging AI for productivity enhancement, client meeting support, investment research, and market insight summarization
- About half (47%) of advisors plan to adopt portfolio tax optimization technology, while 37% plan to adopt specialized estate planning technology within the next 12 months, highlighting growing demand for technology that supports more sophisticated planning services, according to Cerulli’s Americas Asset and Wealth Management report
Industry Response & Adaptation
The wealth management technology ecosystem is rapidly responding with platforms that automate investment processes and enhance operational workflows
- FinTurk (Sep’26): Launched PortfolioSolver and Vigil to automate portfolio construction, monitoring, and investment oversight, helping advisors reduce manual portfolio management and improve consistency and scalability across advisory practices
- Altruist (Sep’26): Introduced AI-powered financial planning capabilities within Hazel, enabling advisors to generate personalized financial plans. The solution demonstrates how AI is moving beyond administrative assistance into core advisory workflows
- AdvisorEngine (Mar'26): Introduced AdvisorEngine Portfolio Solutions, providing access to a model marketplace and integrated TAMP platform that helps advisors streamline investment management, improve operational efficiency, and scale advisory services
Evalueserve Perspective
To remain competitive, wealth management firms can combine holistic planning capabilities, target technology investments, and integrate advice delivery platforms to better serve high-net-worth (HNW) clients and scale personalized advice
- Capability-Led Differentiation: Advisors must differentiate themselves by shifting toward holistic planning capabilities by adopting tax optimization and estate planning technologies to better serve HNW clients with complex financial needs
- Technology Investment: Advisory firms should prioritize technology investments that strengthen financial planning services, helping them expand offerings and address increasingly sophisticated client needs
- Integrated Advice Delivery: Providers must seamlessly integrate model portfolios, AI-driven insights, tax optimization, and estate planning workflows into unified advisor platforms to enhance operational efficiency, improve consistency, and serve a growing client base more effectively
