Choosing a financial advisory firm can be a difficult task, as there are thousands to wade through. Many have specific strengths and offer different ways to invest one's hard-earned money. It's always worth doing your research to know which suits your needs and risks best, but often choosing some of the largest financial advisory firms can be a good option. They have proven track records, a variety of products, and significant amounts of transparency.
The following five financial advisory firms operate with more than $1 trillion in total assets under management (AUM): BlackRock, Vanguard, Fidelity, State Street Global Advisors, and J.P Morgan Asset Management. Each of these companies is one of the best in the industry for different reasons, whether it be low fees and innovation, more than a century of dedicated financial management, or great customer satisfaction.
American investors can choose from thousands of financial advisory firms. The market is top-heavy, which makes sense; a well-known and well-respected name goes a long way in securing assets from families and businesses. It's no accident that these companies are the top dogs. They have worked hard to become so, and have provided consistent positive returns for investors. As such, potential investors can find reasons to like each.
These firms are so large that they offer a multitude of services for all types of clients. Some also provide a broad exposure to the market through the various mutual funds and exchange-traded funds (ETFs) they offer. Most investors will be able to find what suits their investment needs within the offerings of each of the firms.
BlackRock is the largest investment firm in the world. It manages $8.68 trillion in assets as of Dec. 31, 2020. The company has been a proponent of exchange-traded funds and it has gained popularity through its iShares funds that make up more than 30% of its AUM. The company is a powerhouse, operating in more than 30 countries with clients in over 100 countries.
Vanguard has been a revelation in the investment management world, especially since the turn of the century. Much like Walmart in the retail sector, Vanguard became king of the hill through cheap prices and a huge variety of offerings. The company is famous for its low expense ratios on funds and passive investment management.
With $7.2 trillion in total AUM as of Jan. 31, 2021, Vanguard is the second-largest advisory firm. The company lives by the mantra of lower prices and allows investors to keep more of their returns, and customers have responded by flocking to Vanguard in droves.
3. Fidelity Investments
Fidelity Investments earned its name in the brokerage and mutual fund provider spaces. It's fitting that Fidelity—a word meaning loyalty, support, and faithfulness—is one of the most highly rated investment advisory firms in terms of customer satisfaction and online support. The fund manages nearly $4.2 trillion in assets as of June 2021 and offers a variety of mutual funds for the benefit of all types of investors.
4. State Street Global Advisors
State Street manages $3.9 trillion in assets as of June 30, 2021. State Street offers investment management services to a broad swath of clients, including retail investors. It was one of the first proponents of exchange-traded funds and manages one of the most, if not the most, popular exchange-traded fund: the SPDR S&P 500 ETF (SPY). This exchange-traded fund tracks the S&P 500. State Street manages many funds under the SPDR brand name that focus on a variety of sectors, allowing investors to gain access to many areas of the market.
5. J.P. Morgan Asset Management
Founded by the legendary John Pierpont Morgan, J.P. Morgan & Co.—now JPMorgan Chase & Co. (JPM)—is perhaps the most important private financial institution in U.S. history. The firm is the largest bank in the U.S. and one of the biggest financial conglomerates in the world. Its CEO, Jamie Dimon, is one of the most celebrated financial professionals in the world, often found giving advice to the President and other world leaders.
It's no surprise that J.P. Morgan is among the top five largest financial advisory firms, given its track record and name recognition. Among its targeted advisory groups are other financial institutions, governments, pensions, businesses, and individuals. Its asset management division oversees $2.3 trillion in assets as of Dec. 31, 2020.