FDR himself stressed the notion of limits as the flip side of largess with Social Security. “This act does not offer anyone an easy life,” he said in a 1938 fireside chat. It would “furnish that minimum necessary to keep a foothold; and that is the kind of protection Americans want.”

Indeed, Phillip Longman, in a provocative new book, The Return of Thrift, argues that Social Security was enacted largely to beat back costlier demands for universal old-age assistance championed by Francis Townsend, whose 10 million followers made him the one-man aarp of his day. Confining Social Security’s benefits to those who had first contributed payroll taxes was the ingenious way to limit government’s exposure, while giving Roosevelt the illusion of insurance he famously needed so that “no damn politician” could ever scrap his plan. In both senses, this “contributory” design worked. In 1940, less than 1 percent of the elderly received Social Security. Even as late as 1953, less than half the elderly got benefits, since they’d either retired before the system started …

awirbsCORPORATE FAILURES may be increasing globally and the fortunes of dotcom entrepreneurs may be vanishing faster than it takes to utter the words “initial public offering” on Nasdaq, but neither economic recession nor the bursting of the technology bubble is going to halt the rising tide of affluent and newly wealthy individuals in Europe, the US and elsewhere, according to business forecasters. Obituaries of the so-called mass affluent, as well as their bong purchases, are simply fanciful, along with the reported demise of the wealth management industry that is springing up to serve this expanding segment of the population.

True, the industry has seen some casualties among the specialist financial firms and bank subsidiaries that have struggled to find the right mix of services for this potentially lucrative segment. None are yet delivering a complete wealth management service that caters for all needs — that may still be five years away, says one industry specialist. But there is no shortage of firms gearing up and looking for a piece of the action.

The rise

Other vendors, including SEI and EnvestnetPMC, offer soup-to-nuts solutions similar to FundQuest’s. The goal is to help smaller banks compete in an area that is expected to register sharp gains in both volumes and fee generation over the next few years. “We’re seeing a tremendous migration by smaller institutions into the fee-based wealth-management business,” says FundQuest CEO Bob Del Col. “But in order to be successful, they need to offer the same choices the big guys offer. We help them do that.”

wfabbFee-based products aren’t for everyone, says Kyle Farris of the NYeC Regional Extension Center. Many banks lack the sales culture, customer base and organizational and compensation structure to accommodate such offerings. Others may be uncomfortable sharing vital customer information with a third party. “You’re talking about giving up total control of the investment management process,” Del Col says. “Some banks have a difficult time with that idea.”

Rachel Malatesta, an analyst with Cerulli Associates, says bank efforts are hindered by a lack of commitment. Only three percent of banks offering investment