Adviser pool continues to drain, losing 2% in 2013

But adviser ranks to grow slightly in near term, Cerulli says

Jan 22, 2015 @ 1:40 pm

By Liz Skinner

+ Zoom

The total number of U.S. financial advisers is still shrinking, but the decline in adviser ranks may have hit bottom for now, according to researchers.

Financial adviser headcount fell by 1.9% in 2013 to 287,119 advisers, according to the most recent data from Cerulli Associates. The research firm estimates about 5,500 advisers left the industry and were not replaced by new recruits, even as assets under management grew by 13% that year to $14 trillion.

MetLife's elimination of about 2,111 advisers from its ranks in 2013 accounted for a 0.7% decrease in headcount for the industry, the Boston-based research firm said.

The number of advisers with banks, wirehouses, regional and independent brokerages and insurance companies all have declined between 1.5% and 3.6% a year since 2008, Cerulli said in its first quarter 2015 adviser edition of Cerulli Edge, released Thursday.

(More: Wirehouses challenged as retention deals fade)

Registered investment advisers and dually registered advisers both experienced a boost in headcount in recent years, but much of it is due to “adviser movement rather than new advisers entering the industry,” the report said.

The ranks of RIAs have grown by about 1.8% a year since 2008, and dually registered advisers increased by 9% a year since 2008. The channels represent about 10% and 9% of the nation's pool of advisers, respectively, Cerulli said.

“It's not surprising that the number of advisers is down in the bank and brokerage channels because of the momentum of advisers moving to the independent space,” said Mindy Diamond, an industry recruiter with an eponymous firm. “But it's surprising that overall adviser headcount is down.”

In a break from former estimates that the financial advice industry will continue to shed advisers at least through 2017, Cerulli researchers predicted “a slight” boost in headcount of 1% a year "going forward."

Those expectations are based on efforts researchers see at employee-based firms to reinstate training programs, and expectations that independent advisers will be hiring more junior advisers as revenue rises along with investment markets, the report said.

Additionally, only 4% of advisers are indicating that they plan to leave the industry in the next five years, it said.

However, further down the road the adviser headcount would again be set to fall if efforts to bring more advisers into the business aren't stepped up.

In five to 10 years, about 21% of advisers plan to retire or leave the business, Cerulli said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Advisers on the Move

Featured video

Events

Creating client events with a 'wow'

Financial adviser Ryan Furstenau has turned his passion for Dodge Vipers into new clients. Learn about his event and how it has helped him prospect in a small community.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

How adviser salaries stack up to other jobs

Median compensation hovers just under $100,000 on the low end and reaches nearly $300,000 for bosses.

Finra ranking brokers in effort to crack down on industry's bad apples

All 634.403 reps have been ranked based on factors such as prior regulatory disclosures, disciplinary actions and employment history.

How to save retirement planning from tax reform

Losing big deductions, even in lieu of a larger standard deduction, may cause taxes to rise in retirement.

Advice firms in a tricky financial position

As revenue growth dips and salaries rise, nearly 90% of firms are at or near capacity.

In a turnaround, Wells Fargo Advisors sees slight bump in headcount

Racked by a scandal in its retail banking unit, Wells still managed to add 37 new advisers in the third quarter, a small number but an improvement nonetheless.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print