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.
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.