Across all channels tracked by Cerulli Associates, the financial adviser industry grew assets by 12.9% in 2013. The registered investment adviser (RIA) and dually registered channels experienced the strongest growth, explains Kenton Shirk, associate director at Cerulli, noting that advisers are drawn to the “economic advantages and flexibility inherent in these models.”
The findings are from the first quarter 2015 update of “The Cerulli Edge – Advisor Edition,” which also shows the RIA and dually registered channels are the only advisory channels that have experienced positive adviser headcount growth in recent years.
“Much of this expansion [for RIAs and dully registered advisers] results from adviser movement, rather than new advisers entering the industry,” Shirk says.
According to Cerulli, the overall industry headcount shrunk 1.9% in 2013. Moving forward, Cerulli predicts a slight headcount increase of 1% annually. Shirk says the potential turnaround in headcount losses will result from employee-based advisory firms reinstating training programs and independent practices hiring junior advisers as revenues increase with rising markets.
The broker/dealers, custodians, and asset managers that can effectively help advisers “tackle their pain points” will also have success attracting and retaining adviser partners, and thus client assets, the research finds. This trend represents both a challenge and an opportunity for advisers as they give up some control of assets to other investment services providers.
Cerulli’s analysis finds the growth rate for the wirehouse segment of the advisory industry, which Cerulli says continues to be dominated by “the four massive firms,” has been less robust than the RIA space. But large wirehouse firms continue to have productive adviser forces, Cerulli explains, even with growing momentum in the RIA segment.
“[The top four wirehouse firms] are now well positioned with the largest and most productive adviser forces,” Cerulli explains, “with average assets under management of $124.7 million per adviser.”
Cerulli finds MetLife dropped more than 2,000 advisers in recent years, and that decline accounted for a 0.7% drop in the industry headcount. Despite an aging workforce, only a small percentage (4%) of advisory pros indicates a desire to retire or exit within the next five years. Looking further into the future, however, Cerulli reports more than a fifth (21%) of advisers could retire within 10 years.
Information on how to obtain Cerulli research is available here.