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Total Number of Advisers Has Stagnated, Cerulli Reports
While AUM continues to grow, training, mentorship and succession planning could all help address the headcount stasis.
Retail adviser-managed assets hit $31.3 trillion in 2023, signaling continued growth. However, the total number of advisers has stagnated, with headcount increasing by just 0.2% over the last decade, according to the “Cerulli Report—U.S. Adviser Metrics 2024,” released earlier this month.
According to Cerulli Associates, the stagnation is in part due to ongoing practice consolidation, particularly among independent advisers, who have gained the most market share by assets. Independent RIAs have seen their share rise to 16% from 12% over the past 10 years.
To address the shift toward independents, broker/dealers must offer their advisers greater flexibility and technology, Cerulli recommended.
“However, 68% of all advisers [cite] the lack of time to implement and learn their firm’s technology as a moderate or major challenge in their practice,” according to a response from the Cerulli analyst team. “With that being said, any additional support and training brokers/dealers can provide to their advisers to help alleviate this challenge will be highly beneficial to all advisers. Broker/dealers must recognize that having competitive technology is a continuous investment and not a one-time solution.”
Adviser practices with at least $500 million or more in assets under management now control 67% of the industry’s total AUM, and half of these practices are considering acquisitions. Mergers and acquisitions continue to drive growth, with 48% of advisers working in teams.
While advisers in the wirehouse channel manage more than one-third of industry assets, that segment is losing advisers at the fastest rate in the industry. Over the next five years, wirehouse market share is projected to decline to 14% from 15%, largely due to gains made by the registered investment advisory sector.
Client Relationships
Overall, client satisfaction with advisers remains high. Cerulli found that 80% of clients expressed contentment with their advisers, primarily due to trustworthiness and the quality of service. Referrals from clients, friends and family constitute the largest driver of advisers’ new-client acquisition. Advisers differentiate themselves by offering unique investment strategies and comprehensive financial planning, though service offerings vary by channel and practice size.
Referrals remain a key growth tool for advisers, the report noted. More than half (55%) of new clients come from referrals, while 13% are referred by other professionals that serve as centers of influence, such as accountants or attorneys. Advisers typically offer an average of 7.1 different services, with wirehouse advisers leading the industry by offering 8.3 services, including advanced planning for high-net-worth clients.
The report also found that financial planning services are increasingly valued by investors, reflecting a broader trend toward more holistic advisory services. Currently, 48% of advisers offer comprehensive financial planning, with this figure expected to rise to 55% by 2026. Conversely, the proportion of clients receiving no planning services is set to decrease to 23% in 2026 from 30% in 2024.
Succession
Cerulli found succession planning is a growing concern among advisers in all channels. More than one-third of advisers (37%) reported expecting to retire or reduce their business involvement in the next 10 years, underscoring the need for strong succession planning and the recruitment of new talent.
However, 26% of advisers with less than 10 years until retirement remain uncertain about their succession plans. This trend is juxtaposed against data that found up to 71% of rookie advisers fail within their first five years in the business. Taken together, the data highlight the need for stronger training programs and mentorship to ensure the industry’s long-term success.
“We also asked rookie advisers about their level of satisfaction with firm support on some … training opportunities,” the Cerulli analyst team stated. “55% are very satisfied with their firm’s support in training on financial planning topics; 48% are very satisfied with their firm’s support in training on sales techniques; 50% are very satisfied with their firm’s support in training on investment analysis. Given that only about half of all advisers across all channels are very satisfied in the areas listed above, these should be a key focus for broker/dealers to continue to dedicate additional resources.”
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