Despite efforts to draw more people into this industry, the ranks of financial advisors just got smaller. A recent report by Cerulli Associates found that the industry shrank 1.9 percent to 287,119 advisors in 2013. Asset levels, however, are on the rise.
The only areas that experienced growth were the RIA and dually registered channels. These channels also experienced the strongest asset growth last year, at 14.5 percent and 14.4 percent, respectively.
“Advisors are drawn to the economic advantages and flexibility inherent in these models,” said Kenton Shirk, an associate director at Cerulli. “Much of this expansion results from advisor movement, rather than new advisors entering the industry.”
Across all channels, assets grew by 12.9 percent in 2013 to more than $14 billion.
MetLife dropped 2,111 advisors in 2013, which alone accounted for a 0.7 percent decrease in industry headcount. (Some of those advisors were likely part of the deal to sell its IBDs Walnut Street Securities and Tower Square to Cetera in April 2013.) Independent broker/dealers lost 6.8 percent of advisors, the largest of any channel.
Though Cerulli previously estimated that about one-third of the industry will leave by 2024, Shirk expects overall headcount to actually increase about 1 percent a year, at least in the short-term.
“Employee-based firms have reinstated training programs, and independent practices are now more likely to hire junior advisors as revenues increase with rising markets,” Shirk said.
Also helping headcount for the next five years is that only 4 percent of advisors plan to retire or leave the business. Beyond that, Cerulli said the industry will start to shrink again as 21 percent of advisors plan to retire in five to 10 years.
The four largest firms still dominate marketshare despite less growth than the RIA space. Cerulli reported that the wirehouses have the largest and most productive teams of advisors, which average $124.7 assets under management per advisor.