It might be the best time to consider offering 401(k)s as a competitive differentiator. The latest research from global analytics firm Cerulli Associates finds that the industry’s total U.S. advisor headcount increased for the first time in nine years—by 1.1 percent. It means more individuals are offering vanilla, run-of-the-mill product and strategies.
“Many positive developments led to the headcount growth last year,” Kenton Shirk, associate director at Cerulli, said in a statement. “From the advisor perspective, there is a heavier focus on teaming and onboarding rookie advisors into multi-advisor practices. Advisors are eager to hire junior advisors so they can refocus their own efforts on their largest and most ideal clients. There is also greater awareness and concern about succession preparedness.”
“While all of this recent growth has provided some positive momentum, the industry is still not in the clear,” Shirk explains. Although there was an uptick in the number of advisors in 2014, Cerulli projects that the industry’s headcount will begin declining again in 2019 as advisor retirements increase.
Cerulli’s latest report, Advisor Metrics 2015: Anticipating the Advisor Landscape in 2020, focuses on trends in the advisor marketplace, including market sizing, advisor movement trends, advisor challenges and growth opportunities, and client relationships.
“In 2020, Cerulli believes that modest headcount gains will be trumped by a sizable uptick in advisor retirements,” Shirk continues. “The industry’s headcount will begin to decline once again at an even more pronounced rate than in the recent years.”
Cerulli projects that the industry will see a small increase in headcount over the next three years, but by 2019 there will be a sharper decrease as advisors exit the business to retire. To minimize the decrease in headcount, Cerulli recommends the industry begins laying a solid foundation to recruit and groom new advisors in the upcoming years.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.