The current economic downturn has led to a decline in assets under management and a corresponding drop in revenue for firms in the financial planning and advice industry. It has also led to a reduction in new potential revenue inflows into funds under advice due to a projected decline in disposable income.
Currently, there is high demand for experienced financial advisors due to an estimated decline in both industry profitability and financial advisor productivity (due to an increase in client reassurances).
Experienced financial advisors are in high demand since they are more productive, generate significantly lower training costs, and have higher assets under management. They also are more likely to receive new revenue inflows of funds from new clients seeking better asset management and from baby boomers seeking retirement and estate planning services.
Most importantly, experienced financial advisors generate large amounts of revenue from well established client bases by providing complex services to both high net worth and corporate clients - market segments that generate over 57% of the US financial planning and advice revenue.
A shortage of seasoned financial advisors exists although financial planning and advice industry's employment has been growing. Industry recruitment cut backs in early 2000 and retirement are factors that have contributed to the shortage.
Likewise, instead of hiring and training more inexperienced advisors with lower assets under management and fewer clients, firms within this industry decided that it was more attractive to acquire advisors through acquisitions; contributing to the consolidation that has been taking place in the financial planning and advice industry.
Consolidation has also taken place recently to decrease costs via greater economies of scale due to the addition of call centers, online access to advisory services, and teams (or groups of advisors serving clients).
The wealth of the population is expected to take some time to recover. Since the fortunes of this industry are interlaced with the wealth of the population; what other actions could firms take to control costs and surmount a shortage of experienced financial advisors?
Currently, there is high demand for experienced financial advisors due to an estimated decline in both industry profitability and financial advisor productivity (due to an increase in client reassurances).
Experienced financial advisors are in high demand since they are more productive, generate significantly lower training costs, and have higher assets under management. They also are more likely to receive new revenue inflows of funds from new clients seeking better asset management and from baby boomers seeking retirement and estate planning services.
Most importantly, experienced financial advisors generate large amounts of revenue from well established client bases by providing complex services to both high net worth and corporate clients - market segments that generate over 57% of the US financial planning and advice revenue.
A shortage of seasoned financial advisors exists although financial planning and advice industry's employment has been growing. Industry recruitment cut backs in early 2000 and retirement are factors that have contributed to the shortage.
Likewise, instead of hiring and training more inexperienced advisors with lower assets under management and fewer clients, firms within this industry decided that it was more attractive to acquire advisors through acquisitions; contributing to the consolidation that has been taking place in the financial planning and advice industry.
Consolidation has also taken place recently to decrease costs via greater economies of scale due to the addition of call centers, online access to advisory services, and teams (or groups of advisors serving clients).
The wealth of the population is expected to take some time to recover. Since the fortunes of this industry are interlaced with the wealth of the population; what other actions could firms take to control costs and surmount a shortage of experienced financial advisors?
About the Author:
Kenrick Chatman is a revenue and margin growth professional who writes articles on industry analysis and business development. Feel free to read about other industries by visiting his industry analysis blog. Get a totally unique version of this article from our article submission service
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