Industry insiders are alarmed by the overall decline in the U.S. broker population, despite data released by Cerulli Associates in late August that showed only a moderate pace of reduction.
Overall, there were nearly 338,500 producing advisors in 2004, but that number stood at about 320,400 at the end of 2010, Cerulli data shows. That represents a six-year compound annual growth rate of -0.9%. The most dramatic drop was between 2009 and 2010, when nearly 14,000 brokers left the industry. There has been some growth, though, in particular channels–most notably those that include dually registered advisors.
This yearly growth rate (or decline), however, should improve to -0.5% over the next five years, according to Cerulli. The research group projects that the U.S. advisor population should be about 312,250 by 2015.
“There’s been a shocking decline in the overall number of advisors–from about 338,000 to 320,000–at a time when Baby Boomers were adding and needing more advice,” said Chip Roame, head of Tiburon Strategic Advisors in an interview with AdvisorOne.
Missing from this data, Roame (left) points out, are figures for growth in the discount broker channel, whose members have capitalized on this overall decline.
The number of wirehouse advisors fell by about 10,000 since 2004 to 50,700 in 2010, while the figure for insurance-affiliated advisors declined by a similar amount over the six-year period to 89,100. In 2015, these groups could number roughly 44,000 and 85,000 respectively.
“The wirehouses and regionals are finding it difficult to replace advisors who retire or those with weaker franchises who’ve washed out of the business in recent years, said executive-search consultant Mark Elzweig in an interview with AdvisorOne. “It’s largely a zero sum game amongst major firms to recruit capable advisors or high-producing teams. The supply is limited.”
Still, Roame says the wirehouse channel continues to dominate the industry when it comes to both assets under management and sales (or fees and commissions) per rep.