AUM of independent advisors to surpass wirehouses

Part of the growth is coming from a downsizing of the wirehouse channel: Four wirehouses have shed almost 7,000 financial advisors during the past two years (13 percent of their sales forces). And estimated 12 percent of wirehouse and regional broker/dealer brokers are leaving their firms for other firms or to start their own firms each year.

The report notes that break-away brokers have shorter tenures than the average financial advisor (11 years versus 14 years). Break-away brokers also have higher assets under management than the average financial advisor ($243 million versus $231 million) and higher revenues than the average financial advisor ($1.2 million versus $1.1 million).

The survey finds that 25 break-away broker aggregators have emerged. Geneos Wealth Management, VSR Financial Services and High Tower Advisors are the leading break-away broker aggregators with 71, 30, and 18 acquisitions, respectively. High Tower Advisors is the leading break-away broker aggregator in terms of assets under administration with $19.0 billion.

Among the report’s additional findings:

• There are 20,500 fee-based financial advisors, including 10,900 registered with the Securities & Exchange Commission;
• Fee-based financial advisors have gathered $3.0 trillion assets under management, including $2.5 trillion at SEC-registered fee-based financial advisors;
• The number of fee-based financial advisors will reach 19,009 by 2016, up 20 percent since 201;
• Fee-based financial advisor custodians’ net profits will increase to $4.2 billion by 2016, up 250 percent from 2011;
• The average rep firm has grown its client base by 5 percent per year; growth has stagnated for the larger firms;
• Fee-based financial advisor custodian assets under administration will increase to $14.0 trillion by 2016, up 250 percent from 2011;
• Fee-based financial advisor custodians’ revenues will increase to $28.0 billion in 2016, up 250 percent from 2011;
• Fee-based financial advisor custodians’ net profits will increase to $4.2 billion by 2016, up 250 percent from 2011.