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Advisor Headcount on the Decline: Cerulli Study

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Despite the growing number of retirees, the total number of advisors is on the decline, says Cerulli Associates, in a report released early Tuesday.

“During the past year, advisor headcount has declined by 1.3% due to terminations, retirements and advisors exiting the industry by choice,” said Tyler Cloherty, associate director of the Boston-based consulting group, in the report. “We anticipate advisor headcount will continue to decline through 2016.”

The five-year compound annual growth rate for the independent channel, for instance, is -5%; when dually registered reps are included, the group’s growth rate becomes -2.7%.

Wirehouse firms have a -2.4% growth rate.

Other channels, though, have a better story to tell.

The bank channel is expanding at a 1.5% clip. And the RIA channel, for instance, has a 4.7% five-year compound annual growth rate. When independent reps are included, that number jumps to 4.9%.

The dually registered channel is doing even better, with a 5.3% growth rate.

“Few channels are delivering above-average organic headcount growth. The independent channel is benefiting significantly from advisor movement, but suffers as advisors exit the industry and retire,” Cloherty continues. “Wirehouses continue to lose significant assets from advisor movement and have fallen short in replacing talent.”

Still, experts like Chip Roame of Tiburon Strategic Advisors point out that the wirehouses still manage the bulk of client assets: $5 trillion in assets vs. $60 billion for the independent channel.

In the latest quarter, for instance, Morgan Stanley’s (MS) 16,284 reps had an average of $110 million in assets under management. Their yearly fees and commissions were $851,000 on average—a 5% jump from the earlier quarter and a 9% jump from last year.

For its part, independent broker-dealer LPL Financial (LPLA) said that assets under custody on its independent-RIA platform grew 72.3% to $46.7 billion as of March 31. These operations now include 199 RIA firms, compared with $27.1 billion and 152 RIA firms a year ago. Plus, the company expects about 20% to 25% of net new assets to come from the hybrid-RIA channel in 2013.


Read LPL Q1 Earnings Rise on Strong Hybrid-RIA, Other Growth on AdvisorOne.