New research from Cerulli Associates finds they have reason to worry, as advisor headcount is projected to shrink significantly in the immediate future.
“By 2017, the industry will shed more than 25,000 advisors, down to just over 280,000,” Sean Daly, an analyst at the Boston-based analytics firm, said in a statement. “This reduction is largely due to retirement without sufficient backfilling of new advisors, and to a lesser extent, trimming of advisors with insufficient production.
Daly adds that headcount losses “will accrue from the wirehouse, independent broker-dealer, bank and regional channels.”
After peaking in 2005, industry headcount has declined by more than 32,000 advisors. Losses were measured and dispersed by channel. The report adds that the industry contends with an emergence of competition and underwhelming client demand, causing firms to cut advisors.
Titled “Intermediary Distribution 2013: Product Distribution in a Shrinking Industry,” it finds the insurance channel accounts for the largest portion of the advisor population. In a silver lining for the independent advisor space, it finds the registered investment advisor and dually registered channels were the only sources of headcount growth in 2012, but together they amount to only 15% of the industry’s advisors. The independent broker-dealer channel experienced the largest market share change over the last few years.