If only the Department of Labor’s new fiduciary rule were the only challenge facing advisors today — but it’s not.
According to a study released this week by PriceMetrix, part of McKinsey & Co., advisors’ average assets under management improved 6% in 2016 from the prior year and hit $92 million.
That’s where the good news ends.
Revenue per advisor — or average fees and commissions — decreased for the second year in a row: They dropped 1% to 583,000 in 2016.
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“This trend is particularly disturbing in light of the strong equity market performance during that period,” said Patrick Kennedy, chief customer officer of PriceMetrix, in “The State of Retail Wealth Management.”
Drilling down into the acquisition of new clients, the research finds that advisors reached “a new low” in 2016, with an average of only 7.5 new household relationships.
“There is very little growth in client relationships with Gen X and Gen Y. This is an early warning sign that advisors should pay attention to,” Kennedy explained in an interview with ThinkAdvisor.
“Some of these individuals are in their 50s and becoming attractive prospects,” he added. The issue for advisors, of course, is can they covert these prospects to clients.