Advisors Saw Robust Asset Growth in 2017, but Struggled to Add Clients

The implications, in the report’s words: “While money is gradually shifting to younger generations, the lack of new account openings and the climbing average client age [64.2 in 2017] are early signals that without market appreciation, advisors could face significant headwinds in the future with respect to asset growth.”

PriceMetrix found that even as firms labored to bolster their client base, they served their existing clients in more ways. Sixty-one percent of households had multiple accounts with their advisor in 2017, an average of 2.9 accounts, up from 57% and 2.6 accounts in 2014.

According to the report, more advisors were working as part of a team, a practice wealth management firms have increasingly encouraged. Sixty-one percent of advisors teamed up in 2017, a five-point increase from 2014.

PriceMetrix said its previous research showed that teaming up had several benefits, including faster growth. From 2015 to 2017, teams grew revenue 8.8%, while solo practitioner revenue grew by 6.9%.

The report found that fee-based account pricing continued downward for both existing and new clients, a result of advisors lowering fees. For existing clients with assets of $1 million to $1.5 million, fees slid to 1.08% in 2017 from 1.16% in 2014. Similarly for new accounts in that asset range: 1.04% in 2017 versus 1.13% in 2014.

And the effect of lowering fees on revenue growth? Doesn’t work.

PriceMetrix found that the 30% of advisors that reduced fees between 2016 and 2017 attracted $6.9 million per advisor, while the 70% that maintained or increased prices pulled in $7.8 million.

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