North American financial advisors had a very good year in 2017, enjoying record levels of assets under management and revenue production, deepening their client relationships and accelerating the shift toward asset-based fees.
But the news wasn’t all good, according to a new report from PriceMetrix, part of McKinsey & Co.
Advisors struggled to increase their client base, and prices continued their decline from both fee and transactional product lines.
PriceMetrix drew insights from its proprietary database of some two dozen North American wealth management firms that serve upward of 12 million retail investors with more than $6 trillion in assets.
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The study found that assets managed per advisor increased by 15% to a median $106 million last year, driven mainly by strong markets. The MSCI World Index grew by 22.4% in 2017.
This, in turn, resulted in a turnaround of multi-year declines in revenues, a year-over-year increase of 12% to a median $655,000 per advisor.
At the same time, new client growth was basically flat, ticking up to 7.6 new relationships per advisor from 7.5 in 2016. The top quartile of advisors added 17 clients on average, while the bottom quartile added just one.
Penetration of next-generation assets was dismal, as millennials represented just 2% of assets, the same percent as in the preceding three years. In contrast, baby boomer assets rose to 55% last year, from 48% in 2014. Gen X assets treaded water, rising by two percentage points over the same period to 9%.