Financial Planners & Investment Advisors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 46,000 portfolio management and investment advisory firms in the US provide investment advice, develop financial plans to meet client goals, and manage portfolio assets. A company may also act as a licensed broker/dealer or work with third party brokers/dealers, which sell financial or insurance products. Firms may specialize in a particular client base, such as high net worth individuals, nonprofit organizations, or corporate executives.
Competition from Alternative Sources
Portfolio managers and investment advisors compete with a wide range of alternative sources, including banks, securities firms, mutual funds, insurance companies, accountants, online-only services, and clients themselves.
Online Management and Advice
Online-only portfolio managers, financial planners, and investment advisors are a hot market, generating impressive account growth and attracting millions in venture capital.
Industry size & Structure
The average portfolio manager operates out of a single location, employs fewer than 5 workers and generates $13 million in annuial revenue. The average investment advisor operates out of a single location, employs fewer than 5 workers, and generates $3 million annually.
- The portfolio management and investment advisory service industry consists of about 46,000 firms that employ about 496,000 workers and generate about $376 billion annually.
- The portfolio management and investment advisory service industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for over 55% of industry revenue.
- Large portfolio management and investment advisory firms include Morgan Stanley, Fidelity Investments, Goldman Sachs, BlackRock, Charles Schwab, Vanguard, Edelman Financial Engines, Hall Capital, Chevy Chase Trust, Ameriprise Financial, and Lazard.
- The industry includes national and regional firms, franchises, and independent operators.
Industry Forecast
Financial Planners & Investment Advisors Industry Growth
Recent Developments
Nov 14, 2024 - Advisor Attrition Increases
- Advisor attrition rates increased 7.5% in 2023, resulting in 9,600 advisors switching firms, according to Juan Cruz Garzón, COO and co-founder of enterprise AI firm Fligoo. This also amounted to over $100 billion in assets under management being transferred. Replacing a departed advisor is costly: Recruiting and training a replacement can easily cost 300-400% of the advisor’s annual production, not to mention the challenge of reestablishing rapport with clients, Garzón said.
- A significant portion of advisors who responded to a recent J.D. Power survey said that they might leave their firm in the near future. Among advisors who are more than two years away from retirement, 34% who work in an employee channel and 41% of those who are independent said that they might jump to another firm in the next year or two. Investment advisory firms will have to work harder to retain top talent, according to J.D. Power.
- The most commonly cited investment goals of people surveyed by consumer research firm Hearts & Wallets were not directly about investing. Forty-eight percent pointed to building an emergency fund, followed by 43% who said they wanted advisors to help them plan financially for a vacation. Behind those goals were having enough money to work less when older (39%) and being able to stop work fully in retirement (32%). People cited investing goals such as generating current income, capital preservation and capital appreciation about as much as they said they wanted financial planning around buying a new car or buying real estate, at more than 20%.
- Portfolio management and investment advisor industry employment and wages for nonsupervisory employees increased slightly during the first nine months of 2024, according to the BLS. Portfolio managers and investment advisors significantly increased prices during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS).
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