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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 19,400 financial planning and investment advisory firms in the US provide investment advice and develop financial plans to meet client goals. A company may also act as a licensed broker/dealer or work with third party broker/dealers, which sell financial or insurance products. Firms may specialize in a particular client base, such as high net worth individuals, non-profit organizations, or corporate executives.

Competition From Alternative Sources

Financial planners and investment advisors compete with a wide range of alternative sources, including banks, securities firms, portfolio managers, mutual funds, insurance companies, accountants, online-only services, and clients themselves.

Online Financial Planning And Advice

Online-only financial planners and investment advisors are a hot market, generating impressive account growth and attracting millions in venture capital.

Industry size & Structure

The average financial planner or investment advisor operates out of a single location, employs 10-11 workers, and generates $2.4 million annually.

    • The financial planning and investment advisory service industry consists of about 19,400 firms that employ about 201,400 workers and generate about $47 billion annually.
    • The financial planning and investment advisory service industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for over 61% of industry revenue.
    • Large fee-only investment advisory firms include Financial Engines Advisors, Hall Capital Partners, and Chevy Chase Trust. Large financial planning and investment advisory firms that also provide asset management and other services include Ameriprise Financial and Lazard.
    • The industry includes national and regional firms, franchises, and independent operators.
                                      Industry Forecast
                                      Financial Planners & Investment Advisors Industry Growth
                                      Source: Vertical IQ and Inforum

                                      Coronavirus Update

                                      Apr 27, 2022 - Fidelity Investments Adds Bitcoin Option For Investors
                                      • Fidelity Investments will soon have a bitcoin option on its 401(k) plans, making the nation’s largest provider of such workplace retirement accounts the first to wade into the highly volatile crypto landscape. Fidelity, one of the largest managers of workplace plans, said employers can allow employee contributions in crypto of up to 20 percent per payroll cycle and investors can have up to 20 percent of their total 401(k) account value in a digital assets account. Employers would set the limit for their plans, so they could reduce the percentage.
                                      • Investors continued to pour money into their investment accounts in the third quarter of 2021, according to analysis of retirement savings trends by Fidelity Investments. The value of retirement accounts wavered a bit amid some market volatility in Q3, according to Fidelity’s Q3 2021 Retirement Analysis released in mid-November. The average IRA balance was up 15% year-over-year in Q3 2021 and rose slightly over Q2. The average 401(k) value increased 15% compared to Q3 2020 but was down 2% from Q2 2021. The percentage of workers with an outstanding 401(k) loan reached a record low of 17.3% in Q3 2021.
                                      • The coronavirus pandemic generated substantial new pockets of wealth as interest rates were slashed and stock markets rose to new highs. The wealthy getting wealthier has created strong demand for experienced wealth management advisors, according to Financial Planning. The pace of wealth creation is expected to outstrip employment growth in the financial planning industry. The number of millionaires around the world is projected to rise 50% over the next five years compared to the end of 2020, according to Credit Suisse Group. However, according to the US Bureau of Labor Statistics, the number of personal financial managers in the US is forecast to increase 5% between 2020 and 2030. Financial advice firms are turning to acquisitions to staff up instead of relying solely on recruiting new advisors to meet the anticipated boom in demand.
                                      • About a third of high-net-worth investors report their financial advisor hasn’t asked them about how the pandemic has affected their financial future, according to a recent survey by Absolute Engagement, a firm that tracks advisor-client experiences and engagement. About a quarter of wealthy investors said, “what is important to me has changed” during the pandemic, and 20% reported being worried about their financial futures. Nearly 15% of net-high-worth investors said they felt “overwhelmed” when they think about retirement, and 11% said they would likely need to work more. Absolute Engagement suggests advisors should prepare direct questions about the pandemic’s impact on clients’ goals, such as retirement timing, where they want to retire, and changes in lifestyle priorities.
                                      • About two-thirds of Generation Z adults say that they are optimistic about their financial futures despite the pandemic but feel that they could use more knowledge about financial preparation matters, including investing, retirement savings, and buying a home, according to a recent Bank of America survey. More than 25% of survey respondents said they contributed to a retirement account in the past year, and the same percentage invested in the market. About 70% said they added to the savings in the past year. A third of Gen Z adults rated their financial knowledge as low, and 40% of that group said they were unsure about how to gain more financial understanding.
                                      • Inflation led the list of top investment professional concerns for 2022, according to a Markets Live Global Survey, as reported by Bloomberg. Nearly a third of survey respondents said inflation posed the leading tail-risk for markets in 2022, with many tying inflation risks to central banks shifting monetary policy either too quickly or lagging behind. More than 25% of those surveyed said the coronavirus was the top risk, and about half of those cited the Omicron variant specifically. Many felt pandemic-related risks stem from the potential for government restrictions and central bank missteps in adjusting policy in reaction to the pandemic. Nearly a quarter of investment professionals felt geopolitical tensions pose the biggest market risks in 2022, including strife between China and Taiwan, and Russia and Ukraine.
                                      • The pandemic has contributed to a labor shortage that is affecting most industries, including financial planning and investment advice firms. More than 35% of independent registered financial advisors say finding talent is a challenge, according to the recent Schwab Advisor Services’ 2022 Independent Advisor Outlook Study. Of more than 700 independent advisors who custody assets with Schwab or TD Ameritrade, half are looking to find new hires outside the financial industry, including sales, communications, and technology.
                                      • A recent Nationwide Retirement Institute survey of employer-sponsored retirement plan participants and sponsors found that the pandemic has caused many women to have negative emotions when thinking about their current retirement plan status. Of women who stopped or put off contributing to their retirement plans, 45% say they are worried, 53% say they are frustrated, and 16% report being panicked. One-fifth of women surveyed said they felt they were on the wrong track for retirement, and an equal percentage said they would likely have to retire later than planned. However, women are taking action to maintain their retirement goals. Two-thirds of retirement plan sponsors said women are more likely than men to make changes to their retirement plans.
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