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 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

                                      Recent Developments

                                      Mar 9, 2023 - New Organization Supports Individual Advisors
                                      • A new organization has formed to help financial professionals including registered representatives, associated persons, traders, bankers, and back-office staff. The Financial Professionals Coalition (FPC) is meant to be a resource for anyone looking for advice on leaving large brokerages and setting up their own advisory or broker-dealer firms, dealing with regulators, finding expert witnesses, obtaining licensing, or running a practice. Co-founder John Burris said that many organizations like the Securities Industry Financial Markets Association and the Financial Services Institute look out primarily for the interests of large brokerage firms. The FPC is primarily meant for planners who are registered with the Financial Industry Regulatory Authority as brokers and investment advisor representatives registered with the Securities and Exchange Commission and individual states, but it will also be open to back-office workers, insurance representatives, traders and virtually anyone else whose work touches on financial services.
                                      • The Securities and Exchange Commission approved a rule allowing a "restricted firm" designation to be affixed to broker-dealers that have run afoul of regulators too many times. Some financial planners and investment advisors may also act as a licensed broker/dealer or work with third party broker/dealers which sell financial or insurance products. These designations will show up in a prominent place whenever such a firm is searched for in the Financial Industry Regulatory Authority's BrokerCheck database. Regulators said their goal was to flag brokerages "that present a high degree of risk to the investing public." FINRA, the broker-dealer industry's self-regulator, first gained the ability to place the restricted label on firms in January 2022, but the designations were not released to the public.
                                      • Independent financial advisors (IFAs) and wealth managers are a target for criminals seeking to exploit weaknesses due to the intricate web of data they hold, according to Paul O’Leary of Financial Services Technology and Cyber Risk Assurance. It is not just the customer and advisor relationship that criminals are seeking to exploit, but also the other accounts that are interconnected. Many firms do not have dedicated teams to protect the information, presenting a potential weakness along any protective cyber chain. “Cyber criminals prey on IFAs and wealth managers as they know that data governance practices are typically weak, and many are undergoing significant change and transformation. This provides a potent cocktail of opportunity for an attacker,” O'Leary said.
                                      • Investing based on environmental, social and governance (ESG) factors continues growing but the effectiveness of the strategy is unclear. Vanguard Group researchers found no significant difference in returns between ESG and non-ESG funds over a 15-year period. Companies in ESG funds had worse compliance on labor and environmental rules than companies in non-ESG funds, a study from researchers at the London School of Economics and Political Science and Columbia University concluded. Former BlackRock asset manager Terrence Keeley said that the strategy has proved to be neither a reliable generator of returns nor a real catalyst for change. He argues that investors should shift money away from ESG indexes toward “companies with persistent environmental and social problems and engaging them to change.” Keeley was a BlackRock senior adviser who personally managed clients including the Bill and Melinda Gates Foundation and the University of Notre Dame’s endowment.
                                      Get A Demo

                                      Vertical IQ’s Industry Intelligence Platform

                                      See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                                      Build valuable, lasting relationships by having smarter conversations -
                                      check out Vertical IQ today.

                                      Request A Demo