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 465,700 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
Mar 9, 2024 - Firms Increase Prices
- Portfolio managers and investment advisors increased prices in December 2023 after steep cuts were made from August through November, according to the US Bureau of Labor Statistics (BLS). Labor costs increased during 2023 as industry employment and wages for nonsupervisory employees increased moderately, according to the BLS.
- The price of Bitcoin reached a record high in early March, continuing its rapid resurgence that began in late 2023. The digital token rose to $68,818 on March 5, well above its $44,000 valuation at the start of the year. Cryptocurrency watchers told CBS News that Bitcoin is soaring in part because demand is rising on so-called spot exchange traded funds (ETFs). The US Securities and Exchange Commission approved 11 spot Bitcoin exchange-traded funds in January 2024. A spot Bitcoin ETF allows investors to gain direct exposure to Bitcoin without holding it, according to CBS News. Unlike regular Bitcoin ETFs, in which Bitcoin futures contracts are the underlying asset, Bitcoins are the underlying asset of a spot Bitcoin ETF. Each spot Bitcoin ETF is managed by a firm that issues shares of its own Bitcoin holdings purchased through other holders or through an authorized cryptocurrency exchange. The shares are listed on a traditional stock exchange. Investors have deposited some $7.35 billion into the 11 different funds available since January, according to Bloomberg. Bitcoin's rapid rise has also helped push up the price of ether, Solana, and other popular cryptocurrencies.
- 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%.
- An artificial intelligence-powered investment platform has been approved by the Securities and Exchange Commission (SEC) as a registered financial advisor, becoming the first non-human entity to be regulated by the federal agency under the designation. Investment management tool Portfolio Pilot was officially registered as an investment advisor with the SEC under parent company Global Predictions. Global Predictions CEO Alexander Harmsen says the company spent the past year-and-a-half building a compliance program for Portfolio Pilot – which he notes is "completely software" with "no actual human involved in the actual giving of advice, evaluating the portfolios, looking at markets," etc. – and submitted it as a registered investment advisor through the same process that human financial advisors go through. Portfolio Pilot uses a combination of AI and Global Predictions' proprietary Economic Insight Engine to provide information for retail investors. The portfolio management tool has more than 13,000 users and $6 billion in assets on the platform, according to Global Predictions.
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