There are more than a few reasons to look forward to 2021. Here at Indigo Marketing, we feel that too. So we wanted to give you a sneak peek into what the financial advisor landscape may look like next year. Let’s start with what the most current trends are today.
What The Statistics Say
Right now, according to the Bureau of Labor Statistics, there are approximately 263,000 financial advisors in the United States. While data surrounding how many people actually use financial advisors is scarce, one recent survey suggested that only 17% of the survey’s respondents indicated that they used a financial advisor. If that statistic holds true across the board, this signifies that approximately 56 million Americans use financial advisors and each advisor has approximately 212 clients, on average. According to the Bureau of Labor Statistics, the median pay for financial advisors is $87,850 per year, with the average salary being approximately $121,770 per year. The average age of a financial advisor is estimated to be 51 years old in 2020.
As you know, fees for financial advisors vary depending on the investment amount, and the average fees this year ranged from $590 for smaller investors to $117,000 for mega-investors. The average advisor fee for an investment of $1 million was 1.02%, or $10,200. For an investment amount of $500,000, the average advisor fee was 1.05%, or $5,250.
From 2013 to 2016, the median assets under management (AUM) grew 6% from $86 million to $92 million. If this trend continues, by 2021, the median AUM for financial advisors will hover around $97 million.
As baby boomers continue to retire, financial advisors across the country have started targeting the younger generations, Generation X and millennials, to varying degrees of success. One recent study suggested that the scarcity of new relationships are undercutting AUM growth. In any case, the next decade will be critical for financial advisors to connect with younger generations, as baby boomers shift from saving to spending their assets, and interest from newer clients continues to wane.
However, the profession of financial advisors will continue to grow at an average pace, according to the U.S. Bureau of Labor Statistics. By the year 2029, employment of financial advisors will increase by 4%. This means at that time there will be 274,600 financial advisors.
According to one recent report, the number of independent broker-dealer firms has been in a steady decline for the past decade, resulting in 819 firms in 2018. Meanwhile, the number of RIA firms has increased from 9,538 to 15,645 over the same time period.
The Top In The Industry
The top five broker-dealers by AUM includes Fidelity Investments, Charles Schwab, TD Ameritrade, Edward Jones, and Raymond James. Fidelity boasts 8,200 advisors. Coming in second and third, respectively, Charles Schwab has 1,200 financial advisors and TD Ameritrade has 6,000. Edward Jones has 14,000 advisors, and Raymond James has 8,100 financial advisors.
According to Barron’s, the top five registered investment advisors (RIAs) includes Edelman, CIBC Private Wealth Management, Hightower Advisors, Creative Planning, and Mariner Wealth Advisors. Edelman serves just over a million clients and has a team of 332 financial advisors. CIBC has 8,110 clients and 130 financial advisors. Hightower boasts 37,890 clients and 178 advisors. Creative Planning has 252 financial advisors and 33,085 clients. Mariner Wealth Advisors has 346 advisors serving 23,500 clients.
Are You Ready For 2021?
Do these numbers excite you? With all the uncertainty that 2020 brought, it’s refreshing to have confidence that the financial advisor landscape looks bright for 2021 and beyond.
If you have any questions about your marketing strategy for 2021, schedule a free strategy session with our team. We’d love to help you put together a customized marketing plan that attracts your ideal client and keeps your business growing for decades to come.