Experienced Financial Advisors Wanted
The current economic downturn has led to a decline in assets under management and a corresponding drop in revenue for firms in the financial planning and advice industry. It has also led to a reduction in new potential revenue inflows into funds under advice due to a projected decline in disposable income.
Since industry profitability and financial advisor productivity (due to spending more time reassuring clients) are expected to decline, experienced financial advisors currently are in very high demand.
Seasoned financial advisors are in high demand since they are more likely to acquire new revenue inflows of funds from baby boomers seeking estate planning and retirement services and from new clients seeking better asset management. They are also more productive, have higher assets under management, and produce significantly lower training costs.
Most importantly, experienced financial advisors generate large amounts of revenue from well established client bases by providing complex services to both high net worth and corporate clients – market segments that generate over 57% of the US financial planning and advice revenue.
Factors such as retirement and industry recruitment cut backs in early 2000 have contributed to a shortage of seasoned financial advisors; although employment in the financial planning and advice industry has been growing.
Likewise, instead of hiring and training more inexperienced advisors with lower assets under management and fewer clients, firms within this industry decided that it was more attractive to acquire advisors through acquisitions; contributing to the consolidation that has been taking place in the financial planning and advice industry.
Recently, consolidation has also occurred to reduce costs via greater economies of scale due to the addition of teams (groups of advisors serving clients), call centers, and/or online access to advisory services.
Since the fortunes of this industry are tied to the wealth of the population (which is expected to take time to recover), what else can firms do to control costs and overcome a shortage of experienced financial advisors during this period of declining revenue?
Kenrick Chatman is a top-line and profit growth authority who writes articles on industry analysis and the selling process. Feel free to read about other industries by visiting his industry analysis blog.
