The U.S. investment industry’s total advisor headcount increased by 1.1% in 2014, the first increase in nine years, according to new research from Boston-based analytics firm Cerulli Associates.
“Many positive developments led to the headcount growth last year,” says Kenton Shirk, associate director at Cerulli. “From the advisor perspective, there is a heavier focus on teaming and onboarding rookie advisors into multi-advisor practices. Advisors are eager to hire junior advisors so they can refocus their own efforts on their largest and most ideal clients. There is also greater awareness and concern about succession preparedness.”
“While all of this recent growth has provided some positive momentum, the industry is still not in the clear,” Shirk adds, noting that Cerulli is projecting that the industry’s headcount will begin declining again in 2019 as advisor retirements increase.
Cerulli projects that the industry will see a small increase in headcount over the next three years, but it says that by 2019 there will be a sharper decrease as advisors exit the business to retire.
“In 2020, Cerulli believes that modest headcount gains will be trumped by a sizeable uptick in advisor retirements,” Shirk says. “The industry’s headcount will begin to decline once again at an even more pronounced rate than in the recent years.”
To minimize the decrease in the years ahead, Cerulli recommends the industry begins laying a foundation to recruit and groom new advisors.