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Fee-based advisor channel enjoys rapid growth

The study pegs the number of financial advisors across all channels at 352,000, of which 21,000 are fee-based and 11,000 are registered with the SEC.
The study pegs the number of financial advisors across all channels at 352,000, of which 21,000 are fee-based and 11,000 are registered with the SEC.

The number of fee-based financial advisors will top 19,000 by 2016, up 20 percent since 2011, according to new research.

Tiburon Strategic Advisors discloses this finding in an August report on the evolution of financial advisor channels. The survey examines changes among full-service brokerage firms, independent advisors, insurance agents, retail banks, upscale channels and real estate professionals.

Fee-based financial advisor custodians’ net profits will increase to $4.2 billion by 2016, up 250 percent from 2011, the report states. Custodian assets under administration will increase to $14.0 trillion by 2016, up 250 percent from 2011. And custodians’ revenues will increase to $28.0 billion in 2016, up 250 percent from 2011.

The study pegs the number of financial advisors across all channels at 352,000, of which 21,000 are fee-based and 11,000 are registered with the Securities and Exchange Commission.

The report notes also that fee-based financial advisors have gathered $3.0 trillion assets under management. Registered investment advisors account for $2.5 trillion of the AUM total.

The report makes observes also the following:

  • The number of financial advisors across all channels will decline slowly to 312,000 by 2017.
  • Two-thirds of wirehouse and regional broker/dealer brokers who move on their own in any year migrate to other wirehouses or regional broker/dealers.
  • The number of successful “break-away brokers” going independent is likely closer to 400 per year, down from 500 in 2009.
  • Break-away brokers have shorter tenures than the average financial advisor at 11 years versus 14 years.
  • Break-away brokers have higher assets under management than the average financial advisor at $243 million versus $231 million.
  • Break-away brokers have higher revenues than the average financial advisor at $1.2 million versus $1.1 million.
  • Geneos Wealth Management, VSR Financial Services and High Tower Advisors are the leading break-away broker aggregators with 71, 30 and 18 acquisitions, respectively.
  • High Tower Advisors is the leading break-away broker aggregator in terms of assets under administration with $19.0 billion; and in terms of average firm assets under administration with $1.0 billion.
  • VSR Financial Services and Geneos Wealth Management are the leading break-away broker aggregators in terms of revenues with $92 million and $70 million, respectively.
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