The number of advisors working in financial institutions increased last year, but their productivity fell, according to a new report.
According to Kehrer Bielan Research & Consulting’s fourth Annual Checkup, the average production of the typical financial advisor working in a financial institution dropped 5.1% to $366,428. Advisors in banks with their own broker-dealers continued to outperform their colleagues in regional and community banks and credit unions, but both groups produced less, on average, than in 2014.
The number of advisors working in financial institutions increased 1.6%. Banks and credit unions that partner with third-party broker-dealers (TPMs) led the way, increasing their advisor headcount for the third consecutive year, this time by 5.6%.
By increasing their contingent of financial advisors, the banks and credit unions that partner with TPMs were able to offset a decline in advisor productivity, according to the report.
The report notes that banks and credit unions experienced a decline of 4.5% in gross revenue from investment services in 2015, though this was concentrated in banks with their own broker-dealer, where revenue fell by 6.2%. Revenue increased 1% in regional and community banks and credit unions that partner with TPMs.
Bank broker-dealers suffered a small decline in advisor headcount. Many bank broker-dealers reported a significant number of new advisor hires, but no net gain in their advisor force, due to attrition. This decline reflects the challenges of both recruiting and retaining these advisors, according to the report.
In 2015, the number of banks and credit unions offering investment services shrank even as the percentage of financial institutions providing investment advice to their customers or members continued to increase as the industry further consolidated. Currently, the banks with their own broker-dealers account for two-thirds of the advisors in financial institutions and three-fourths of the investment services revenue, according to the report.
