Financial Advisor Business Plan Template [Updated 2024]

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III. Industry Analysis

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The financial advisory services industry is strongly correlated with the strength of the economy as a whole. Last year, industry revenues fell as the market fell, declining by 34% to $37.6 billion. Revenues are expected to recover again this year, reaching the $38 billion mark.

There are some very large firms that are major players in the private wealth management industry. Famous names such as Bank of America-Merrill Lynch Wealth Management or Ameriprise Financial hold 16% and 9.4% of the industry, respectively. Overall, this industry has a low level of concentration, but is undergoing a trend of consolidation where larger firms buy or merge with smaller ones.

While there are major players, most of the industry consists of small, independent financial advisors and firms. The lion’s share of the private wealth management industry is composed of these individual advisors. Large firms often pay significant amounts for an independent advisor to join them and bring their client base along. Overall, employment in the industry is currently declining. It is estimated that 225,000 people were employed in financial advisory services in last year, and that only 213,800 will be employed this year.

The market served by financial advisors is a diverse one. 47% of the client base is made up of High Net Worth Individuals, HNWIs for short. These are classified by the Securities and Exchange Commission as people with at least $750,000 in investment-ready assets, or $1.5 million in investment-ready assets held in a marriage. These clients tend to be aging individuals who are beginning to consider retirement. This fits with the industry trend toward retirement planning services. Financial advisory services are not reserved exclusively for HNWIs, however. There are an estimated 120 million households with $17 trillion in assets in the United States, many of which require such services.

The next largest customer segment served by financial advisors is made up of businesses and the US government, holding 23% of the business. Retail clients make up 13% of the business, followed by hedge funds and other clients with 7% and 10%, respectively.

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