A rebound in the Standard and Poor's 500 and growth in income levels will boost demand
Los Angeles, CA (PRWEB) March 21, 2012
The Financial Planning and Advice industry has been on a roller coaster ride over the five years to 2012. Revenue is estimated to increase at an average annual rate of 1.8% during the period, but this belies the 7.0% revenue jump expected in 2012 to bring revenue to $46.8 billion. The industry is composed of advisers and planners who provide financial advice in conjunction with other activities like portfolio management, protection planning and brokerage services. Economic drivers like capital market fluctuations, unemployment, disposable income and savings rates all greatly affect the industry, so the recession hurt this industry. Since consumers had less available income, they saved their money instead of investing it, derailing the industry's string of years marked by strong revenue growth, according to IBISWorld industry analyst Dale Schmidt. The recession is not the only factor that has negatively affected the industry. The industry faces increased external competition from do-it-yourself investors and full-service security brokers, placing further downward pressure on revenue.
The five years to 2017 are expected to be better for the Financial Planning & Advice industry. From 2012 to 2013, revenue is projected to increase. “The recession's psychological effects will encourage more individuals to seek financial advice, while the capital markets will rebound,” Schmidt said. IBISWorld forecasts that the S&P 500 will grow by 5.4% in 2012, helping increase total AUM and raising revenue generated from wrap fees, which are annual fees charged on assets under management. Over the five years to 2017, industry revenue is projected to grow.
The concentration of the Financial Planning and Advice industry in the United States is medium, with the four largest players - Morgan Stanley Smith Barney, Wells Fargo & Company, Bank of America Corporation and Ameriprise Financial Inc. - accounting for almost half of the market. The other half of the industry includes a large number of relatively small firms, regional firms and independent financial advisers. The industry's concentration has increased substantially over the five years to 2012, due in part to the recession. Larger players have become stronger by acquiring weaker competition that floundered during the economic downturn. For example, Bank of America has increased its adviser force dramatically with the acquisition of Merrill Lynch advisers. Market concentration is expected to strengthen in the future as large firms continue to grow. For more information, visit IBISWorld’s Financial Planning & Advice report in the US industry page.
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IBISWorld industry Report Key Topics
The industry comprises firms and individuals that provide financial planning, financial advice and wealth management to individuals and business clients. Firms provide advice in conjunction with other activities such as portfolio management, protection planning and brokerage services. This industry does not include mutual fund companies, hedge funds, discount brokers, insurance brokers or other companies that provide these services outside the context of a written financial plan.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.