Los Angeles, CA (PRWEB) October 24, 2013
Growth in the Financial Planning and Advice industry is compounding swiftly, after a brief decline early in the five-year period to 2013, due to the recession. Consequently, revenue is expected to increase during the period, and includes significant growth in 2013 alone. The industry is composed of advisers and planners who provide financial advice in conjunction with other activities, such as portfolio management, protection planning and brokerage services. Economic drivers like capital market fluctuations; unemployment; disposable income and savings rates all greatly affect the industry.
Advisers generate revenue in a variety of ways, including financial planning fees, investment commissions, insurance commissions and other fees. The recession, which was highlighted by increased unemployment and falling disposable income, hurt new and recurring advice fees. Since consumers had less available income, they opted to save money or paid off debts, instead of capitalizing on investments. Consequently, the industry's positive performance in pervious years, which was marked by strong revenue growth, was damaged in 2008. The fall of the Standard & Poor's 500 index (S&P 500) in 2009 reduced the total value of assets under management (AUM) and caused a drop in revenue generated from fees on total AUM. Fees from insurance policies also declined because new business dwindled, and many existing policies lapsed.
According to IBISWorld Industry Analyst Stephen Morea, “The concentration of the Financial Planning and Advice industry is high, with the four largest players (Morgan Stanley, Wells Fargo, Bank of America and Ameriprise Financial) accounting for more than half of total industry revenue in 2013” (see IBISWorld report 52393 for major player market shares). Although the total number of enterprises increased in the five years to 2013, a series of large-scale acquisitions, precipitated by the recession, vastly increased the market share concentration of the industry's largest players. For example, Bank of America increased its adviser force dramatically with the acquisition of Merrill Lynch advisers. Wells Fargo's acquisition of Wachovia also increased the company's footprint in the industry.
Looking ahead, “the five years to 2018 appear promising for the industry,” says Morea. Revenue is projected to increase in 2014, as capital markets rebound. IBISWorld forecasts that the S&P 500 will grow in the next five years, helping increase total AUM and raise revenue generated from wrap fees, which are annual fees charged on assets under management. Meanwhile, the recession's damaging effects on consumer confidence will encourage more individuals to seek financial advice, consequently increasing industry revenue over the five years to 2018.
For more information, visit IBISWorld’s Financial Planning & Advice in the US industry report page.
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IBISWorld industry Report Key Topics
The Financial Planning & Advice industry comprises companies that provide financial planning, financial advice and wealth management, to individuals and business clients. Operators also offer 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 deliver 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.