- On October 2, 2017
Fidelity recently released a report on their perspectives of the State of the Wealth Management Industry 2017: The New Value Drivers. Perspectives provided by Sanjiv Mirchandani, President, Fidelity Clearing & Custody Solutions.
What industry will look like in 2026
Two kinds of opportunities to be successful:
- Large player with greater scale
- Focused player with distinct niche
The Big Squeeze created by pressures in the industry:
How do you win? Value.
3 drivers of value:
- Drive better outcomes for clients
- Build Digital into your DNA
- Create sustainable enduring firm
In 2016 the net organic growth of Fidelity clearing and custody clients dipped to 1.5%, down from 2.8% just 3 years ago. Organic growth is the net new client money you receive each year, excluding market action – divided by your beginning base of assets.
Fidelity Organic Growth Rates:
- 2013 2.2%
- 2014 2.8%
- 2015 2.5%
- 2016 1.5%
The assets withdrawn from existing clients now outpace new assets from existing clients.
Fidelity reports that in 2016 for example:
- 8.4% new assets from new clients
- 12.6% new assets from existing clients
- 4.2% assets withdrawn by departing clients
- 15.4% assets withdrawn by existing clients
- 19.6% lost almost wiping out all of the growth
Regardless of the outcome of the DOL rule, advisors are moving to a fee-based model.
From 2004 to 2015 the percentage of advisors who were primarily or partially fee based among all advisor groups increased from 41% to 80%.
Looming Succession Crisis:
- About 300,000 advisors in industry
- About 110,000 likely to retire within 10 years
Retiring less than 5 years:
- 12% of advisors
- 37,684 advisors
- $1.434 Billion in assets
- 23% of advisors
- 72,653 advisors
- $4.368 Billion in assets
Just over 10 years
- 62% of advisors
- 192,171 advisors
- $10.416 Billion in assets
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