PLANADVISER - September/October 2019 - 12

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Next Generation Producers
More advisers are in their 40s-and they are successful
selling not just to maintain but also to
grow the business. "
According to the data, the average
firm's operating profit margin last
year, at 21%, was more than a
percentage point higher than in 2017.
Further, the survey shows that
overhead expenses as a share of
revenue fell slightly in 2018.
This translated to rising income
for firm owners, whose median total
income rose 3.6% last year to $633,000,
the highest since 2014, or 55 cents for
every dollar of firm revenue.
Choppy markets have not shaken
advisers' optimism, even as growth in
assets under management (AUM) has
slowed. The median revenue growth
rate for firms was 14% last year, up
slightly from 2017, while the median
client growth rate of 7.4% was little
changed. The rate of growth for AUM
dropped to 5.9%, according to TD
Ameritrade.
Back to age, the survey found
the median age of advisers is
that
49-three years younger than when
a previous edition of the survey was
conducted in 2015.
At the same time, six out of 10
firms have an owner who expects to
stay at the helm for at least another
12 years. The study also suggests that
the number of firm owners who are
40 or younger now equals the number
SCOTT SLATER, vice president of practice
management and consulting for
Fidelity Clearing and Custody Solutions,
says the average age of advisers
has always been an interesting and
evolving topic.
As recently as 2013, he notes,
Cerulli Associates reported the
average age of financial advisers as 51.
The firm's research showed that 43%
of advisers were over the age of 55,
with nearly one-third falling into the
55 to 64 category.
Fast forward to 2019, and,
according to a new TD Ameritrade
survey report, " 2019 FA Insight Study
of Advisory Firms: People and Pay, "
the average age of advisers has gone
down meaningfully. The survey
report suggests that the median age
of advisory firm associates is 42, while
the median age of lead advisers is 46.
Echoing the TD Ameritrade data,
Slater says he has seen emerging
evidence that younger advisers are
generating quite a bit of the advisory
industry's overall growth.
" We commonly see advisers with at
least 15 years left in their career who
are already doing well for their practice, "
Slater observes. " They're having
success selling in their 40s. Many are
who are over 60.
" As the next generation of registered
investment adviser [RIA]
leaders comes to the forefront,
they
are
investing
in their
firms
and thinking about growth over a
long-term horizon, " says Vanessa
Oligino, director of business performance
solutions at TD Ameritrade
Institutional.
" We expect to see pioneering
approaches to industry challenges-
whether they be staffing and compensation,
growth and organizational
design, or technology and innovation, "
she says. -John Manganaro
12 | planadviser.com September-October 2019
Art by Ellen Surrey
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