Robust Asset Acquisition Dissipated by Asset Attrition

As the business of financial advice has shifted from generating transaction revenue to asset-based compensation, asset growth has become an increasingly important metric for directors of retail wealth management in financial institutions.  Each advisor is tasked with capturing new assets every year to fuel the growth expected by the institution.

 

Last year advisors in banks and credit unions acquired $13.7 million in new assets, on average, up 5% from 2022.

 

The improvement in asset acquisition was driven by bank-based firms with less than 25 advisors, which have been outperforming their peers in other institutions.  The average advisor in these small firms brought in $17.1 million in new assets, a 10% gain year over year.  Advisors in larger bank firms and credit unions actually added less new assets, with acquired assets down 12% and 7% in those firms, respectively.  Advisors in the smaller bank firms acquired 50% more new assets than advisors in larger firms, and almost two-thirds more than advisors in credit unions.

 

But while advisors are acquiring new assets, they are also losing assets out the back door, as some clients spend down their savings, or clients depart.  So, we need to focus on net new assets—acquired assets minus assets that have left the firm.  While new asset acquisition improved modestly last year, the growth in net new assets actually slipped below 2022’s performance.  Advisors in banks and credit unions added $5.5 million in net new assets last year, down 11%.

 

Net new asset acquisition decreased across the board last year, but particularly in firms with at least 25 advisors. While the typical advisor in large bank-based firms acquired $11.4 million in new assets, $8.5 million left the books.  Advisors in smaller bank firms lost $8 million of their assets, on average, while credit union-based advisors lost $6.4 million.

 

This experience demonstrates the challenges of accumulating assets when the typical advisor loses $6-$8 million of existing assets every year.

 

About the Data  

This Highlighter draws on data from the 2023-2024 Kehrer Group Benchmarking Survey.  Kehrer Group has been benchmarking the investment services business in financial institutions since the early 1990s. 115 banks and credit unions, which deploy 4,590 advisors, participated in this year’s survey during the first quarter of 2024.  We publish the survey findings in three segments:

  • Firms with at least 25 advisors (sponsored by Corebridge)
  • Firms in Regional & Community Banks with less than 25 advisors (sponsored by Ameriprise Financial Institutions Group and Financial Resources Group)
  • Firms in Credit Unions (sponsored by Ameriprise Financial Institutions Group and Financial Resources Group)