A Mixed Report Card
The branch referral model at the core of most bank and credit union retail wealth management businesses has resulted in advisors stockpiling clients to the point that serving all of them is problematic; either many clients are underserved, or they constrain the advisor’s productivity. Many directors of retail wealth management advisors in financial institutions have been encouraging their advisors to cull their books of less productive clients, assigning those clients to less experienced advisors, investment call centers, or digital platforms. This frees the advisor to dig deeper with more productive clients, helping them grow assets and revenue.
How’s that going?
The typical advisor in a bank or credit union has 408 client households, 3% less than in 2022. This modest improvement was driven by advisors in credit unions and banks with less than 25 advisors. Credit union-based advisors, which already have smaller client books, reduced their client headcount from 387 to 361, on average. That 7% improvement was matched by advisors in small firms.
Advisors in banks with at least 25 advisors actually retrogressed, adding clients.
We see the impact of focusing advisors on fewer clients by examining how productive their clients are. The typical advisor in a financial institution experienced a 3% increase in revenue per client in 2023, a reflection of a 3% drop in client headcount.
Advisors in large firms, which already have more productive clients, saw their revenue per client dip 17% as they served 8% more clients. Credit unions, who started the year with the least productive clients, culled 7% of their clients and increased revenue per client 20%. Advisors in the regional and community banks with less than 25 advisors eked out a small gain in client productivity as they culled clients.
Of course, this analysis is based on firm level data. Within each firm, some advisors are culling clients while others keep building their book. To view the impact of reducing client headcount on an individual advisor’s production we need to turn to advisor level data. Look for our forthcoming analysis of our proprietary database of 3,000 advisors from 168 banks and credit unions.
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. There were 115 banks and credit unions, which deploy 4,590 advisors, that 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)