Thought Leadership

The Potential Impacts of Reducing Advisor Head Count

October 17, 2023

There have been recent news reports about wealth management firms cutting staff, including positions in wealth management and assets units. While this isn’t necessarily a new phenomenon during economic challenges, other trends in the industry are further impacting the landscape. The buzz of artificial intelligence is touching all aspects of our lives and financial services isn’t immune. Firms are considering how the evolving landscape of technology—robo-advisors, for example—could impact investment decisions in the near future. This context raises the question of how valuable advisors are to affluent investors and, therefore, by extension, to wealth management firms.

Luckily, Cogent Syndicated conducts monthly surveys among affluent investors, asking questions about if and how they use financial advice and financial advisors. As wealth management firms continue to determine whether or when to cut advisor jobs (and/or the positions that support advisors in doing their jobs well), it’s imperative to know the potential impact. We dug into the results from Q2 to uncover how affluent investors view and value their financial advisor relationships.

Here are five key findings that underscore the value of advisors to investors, and, therefore, to wealth management firms.

  1. Most affluent investors (65%) are currently using either a financial advisor (FA) or a non-FA investment representative. Only 35% of affluent investors take a self-directed approach to managing their assets. As firms remove advisor head count, they need to be aware that many affluent investors are looking for advice from an investment professional as they manage their assets. If investors can’t get that access with your firm, they may find it somewhere else.
  2. Affluent investors with higher investable assets are more likely to be advised by financial advisors. This is true across all generations. These highly valuable clients are seeking the advice of investment professionals when managing their larger portfolios.
  3. The majority (58%) of traditionally advised investors are in the younger generations (34% are Gen Xers and 24% are Millennials). Solidifying loyal relationships with these clients now represents long-term future value as these clients age and their portfolios grow.
  4. Most affluent investors (58%) make 100% of their trades through an advisor in a typical month. Will less access to financial advisors limit these trades and the associated fees wealth management firms collect? Potentially.
  5. Advisors have the potential to determine substantial wins or losses of business, with 35% of affluent investors being likely to follow their primary advisor to a new firm, 10% being likely to use a new advisor in the next three months, and 6% interacting with a potential new advisor.

As wealth management firms consider cutting staff, including positions in wealth management and assets units, to the extent that they may consider cutting advisor head count, they should exercise caution. It’s imperative to carefully consider the potential loss of business as a result of cutting advisors from the payroll. At the same time, should competitors cut advisor positions, firms should consider how they could pick up those advisors along with the new business that would come from the investors who loyally follow those advisors to a new firm.

We’re actively writing our annual Investor Brand Builder report which provides a holistic overview of these and other important trends affecting the affluent investor market and a customized evaluation of your brand health to enhance investor segmentation, improve marketing and communication, identify opportunities to grow market share and boost profitability.

Publishing at the end of this month, Investor Brand Builder gives firms insights that can directly inform brand and marketing strategies that maximize purchase intent among investors and expand client relationships. Click below to learn more.


Headshot of Escalent's vice president Steve Ethridge
Steve Ethridge
Senior Director, Cogent Syndicated

Steve is a senior director in the Cogent Syndicated financial services division, where he directs affluent investor research and consulting. He has more than 30 years of experience in marketing research and consulting, and more than 15 years in financial services including investment banks, mutual funds, retail and commercial banks, and credit unions. He brings in-depth market research (qualitative, quantitative and mixed method) and strategic marketing experience from a wide range of industries. In addition to running his award-winning research consulting firm for many years prior to joining Escalent, Steve headed market research and customer insights for AutoZone. He has also held the positions of senior manager of brand marketing, research for The Holiday Corporation (Holiday Inns) and its spin-off, Promus Companies (Hampton Inn, Embassy Suites, Homewood Suites and Harrah’s Entertainment), as well as executive associate and client manager with Gallup and vice president and director of market research for Cliff Davis Associates, a national strategic business planning consulting firm specializing in financial services. Steve holds a master’s degree in communication from The University of Memphis and a BBA in marketing management from Ole Miss, and has completed coursework in the master of market research program at UGA.