As many of you know, I’m a fan of the fine folks over at Kehrer Bielan Research & Consulting. Every year I look forward to the Kehrer Bielan Annual Checkup, as it provides leaders with the insights they need to be successful. These insights are invaluable not only to financial institutions but also to companies like Terrapin as we tailor our services to the evolving needs of our customers. This is why we gladly co-sponsored the study, which you can download here.

Kehrer Bielan recently wrote about how some of the findings in the annual checkup are disconcerting. Here’s what they had to say.

“The financial institution investment services and insurance community enjoyed its best year in recent memory in 2021, as the nation shook off many of the effects of the COVID 19 pandemic. Investment services revenue increased 17% in banks and credit unions, the largest year-over-year increase ever recorded in the Annual Industry Checkup. Average financial advisor productivity improved 16% in financial institutions in 2021 after remaining flat the previous two years.”

Despite this good news, as the chart below depicts, a recurring problem remains: nearly nonexistent growth in advisor headcount.

Kehrer Bielan Annual Industry Checkup 2021-2022

According to Kehrer Bielan, this chart demonstrates that firms have “relied almost entirely on improvements to advisor productivity aided by strong market appreciation to drive growth in recent years, while advisor headcount has more-or-less stalled. Over the same period, financial institution deposits have grown significantly, surging 14% in banks that offer investment services in 2021 alone. That means that the typical financial institution, which already had too few advisors to cover the opportunity for investment services among its customers, is now much deeper in the hole than it was several years ago.

Their takeaway here is that firms are likely facing slower growth, which is a concern for program managers who are expected to meet or exceed the growth experienced in 2021.

Of course, it’s non-news to say we are facing a looming financial advisor shortage. Research has shown that approximately 40% of financial advisors plan to retire within 10 years. Kehrer Bielan’s findings align with new research from InvestmentNews, which shows that in Q1 2022, across all channels, advisor recruiting activity has yet to fully rebound since the onset of the pandemic. The bank channel lost 28 advisors, with wirehouses appearing to be facing the largest challenge, having lost 522 advisors.

Having worked with financial institutions for over 25 years, we know how vital your advisor workforce is to the overall success of your investment services program. With the wave of advisors projected to retire over the next decade, business-enhancing technology will be vital in attracting and retaining the next generation of advisors. Our compensation management solution gives advisors visibility into their production with dashboards and trade blotters using real-time metrics. Its all-in-one solution empowers firms to pay advisors accurately and on time. Attract and retain top talent with Terrapin Technologies. To learn more, click here.

Portions of this article include excerpts originally published by Kehrer Bielan Research and Consulting. Kehrer Bielan Research & Consulting provides the financial advice industry with insights based on a melding of research and experience in managing the delivery of investment, insurance, and wealth management services. The firm’s principals—Kenneth Kehrer and Peter Bielan—have participated in the financial advice industry as executives, researchers, analysts, and spokespersons for over 30 years. Together they bring a unique, unbiased resource and perspective through their original research, actionable advice, and keen understanding of where the industry has been and where it needs to go.

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