Most of us are under pressure to grow our business. While 2021 is shaping up to be a strong growth year, riding the wave of eye-popping market highs, the last several years have seen almost no growth in investment services revenue in financial institutions.
In the chart we’ve taken the data from our Annual Industry Checkup1, which provides the broadest view of the 3,000 banks and credit unions that offer investment services, and indexed investment services revenue and the key drivers of revenue—revenue per financial advisor, and advisor headcount—to their 2015 levels. Financial institutions experienced strong growth in investment services revenue in 2018, but revenue was essentially flat in the other four years.
For illustrative purposes only. Experiences will vary. Past performance is not a guarantee of future results
For the first two years, gross revenue, advisor headcount and advisor productivity—gross revenue per advisor—moved together. The lift in gross revenue during 2018 was driven by an increase in advisor productivity, despite a decline in advisor headcount. But during the past two years shrinking advisor headcount has dragged revenue down.
The chart highlights the importance of recruiting and retaining advisors as a growth engine. But it also reminds us that we experience periodic market-driven bursts in advisor productivity—like what we are experiencing today—that mask the long run trend of flat growth.
How do we achieve the kind of sustainable double-digit growth in advisor productivity, and revenue, that our host institutions want?
The answer may be the Ideal Practice Model that Ameriprise Financial shares with its financial advisors. This innovative approach drives exceptional growth by analyzing best practices of the fastest growing financial advisors at Ameriprise Financial and across the industry. That insight informs strategies and tactics that drive optimal results.
How optimal? On average over the last eight years through 2019, Ameriprise financial advisors have grown at a CAGR of 8% vs. an average of 3% at the regionals, independents and wirehouses2.
To learn more about how Ameriprise Financial can help your investment program drive financial advisor productivity and revenue, contact Chris Melton, National Director – Institutional Business Development at Ameriprise Financial Institutions Group.
800.679.1237 or visit ameriprise.com/AFIG
1 Kehrer Bielan Annual Industry Checkup 2020 – 2021, Investment and Insurance Services in Financial Institutions, March 2021
2 Ameriprise filings, S&P Cap IQ, and Ameriprise Financial internal GDC and revenue data from 2012-2019. 2019 data represents trailing 12 months through 9-30-19. Ameriprise 2012 Revenue Per Advisor includes 12b-1 fees. Regional/Independent represents median of LPL, Edward Jones and Raymond James PCG. Wirehouse represents median of Morgan Stanley and Bank of America Wealth Management. Figures for Regional/Independent and Wirehouse sourced exclusively from publicly-available data.
Ameriprise Financial and Kehrer Bielan are not affiliated.
Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Securities offered by Ameriprise Financial Services, LLC. Member FINRA and SIPC.
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