Having previously looked at some analysis of new and ceased adviser numbers for the period of Dec 2018-Feb 2019, we now turn our attention to advisers who are returning to the industry and/or switching between licensees. During this period, there were a total of 920 existing advisers who either switched from one licensee to another – or who returned to the industry with a new licensee. The indications from this analysis again show a preference among advisers for privately owned licensees.
A total of 460 advisers switched from one licensee to another between December and February. Additionally, a further 460 advisers returned to the industry. Yes, in this period the number of “switches” and “returns” was exactly the same, giving us the total of 920 adviser movements in this category for the Dec-Feb period.
Switching and Returning Advisers
For clarity, when talking about switching and returning advisers, we define them in the following way:
When both a switch-out from one licensee and switch-in to a different licensee occur during December-February, we define this as a switch. When switch-out from one licensee occurs before December 2018 and switch-in occurs during December- February we define this as return. Returning advisers have previously been licensed (and as such are not “new” advisers), but have returned to the industry with a different licensee.
Our previous analysis of advisers new to the industry showed a theme of further growth in the privately owned licensee space, with the vast majority (67%) of new advisers preferring to join privately owned licensees, rather than institutionally owned or aligned licensees.
Our analysis of the destination licensees for these existing Switching and Returning advisers mirrors the theme for new advisers. As the first chart shows, among the 920 “Switchers and Returns”, almost 70% (642 advisers) were found to be migrating to privately owned licensees, 22% (208) going to institutionally aligned licensees and only 8% (70) were joining institutionally owned licensees.
When focussing on just the 460 switching advisers, 365 (180+71+114), or 80% have switched-in to privately owned licensees, compared to 66 (14%) to institutionally aligned and 29 (6%) to institutionally owned.
Drilling further down, we can see that advisers are consistently switch between privately owned licensees. In fact, of the 365 advisers who joined a privately owned licensee, 220 actually came from a different privately owned licensee. This adviser movement, and the extent that institutionally owned and aligned licensees are losing advisers is clearly illustrated in the second chart, which shows that there are more advisers switching out of owned and aligned licensees, than are switching in.
Regarding switching advisers, the migration is a “zero sum” calculation, if the private licensees grew by 145, it follows that the institutions lost the same amount switching out. We can see that while 95 advisers switched-in to the institutionally owned or aligned licensees, 240 advisers switched-out. This means that among the 460 switching advisers there was a net migration of 145 advisers away (a net loss of 145 advisers) from the institutions to privately held licensees.
Privately owned licensees also saw the most advisers return between December and February. To illustrate this, the next figure shows the monthly licensee distribution of returning advisers. Among the total of 460 returning advisers, 277 (250+11+16), or 60% of returning advisers went to privately owned licensees, compared to 142 advisers in institutionally aligned and 41 advisers in institutionally owned licensees.
Growth Of The Privates
This three-month snapshot of data from our latest Musical Chairs report shows some fascinating insights into recent adviser movement. Obviously context is everything, so it’s is helpful to look further back in time to see if these current adviser movements are an anomaly, or part of a wider trend.
Our final chart shows adviser numbers by licensee type over the last five years. It accounts for all advisers who are currently licensed (existing, new, switches and returns). The chart will not surprise to anyone who has read our past analysis of adviser movement trends. Adviser numbers in privately owned licensees have nearly doubled in this time, while advisers in the institutionally aligned space have been steadily decreasing since their high-point in 2014.
The total number of advisers in institutionally owned licensees has changed little over time. Privately owned licensee adviser numbers have been growing steadily, passing institutionally aligned advisers numbers in mid-2016.
Although we see the spike in total adviser numbers evident at the end of 2018, we can also see the subsequent downwards dip that follows. Given our recent analysis, which indicates only a few dozen returning advisers since January, virtually no new advisers being authorised this year, and a net loss of over 600 advisers (ceased) in Jan/Feb 2019, we would expect total adviser numbers who are active in the industry to decline further, with the institutionally owed and aligned licensees shedding the majority of adviser numbers.
Adviser Ratings will continue to bring you more insightful analysis of adviser movements and other industry trends. For more information about our insights contact firstname.lastname@example.org