The Post-COVID Challenges Facing the Planning Profession

New data on consumer preferences and behaviors during COVID shows that the advisory firms face daunting challenges with respect to staffing, differentiation and – if they are private-equity backed – financing and maintaining profitability.

There are a lot of opinions about the health of the advisor profession and consumer/advisor relationships floating around, but not everybody is backing their words with actual data. Philip Palaveev, founder and CEO of The Ensemble Practice consulting firm, is a notable exception. He has been the author of the profession’s leading benchmarking studies for the last couple of decades (the Investment News profitability and compensation benchmarking reports). In his day job as leader of a consulting group, he helps advisory firm founders think through their decisions about how to share equity from founders to staff leaders, how to create compensation structures and partnership agreements, and how to formulate strategic planning initiatives.

With his G2 program, Palaveev gains additional insight, working to develop leadership skills with 100 younger advisor and staff leaders from around the country every year.

Recently, Palaveev authored two additional research reports, one which measured the financial growth of advisory firms during the 2021 COVID-impacted calendar year, and a very different survey that offered some insight into the complicated relationship between upscale consumers and the advisory profession. Both offer real quantitative data around issues on which there has been a great deal of speculation.

Opportunity and disappointment

Let’s start with the consumer survey, where 500 randomly selected individuals, all with annual personal pretax income of $100,000 or more, answered questions online. (Readers can download the report here) These are desirable clients for most financial services professionals. Yet one of the most interesting findings was that almost half (43.7%) have no current advisory relationship and have never had one. In all, only 32.4% of this sample of attractive prospects have any kind of relationship with an advisor.