Adviser Executives Expect Strong Headcount Growth This Year

The Investment Adviser Association (IAA) is a not-for-profit organization that exclusively represents the interests of Securities and Exchange Commission (SEC)-registered investment adviser firms.

As part of its ongoing advocacy efforts, the organization has engaged Cerulli Associates to survey the executives of its member firms, publishing this week its second “Executive Outlook Survey.”

According to IAA and Cerulli, nearly 80% of respondents to the 2018 survey say they plan to grow their work force over the next 12 months. Nearly two-thirds of respondents plan to grow their headcounts by up to 10%, the survey shows, while nearly 15% percent say they plan to increase their staffs by more than 10%.

“Moreover, the majority of respondents view focusing on the hiring, training, and retention of talent as key,” the survey report states. “It ranks among the top three strategic priorities, measures of profitability, and areas to receive increased budgetary resources.”

Another measure of executive optimism cited in the report is the 57% of individual wealth managers that expect to increase assets under management over the next three years. This compares with 59% of institutional advisers expecting AUM to increase over the same period.

“While the survey found that executives’ overall outlook is positive, it also identified several areas of rising concern,” the report warns. “Asked to rate their level of concern regarding external factors over the next two years, participating executives identified cybersecurity; a potential significant market crisis; fee compression; the country’s international relations; the non-U.S. regulatory environments; tax reform; globalization; and Brexit.”

Asked to prioritize technology investments over the next 12 months, participants identified improving cybersecurity; updating older technology; implementing regulatory/reporting requirements; improving data management/analytics; improving digital content; maximizing resource allocation and distribution opportunities, such as client segmenting and predictive analytics; artificial intelligence/data innovation; and building or improving social media marketing strategy.

“Executives were virtually unanimous in identifying development of the next generation of talent as the most important initiative for ensuring firm profitability,” the report concludes. “Other priority initiatives included increasing scale; improving the firm’s service model; reducing costs; and compensation analysis and adjustments.