Sullivan agrees. “A lot of the banking management people we’ve sat down with are reappraising their wealth management and advisory businesses, looking for more fee income. Also their insurance business. They don’t want to be so dependent upon loan growth. It will be a better time for financial advisors, for sure, with more resources and with better deals when they are hired.”
Earlier this year, Kehrer Saltzman Associates, a research firm that studies the financial advisory industry, found that during 2010 and 2011, even as the number of banks partnering with a third-party marketing firm to run their financial advisory business declined because of mergers from 2,958 to 2,760, the percentage of banks offering investment services by one of the 12 largest TPMs actually rose slightly from 24.8% to 24.9%.
With the focus on trying to build fee income, Steve Saltzman, a managing principal at the research firm Kehrer Saltzman Associates says, “I think you’ll only see advisors losing their positions where branches are closed because of overlapping jurisdictions.”
In any event, there’s plenty of room for the advisory business to expand, even if the number of banks does start to shrink seriously in 2013 through mergers and acquisitions. According to the Kehrer Saltzman study, 75% of financial institutions in the country still have no investment program.
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