According to Kitces ’ s report , the cohort of 45- to 64-year-olds peaked at 84.1 million in 2017 and represented 26 % of the American population , after growing 36 % from 2000 .

While long considered the “ backbone of a financial advisor ’ s client base ,” this demographic is now expected to shrink to 23 % of the population by 2030 , Kitces wrote in the 2024 release of his firm ’ s biannual marketing study .

“ Relative to the 2017 peak , this red zone population is projected to decrease 2.7 million by 2030 , as its share of total U . S . population drops from 26 % to 23 %,” the report said .

In addition , the report continued , competition at all sizes of advisory practice means more individuals already have a financial advisor , further lowering the prospects that advisors are able to win new business . “ Given these recent trends , it is no surprise that advisors are finding it more difficult to attract new clients when offering financial planning services ,” Kitces wrote , adding that offering “ comprehensive financial planning ” is no longer a differentiator , and soon even having a CFP designation will be less of a differentiator as more advisors attain the certification .

For example , in 2023 , organic new client revenue growth was 8.6 % for a typical practice , the study found . While many firms publicly say they are happy with revenue growth between 5 % and 10 %, that 8.6 % was a significant decline from the 11.1 % seen in 2021 . That falloff occurred despite advisors spending more on organic growth marketing than they have in the past , the report said .

Meanwhile , the median cost to acquire a new client has risen significantly , from just under $ 2,200 per client in 2021 to $ 3,800 per client in 2023 — a 75 % jump .

The 2024 study was based on the

responses of nearly 1,000 advisory practices to a 138-question survey . Eligible participants had at least a year in business providing financial advice or implementing investment products for retail customers in the U . S . The survey was fielded between the last week of February and the third week of March .

For average firms , marketing spend amounted to 9.7 % of revenue . But in high- growth practices , the Kitces survey found it equaled 12.5 % of revenue . “ High-growth practices outspent their peers in terms of both soft and hard dollars , but soft dollars tended to make up a smaller share of their marketing costs ,” Kitces said , defining soft dollars as the value of advisor and staff time spent on marketing . “ This occurred despite high-growth advisors committing 15 % of each workweek to marketing activities compared to just 10 % for other advisors , which was made possible due to high-growth advisors typically taking lower compensation from their practices . The lesser compensation , in turn , enhances the ability of the practice to invest more hard dollars into marketing .”

At some point , however , efforts spent organically acquiring new clients prove too taxing for an advisory , so this kind of acquisition slows , and getting new clients through a partnership or M & A is a better use of time , the report said .

Beyond $ 2 million in revenue , marketing efficiency for the typical high-growth practice falls enough that it becomes the equivalent of paying two times the acquisition cost , “ a level where M & A transactions begin to become a viable alternative to organic growth ( and helps to explain the predominance of M & A amongst larger advisory firms seeking to grow ).”

— Jennifer Lea Reed

solutions that create a stronger bridge between the asset accumulation and decumulation phases to grow and preserve plan participant wealth while simultaneously providing an opportunity to optimize the timing of their Social Security benefits ,” said Deb Boyden , the head of U . S . defined contribution at Schroders , in a statement . The “ Schroders 2024 U . S . Retirement

Survey ” was conducted from March 15 to

April 5 . It included 2,000 U . S . investors nationwide , ages 28 to 79 , including 780 Americans who currently participate in a workplace retirement plan .

— Jacqueline Sergeant

OCTOBER 2024 | FINANCIAL ADVISOR MAGAZINE | 11