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Service Market Growth Study

What service propels advisory firm organic growth? Holistic Service Models.

Are financial advisory firms growing faster if they offer custom portfolios? Or are firms who’re offering tax planning the fastest growers? Or is it a combination of services, such as estate planning and early retirement planning? We now know the answers.

Are financial advisory firms giving consumers the services they truly want, and if so, how does that impact growth?

To answer that vitally important question, Herbers & Company commissioned two major surveys, one of consumers and another of financial advisory firms. The results form the basis of the 2023 Herbers & Company Service Market Growth Study, and we are pleased to share them.

Because the results are so comprehensive—nearly 1,600 consumers and more than 700 firms were surveyed, yielding more than 300 data points—we will present the material in multiple formats, all available here. In addition to the introductory overview of the study that you’re now reading, we have posted below the most important data points gathered from the study.

consulting > 2023 Herbers & Company Service market growth study

Top 5 Noteworthy Data Points

#1: Tax planning highest demanded service from consumers.

Tax planning and retirement planning are the most in-demand services among financial consumers. Tax planning was the most demanded service among consumers with more than $250,000 in household assets. While 73% of the financial advisory firms we surveyed offer tax planning, just 67% reported offering retirement planning.

Bar chart showing the percentage of consumers with over $250,000 in household assets prioritizing various financial services, led by tax planning at 90%, followed by retirement planning at 74%, and investment management at 55%.

Bar chart showing survey data on the percentage of consumers with income over $250,000 and financial advisory firms offering various planning services. Services include business, cash flow, education, employee benefits, estate, health care, insurance, investment, retirement, and tax planning. The chart compares all advisory firms versus consumers over $250,000, with the highest consumer percentage for tax planning at 90% and the lowest for health care planning at 10%.

#2: Firms have prospect to client conversion disparities

The average advisory firm is struggling to convert prospects to clients. While the top organic growing advisory firms disclosed that they close seven of 10 prospects, that number is just three of 10 for average firms. Those firms that offer life planning, an area involving the psychology of money, convert prospects to clients at just a 10% clip. Firms that acquired at least one other firm in 2022 had a below-average conversion rate of 22%. Just 5% of surveyed firms acquired another business last year.

A chart showing that top organic growing financial advisory firms have a 73% average close ratio, compared to 33% for all firms, 22% for firms that acquired in the past year, and 10% for self-identified life planning firms.

#3: Traditional Investment Management, Crypto, & Alternatives

Only 1 in 2 consumers wanted traditional investment management help. Consumers with more than $250,000 of investable assets want help with alternative investing options (39%) and crypto investing (10%). But none of the surveyed financial advice firms reported that they offer help with crypto investing. Meanwhile, 33% of all advisory firms reported that they offer help with alternative investments.

Bar chart showing investment preferences across different groups. Blue for consumers over $250K, purple for advisory firms, and green for top-organic growers. Highlights include high preference for diversified portfolios among advisory firms and top-organic growers and higher interest in socially responsible investing among advisory firms and top-organic growers.

#4: The Client Experience Conundrum.

The top organic-growing firms diverged from others in self-evaluating their client experience. Sixty-three percent described their client experience as below average, while 36% of all other firms assessed their client experience as above average.

A slide showing a chart comparing client experience ratings for organic growth advisory firms. 63% of top-organic growers rated their client experience below average, compared to 36% of all other firms.

#5: Misalignment on the definition of ‘comprehensive’ advise.

Although 77% of firms self-identified as comprehensive wealth managers, only 31% were offering comprehensive wealth management services. The top organic-growing firms offered more comprehensive services than all other advisory firms.

Bar chart comparing service offerings between Top-Organic Growers and All Other Advisory Firms across various financial planning categories, with Top-Organic Growers consistently higher.

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About the Study

The 2023 Herbers & Company Service Market Growth Study consists of two surveys conducted in 2023: a consumer survey and a financial advisory firm survey. Our goal was to determine whether the services consumers demanded were aligned with those that advisors offer. In the cases where they were, we sought to understand whether firms grew faster than average.

The consumer study elicited 1,598 valid responses, while the financial advisory firm study generated 724 responses. The consumer data was collected through a reputable data service that Herbers & Company paid per response to ensure an even balance of respondents across gender, age and income. The advisory firm data was collected using the mailing lists of Herbers & Company, technology vendors and media outlets that serve independent financial advisors. The study was not sponsored by or affiliated with a larger organization, vendor, or media company.