A tale of 27 trillion dollars

It is the best of times, it is the worst of times. All the rules of client-advisor relationships are about to change, says Moss Adams guru Mark Tibergien (InvestmentNews):

Along with the increase in demand for financial advice, clients have more power in the relationship with their financial consultants, who are competing in a small talent pool, said Mark Tibergien, principal of Moss Adams LLP of Seattle.

Mr. Tibergien, who spoke yesterday afternoon in Hollywood, Fla. at the annual financial products and services conference held by Pershing LLC of Jersey City, N.J., noted the sweeping changes in demographics and said that “boomers and their children are extraordinarily demanding.”

“There’s an oversupply of clients and an undersupply of talent,” he said.

“Seventy percent of the industry is made up of sole practitioners who don’t want to grow.”

The changes range from the amount of money clients will have and the competition from new advisers, he said.

Currently, households have $22 trillion in investable assets, with another $5 trillion likely to be added to that by 2012, he said.

Over the same period of time, the number of advisory firms registered with the Securities and Exchange Commission will increase to as many as 20,000, up from the current figure of 14,000, he said.

This is news to me. Tibergien predicts that the number of advisory firms will grow by almost 50% in the next five years. Will they all be sole proprietors?

Because we are seeing more and more consolidation in financial services, it would be interesting to know the expected growth in the number of advisors, as opposed to firms. Then we would have a better idea of whether or not the industry is truly equipped to serve the needs of aging boomers and their trillions.