Pulse of the Industry: 2020 Midyear Study

By: Philip Palaveev

When following a path through the forest, sometimes it takes so many twists and turns that you can no longer tell which direction you are heading. It is time to check your map and compass to get a sense of where all that twisting and turning has led you.

This year has been a lot like that. Twists and turns have been plentiful, and we all want to get a better sense of where the industry stands at the half-year mark. While big studies are very informative, they only tell us about financial performance in 2019. We needed a quick but more timely check.

To this end, we surveyed the G2 Leadership Institute community of firms on where they currently stand halfway through the year and compiled the results in the Pulse of the Industry: 2020 Midyear Survey. You can download the full report at the link below.

Here are some key takeaways:

  • The average change in assets under management (AUM) is minimal at -1.2%, and very few firms are either suffering significant declines (low quartile is -3.2%) or gaining ground (high quartile is 1.2%).
  • Advisory firms are also continuing to hire, with 53% of firms ending the first two quarters of 2020 with more employees than they started with. Layoffs are essentially non-existent in the industry.
  • Client activity is significantly diminished, with net activity as low as one-third of 2019 levels, though firms are adding twice as many clients as they are losing. The typical firm had 675 clients, added an average of 24 clients and lost 10.
  • While industry spending is changing, not dramatically so. Firms are reducing incentive compensation budgets and purchasing more technology to work remotely. Some firms are curtailing marketing spending while others are willing to be contrarians, spending more on growth by increasing marketing budgets.
  • The size of the firm made little difference on outcomes: firms large and small faced similar dynamics. Still, the largest firms have been more likely to make budget changes, either decreasing or increasing them.