By: The Ensemble Practice

The start of the year reads a bit like a cautionary tale for advisory firms with slow growth, few open positions for hire and many firms tightening budgets. These are just some of the key findings from The Pulse of the Industry survey conducted by The Ensemble Practice this January.

The Ensemble Practice invited its consulting clients as well as participants and alumni of its G2 Leadership Institute to complete the Pulse of the Industry survey. Eighty-five firms responded to the survey and the characteristics of the sample are consistent from year-to-year, and repeat participation is high, allowing for the examination of trends.

Following are some key takeaways from the first half of this year:

  • Advisory Firms Becoming Cautious: Firms experienced median decline in Assets Under Management (AUM) of 7.2% in 2022. With the S&P having lost 19.4% for the year, this is not an unexpected result, though diversification and the addition of new clients helped mitigate the damage. Several data points in the study indicate that the message from the markets has been received and firms are using caution before growing spending.
  • Budgets Are Tighter: Nearly half (43%) of firms respond that they are cutting at least some budgets for 2023. Though some are optimists, with 39% growing their spending and 18% of respondents planning to maintain “business as usual.”
  • Restoring Profitability and Efficiency Is the New Priority: The damage to profits from the decline in the markets caused firms to elevate profitability as their number-one priority—a jump from number seven in 2022. That is particularly a concern for mid-sized and smaller firms. Large firms, perhaps well-funded, continue to focus on growth and adding owners. Small firms on the other hand are becoming increasingly worried about succession.
  • To Grow, Consider Acquisitions: Firms that grew their assets in 2022 (30% did) tend to be more acquisitive. They are also more likely to sell their own equity to raise capital for growth.

You can register to receive the full survey report here: