At the onset of the Covid-19 pandemic, one of the biggest fears among financial advisors was that they would have to cut their staffs. But it turned out they didn’t have to, according to industry consultant Philip Palaveev.

A survey conducted by Palaveev’s firm, the Ensemble Practice, revealed that layoffs were nearly nonexistent in the financial advisory industry. In fact, firms continued to hire. Fifty-eight percent of the firms surveyed have hired for a new position during the crisis so far, and 42% of firms ended the first six months of the year with more employees than they started with.

Also, the average change in assets under management was minimal, falling only 1.2%, and very few firms reported suffering significant declines (the average drop in the low quartile was 3.2%). In some cases, they gained ground (the average increase in the high quartile was 1.2%).

The survey included 72 firms with an average of $1.746 billion in assets under management. Most of the participants were alumni of Palaveev’s G2 Leadership Institute, a management and leadership training program for financial advisors.

Palaveev said the fact that firms did not have layoffs had little to do with the Paycheck Protection Program under the CARES Act. Rather, it was because the industry did not lose much revenue, he said. The S&P 500 has remained solid since the beginning of the year. “The vast majority of firms are firmly tied to the market. They are like a captain to a ship, and when the ship goes down, they go down with it,” he said.

“Also, when the market returns to some level of stability, revenue returns to a level of stability as well, so the loss of revenue has been minimal.” He noted that firms’ profit and loss statements look the same as they did in 2019.

The survey found that the typical firm lost 10 clients, or 1.4% of their client count, which is actually fewer than normal. And on average, firms added twice as many clients as they lost. Palaveev said firms increased their net client count by 8.2%.

One of the things that surprised him was equity transactions. “With so much volatility in the market, you would think that it’s kind of difficult for a buyer and seller to agree on what’s happening and how to proceed. But quite the contrary,” he said, noting that very few firms are reporting delaying a transaction.

The survey showed that 34% of firms added a partner in 2020; 32% executed transactions between existing partners; and 6% of firms added an external investor.

Many of the firms had to adapt to changes during the crisis. According to the survey, 46% rolled out new marketing initiatives, and one-third changed their software systems to suit the new environment of working remotely.

“We should feel fortunate,” he said, noting that the results are testament to advisory firms doing a fantastic job of marketing and maintaining their teams.

He said, all in all, advisors remain very optimistic and ambitious, adding, “they are so ready to go out and grow, so ready to go out and continue merging and acquiring, seeking more clients and hiring more people.”