Advisor Trends

The Financial Advisor Industry Has A Headcount Problem

Plagued by retirements and rookie failures, headcount across the industry remains relatively stagnant

A new report from Cerulli Associates provides a broad and deep perspective on financial advisors, highlighting their most critical needs, risks, opportunities, and challenges. Access the complete report here.

January 16, 2024, BOSTON—Advisor headcount was largely unchanged in 2023 as the number of advisors grew by just 2,706 in 2022, according to The Cerulli Report—U.S. Advisor Metrics 2023. The number of new advisors barely offsets trainee failures and retirements, emphasizing the critical need for the industry to attract and retain talent.

Over the next decade, 109,093 advisors plan to retire, comprising 37.5% of industry headcount and 41.5% of total assets. Meanwhile, the rookie failure rate hovers around 72%. As the industry grapples with such a low success rate for new advisors entering the industry, firms must grow their talent pipeline and better communicate the role and training timeline of a financial advisor.

According to Cerulli, only a small portion of rookies (13%) join the financial advice industry as the first job in their career; however, 40% of rookie advisors work in the financial services industry prior to becoming an advisor. To this end, professional networking and referrals could be as critical for firms building a pool of potential advisor candidates as it is for those looking to become financial advisors—nearly one-third (32%) of rookie advisors were referred by a personal contact.

It is crucial for RIAs and B/Ds to continue to develop programs and training methods to aid rookies in financial planning and other skills to adequately prepare them as they embark upon a new career as an advisor...

Ramp-up time and responsibilities are important to growth, development, and retention. Rookie advisors generally start in roles focused on increasing practice efficiency and then shift into producers by being provided a natural progression in their roles and responsibilities. Cerulli recommends senior advisors ensure sufficient learning opportunities are provided to younger team members for experience in client-facing and asset-gathering roles. Granting rookies opportunities for development better positions a practice for a potential transition, as well as achieving process continuity and job satisfaction, which will lead to longer-tenured staff.

“A strong partnership between a rookie advisor and their firm is often a key reason behind successful development,” says Andrew Blake, associate director. “Rookies rely upon strong mentorship from their peers, exposure to successful financial advisors, and increased training on various financial planning topics. It is crucial for RIAs and B/Ds to continue to develop programs and training methods to aid rookies in financial planning and other skills to adequately prepare them as they embark upon a new career as an advisor,” he concludes.

 

 

 

About Cerulli Associates
For over 30 years, Cerulli has provided global asset and wealth management firms with unmatched, actionable insights.
Headquartered in Boston, Cerulli Associates is an international research and consulting firm that provides financial institutions with guidance in strategic positioning and new business development. Our analysts blend industry knowledge, original research, and data analysis to bring perspective to current market conditions and forecasts for future developments.