The number of financial advisors is gradually dwindling as trainees fall out and veterans retire, highlighting the serious need for the industry to attract and retain talent, reports a recent study by Cerulli Associates.
The firm’s latest study, “The Cerulli Report—U.S. Advisor Metrics 2023,” finds that over the next decade, 109,093 advisors, or 37.5% of the industry headcount, are set to retire—and will take 41.5% of the industry’s total assets with them as a result.
Meanwhile, the failure rate of rookies leaving the financial advisory sector falls around 72%, a sign that firms must do a better job at recruiting talent. According to Cerulli, only 13% of rookies join the financial advice industry as their first job after college, while 40% work in the financial services industry before getting a job as an advisor. Cerulli notes that professional networking and referrals are critical for firms to build a solid talent pool of advisors, with 32% of current rookie advisors having been referred by a personal contact.
How rookies grow and develop within their advisory roles has a large impact on their willingness to stay with a firm. Senior advisors have a responsibility to ensure rookies are provided with learning opportunities that extend to client-facing and asset-gathering roles, in order for them to gain experience, be satisfied in their roles, and eventually ease transition periods, Cerulli adds. This all leads to a longer-tenured staff, the report notes.
“A strong partnership between a rookie advisor and their firm is often a key reason behind successful development,” said Andrew Blake, associate director at Cerulli, in a statement. “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 [registered investment advisors] and B/Ds [broker/dealers] 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.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
