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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