Cerulli | The Financial Advisor Industry Has a Headcount Problem (2024)

FAQs

Cerulli | The Financial Advisor Industry Has a Headcount Problem? ›

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.

Up to 90% of financial advisors fail in 2.5 to 3 years in the business. This number is so high because the industry is full of people who are just trying to make a quick buck and are not in it for the long haul. If you want to be a successful financial advisor, you need to have a plan and stick to it.

Lack Of Fulfillment

They are required to spend their days selling products and services they don't believe in. Far too many advisors find themselves working 9-5 (or worse) at a job that doesn't fulfill them or make them happy.

The country's advisors are retiring, along with their baby boomer cohorts, exactly when those clients need advisors' services the most. Nearly 40 percent of financial advisors are expected to retire in the next decade, and the replacement rate is not keeping up.

With an adviser shortage estimated to reach 50,000 over the next decade and an increase in demand, there has never been a better time to get into this sector.

Key Takeaways

Communication is a big issue: not listening to clients, not communicating with them, or some breakdown in how comfortable they feel with you. Communication is often at the heart of other cited problems with an advisor. Setting realistic expectations at the outset of the relationship is crucial.

Prospecting. Prospecting for new clients is a fundamental but often challenging aspect of a financial advisor's daily routine.

That's the case even though 42% consider themselves “highly disciplined” planners, which is more than twice the percentage of the general population. Odder still, 70% of wealthy Americans work with a professional financial advisor — and yet one-third still worry about running out of money in retirement.

How long does the average client stay with their financial advisor? ›

How long do clients stay with a financial advisor? The client churn for financial advisors is notoriously high. The average client lifespan for a financial advisor is between three and five years, with 45% of clients leaving in the first two years.

Research shows that the top reasons people fire their financial advisor are the quality of the advice and services provided, the quality of the relationship and the value of working with that advisor relative to the cost. Many people hire a financial advisor because they want an expert in their corner.

From the rise of blockchain technology and cryptocurrencies to the role of AI and automation, the future of financial advisors remains bright. Embracing these technologies and adapting your strategies allows you to enhance your service offerings and maintain a competitive edge in the industry.

80-90% of financial advisors fail and close their firm within the first three years of business. This means only 10-20% of financial advisors are ultimately successful.

This could be anything from starting a family, receiving a sizable inheritance or going through a divorce. If you have kids, for instance, you'll want to start thinking about saving up for their college education and possibly passing on an inheritance. The right financial advisor can help you do these things.

New York and Florida rank next, with 26,800 and 24,640 financial advisor jobs, respectively. Financial advisors make up the highest share of all jobs in New York and North Carolina. In these states, 2.94 of each 100,000 jobs are for financial advisors.

Lots of Hard Work Early On

In the initial stages of your career, you'll need to put in long hours to establish your practice and build a solid client base. Many advisors routinely work more than 60 hours a week to meet the demands of their profession.

The benefits of becoming an advisor include earning potential, a flexible work schedule, and the ability to tailor one's practice. The drawbacks include high stress, the hard work needed to build a clientele, and the ongoing need to follow regulations.