This uptick in demand is well documented. Data from the U.S. Bureau of Labor Statistics projects employment of personal financial advisers to grow 13% by 2031, which is much faster than average across all occupations. But today's young professionals want more than growth opportunities and a steady income.
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.
Increased demand for financial advice
According to the data, more businesses are getting financial advice as accounts enquiries are up 122.7% between 5 July and 15 October 2024, compared to the same period in 2023.
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.
Advisors may quit if they feel that they've been wedged into a role that doesn't fit their skills, or that their firm doesn't encourage them to acquire new skills. It's frustrating, and once frustration sets in, it can be difficult to feel as if you're able to move ahead.
Job Outlook
Employment of personal financial advisors is projected to grow 17 percent from 2023 to 2033, much faster than the average for all occupations. About 27,000 openings for personal financial advisors are projected each year, on average, over the decade.
The average age of a financial adviser in the U.S. is 56. As they start to retire, younger practitioners will need to step up.
Financial advisors are leaving the industry for all sorts of reasons, but in most cases, the root cause can be traced to the same origin: failed training programs. The result is that many advisors struggle to build an enduring practice.
According to the Bureau of Labor Statistics, the financial advisor industry is expected to grow by 17% through 2033. However, even with this expected growth, change is likely in 2025 and beyond.
Graduating college, getting married, expanding your family and starting a business are some major life events that might cause you to reevaluate your financial situation. A financial advisor can help you manage these life events while making sure you get or stay on track.
It also takes considerable time and effort to build a clientele and is considered a high-stress job by many, even in the best of times.
The financial services industry is facing a critical challenge: a talent shortage. As the average age of financial advisors has reached 57, firms must urgently focus on attracting and training young talent to ensure sustainability.
And if you're a financial advisor in the following ten metro areas, you can expect to make more money than in any other: Barnstable Town, MA: $ 83.07/hour; $172,780/year. San Francisco-Oakland-Hayward, CA: $ 77.41/hour; $161,010/year. East Stroudsburg, PA: $76.34/hour; $158,790/year.
New advisors face an uphill battle. Building your clientele from scratch and producing results for your firm – all while trying to learn the business – is tough. In fact, 80 to 90% of financial advisors fail in the first three years.
Ultimately, the key point is that financial advisors have new technologies and approaches that increasingly support a shift into a more proactive, interactive, and dynamically engaging version of planning for clients – Financial Advice 3.0.
The Bottom Line. As a financial advisor, it takes hard work to attract clients and even more work to keep them. Clients can part ways with their advisors due to poor communication, mismatched expectations, underperformance, lack of personalized advice, trust issues, high fees, and inadequate financial education.
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%.
Commissions. In this type of fee arrangement, a financial advisor makes their money from commissions. Advisors earn these fees when they recommend and sell specific financial products, such as mutual funds or annuities, to a client. These are often payable in addition to the above client fees.
As long as you earn the right degree, get certified, and show how your life experience is an asset, you can become a financial advisor no matter how old you are.
Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.
Yet there is another occupation that is in very high demand, though it might not get as much attention: financial planning. In fact, the job prospects for those who choose this career are excellent.
A bachelor's degree or higher in any discipline from an accredited college or university is required for CFP® certification.
While the typical annual financial advisor fee is thought to be 1%, according to a 2023 study by Advisory HQ, the average financial advisor fee is 0.59% to 1.18% per year. However, rates typically decrease the more money you invest.