According to Financial Planning, the demand for financial advisors is surging, but the wealth management industry is struggling to keep pace with hiring. A recent McKinsey & Company study warns that firms could face a shortfall of up to 100,000 advisors by 2034, even with improvements in technology and team structures.
Wealth management is in a strong position, with annual fee-based advisory revenue soaring 73 percent over the past decade to $260 billion. Client relationships are expanding at three times the rate of U.S. population growth, and the number of households with at least $500,000 in investable assets is rising at a steady pace, according to Financial Planning. McKinsey estimates that advised client relationships could increase by 28 percent to 34 percent this decade, reaching between 67 million and 71 million.
To close the gap, wealth management firms must rethink how they attract, train, and retain advisors. Financial Planning compiled several strategies from the report that the industry can implement, including:
- Expanding on-campus recruiting at colleges
- Creating career paths for industry newcomers and career-changers
- Developing team-based roles that do not require immediate sales targets
- Recruiting advisors who may not fit at other firms but have potential elsewhere
Team-based models offer a promising path forward. Financial Planning reports that advisors in team structures manage practices that are 20 percent larger than solo practitioners. Currently, 59 percent of advisors at national or regional brokerages work in teams, and further adoption of this model could unlock 3 percent to 6 percent in advisor capacity.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
