2022 was a dismal year for rookie financial advisors as there was a 72% failure rate. In total, the number of new financial advisors grew by 2,579 which was barely more than the number of advisors who retired.
Overall, there are 288,555 financial advisors in the US. A pressing concern is that the advisor workforce is rapidly aging. According to a recent report from Cerulli, 37% of advisors plan to retire over the next decade. This amounts to 106,264 advisors who will be exiting the industry.
At current growth rates, there is little chance of this shortfall being made up unless there is some radical change in training programs or recruitment efforts. Currently, 64% of new advisors are recruited through referrals.
Financial services companies will have to broaden their horizons if they want to educate young people about this career path especially as the role has shifted significantly over the last couple of decades from focusing on stock-picking and investment management to goals-based planning.
For younger advisors, it constitutes a significant opportunity to gather clients and assets. For firms, it will likely be a major challenge and likely continue fueling the recruiting frenzy.
Finsum: It’s estimated that nearly 40% of financial advisors will be exiting the industry over the next decade. This will create major challenges and opportunities for players in the industry.