Advisor Retirements Expected to Set More Than One-Third of Industry Assets in Motion


PRESS RELEASE | FOR IMMEDIATE RELEASE


Advisor Retirements Expected to Set More Than One-Third of Industry Assets in Motion


To retain assets, broker/dealers should consider rookie advisor recruiting efforts, advisor teaming, and succession planning tools


November 2019, BOSTON—At the end of 2017, the average age of financial advisors in the United States was 52, which, for many advisors, means that retirement is in the not-so-distant future. Over the next 10 years, roughly 37% of advisors are expected to retire, which would put almost 39% of industry assets in motion, according to Cerulli Associates' newest report, U.S. Broker/Dealer Marketplace 2019. Partly as a result, Cerulli projects that total advisor headcount will decrease 1.4% between year-end 2018 and 2023.


The wirehouse (40.7%), independent broker/dealer (IBD) (40.7%), national and regional broker/dealer (B/D) (39.7%) channels have the largest portion of advisors who are planning to retire and transition their businesses within the next 10 years. Meanwhile, the hybrid registered investment advisor (RIA) channels (31.1%) and bank B/Ds (24.7%) have lower rates of advisors retiring within the next 10 years.


Similar to the attention being paid to the pending wealth transfer that is set to see $68 trillion in assets change hands between generations over the next 25 years (see The Cerulli Report—U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2018), the industry is attempting to adapt to a changing of the guard amongst its own advisors. Across all channels, 28% of advisors who plan to retire in the next decade expect an advisor in their practice to succeed them, while 22% have no plan.


Michael Rose, associate director of wealth management at Cerulli, explains, “While some progress is being made, the industry is struggling to recruit and retain advisor talent that is adequately prepared to inherit the businesses.” In an effort to overcome this challenge, firms are boosting recruiting efforts to bring new advisors into the industry and revamping training efforts to improve success rates.


“Just as importantly, B/Ds are working to create attractive succession options for advisors approaching retirement,” Rose adds. “It will be increasingly important that firms operate successful training programs in order to attract and train qualified advisors, integrate these younger advisors within teams for whom they can serve as a pipeline of potential successor candidates, and operate effective business succession programs for retiring advisors.”

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NOTES TO EDITORS:
These findings and more are from The Cerulli Report—U.S. Broker/Dealer Marketplace 2019: Value Levers—Technology, Planning, and Practice Management.

 

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