State Of The Industry: Too Many Advisors, Aging Too Fast? Or Is Everything Just Right?

Sunday, April 03, 2011 23:48
State Of The Industry: Too Many Advisors, Aging Too Fast? Or Is Everything Just Right?

Tags: practice management

About 16% of advisors reportedly quit the business every year and those who remain are getting older. But does this mean that the strong players are simply squeezing out their less experienced counterparts?

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Brilliant article in Registered Rep that tries to answer the question of whether there's plenty of clients out there for established advisors and incoming trainees alike. 


The fact is, the number of advisors in all channels -- wirehouse to RIA, including banks and insurance agents -- has only dipped 1% since peaking in 2005. And with 44% of those advisors still aged 45 and under, this is not exactly a geriatric business.


The "problem" may simply boil down to demographic trends and history. While financial planning has been around since the 1970s, the modern advisory world didn't really get going until the mid-1980s, which means that most of the oldest practitioners are now at least in their mid-40s.


The problem of retention is a bit more serious, however. If it's true that the industry sheds 16% of its advisory force every year, that means enormous churn among younger advisors.


Figure 13% of the industry is under 35, which comes to around 43,000 advisors. It takes almost that many new recruits just to replace the people who quit or retire, so it may be true that if someone's going to drop out of the business, it'll be in the first few years.






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