Coming advisor shortfall has advisors turning to AI

Studies show there’s a scarcity problem brewing in the wealth management industry. Over the coming decade, fewer advisors will be serving more and more clients.

Those professionals that view this market imbalance as an opportunity have a chance to enjoy remarkable growth. Those that don’t could very well disappear.

The difference, and the wild card, advisors say, is technology.

Consulting firm McKinsey estimates by 2034, at current advisor productivity levels, the advisor workforce will decline to the point where the industry faces a shortage of roughly 100,000 advisors. Mix that with a wealth transfer of $124 trillion through 2048, according to the latest Cerulli projection, and that creates significant opportunity for wealth managers like Cooke Financial Group’s Tammy Williams, who is already planning to take advantage of the coming dislocation.  

“With the average age of advisors being in their mid-to-late fifties, there is a huge talent gap to fill. It’s essential that firms, like Cooke Financial Group, start the recruitment process now and begin developing the next generation of advisors,” Williams said. 

Filling the advisor gap

To fill that gap, Williams is first considering the recent college graduates that have a natural interest in wealth management. After that, she’s targeting individuals that have over a decade of career experience who are seeking a new chapter or second career.

“The dot-com Bubble in 2000 and the housing crisis in 2008 left a gap in the financial services industry, particularly in the millennial generation. In our opinion, finding talent in this age range increases our ability to grow significantly,” Williams said.

She also has big plans to leverage technology to keep up with current trends, minimize human error, and improve efficiency. 

“Firms that embrace AI and automation will be the ones that have the scalability to grow, while continuing to prioritize strong client relationships that remain essential to our business. Our goal is to find the perfect blend of high-touch service with cutting-edge technology that today’s clients expect,” Williams said.

Similarly, Will Metzner, vice president at Optimus Financial, part of Stifel Independent Advisors, believes there will be a market opportunity for growth-minded firms and advisors to take advantage of the coming talent shortage. And he also feels “emotional intelligence” (EQ) will matter more than ever.

“Clients want to feel understood, and not just managed. Technology can calculate outcomes, but only a human can coach someone through a death, divorce, or retirement. AI can give advice, but advisors with strong EQ will help clients act on it, especially in times of stress,” Metzner said, adding that he has already incorporated technologies including CRM, virtual meetings, and planning software into his practice to boost productivity.

EQ and AI, too

Valarie Vest, executive vice president and chief experience officer at Cambridge Investment Research, said she is taking a multi-faceted approach to the approaching talent shortage, which includes leveraging emerging technologies like AI to attract and support new advisors, delivering a more personalized experience to investors and improving the overall investor experience by eliminating time-consuming, paper-heavy processes.

“We believe the industry is on the cusp of a major transformation, and Cambridge is building on its foundation of true independence. Our goal is to create a more intuitive, trust-driven experience that strengthens advisor-investor relationships and enhances the human experience in every interaction,” Vest said.

Similarly, Jason Hanavan, president and CFO at VestGen Wealth Partners, views taking advantage of the thinning of the advisor ranks as “critical” to his business strategy. Aside from helping retiring advisors with succession, Hanavan said one of his core strategic pillars is to invest in the nextgen advisors through targeted recruiting, hiring and development programs.

“We’re all about developing the next generation of advisors and giving them tools and tech to provide outstanding service to their clients and the assets they’re managing. Giving them the tools they need to grow,” Hanavan said.

One of those tools is AI, said Hanavan, and embracing AI as a supplemental tool to “unlock more capacity for nextgen and improve the overall client experience.”

As to which AI tools wealth management firms need the most, Sindhu Joseph, CEO of AI technology platform CogniCor, said point solutions like note-takers and form-fillers offer short-term relief, but they won’t enable advisors to scale with rising client demands. What’s needed, according to Joseph, is an intelligence layer that unifies systems, data, and workflows, in order to transform “fragmented operations into insight-driven experiences.”

“Acting now not only helps advisors serve more clients with greater personalization and precision, but also opens the door to a new generation of advisors, those with strong interpersonal skills who, with the right support, can deliver technical, investment, and compliance guidance,” Joseph said.