Independence, technology are key to tackling talent drain, say industry leaders

With the U.S. facing a looming shortage of financial advisors, firms are laser focused on what they can do to get hold of, and retain, top talent.

McKinsey underlined the scale of this challenge in a report released earlier this year. With advisor retirements outpacing recruitment, headcount is expected to decline by about 0.2% annually. Worryingly, the consulting firm estimates that, by 2034 the industry could face a shortage of about 100,000 advisors.

Advisory firms acknowledge the problem and are tackling it head on. “This is something that we think about a lot,” Stacy Francis, the founder and president of fee-only fiduciary wealth management firm Francis Financial, told InvestmentNews.

READ MORE: One in 10 advisors expect to switch firms in 2025: Cerulli report

Francis points to career development as crucial, with the company putting “a huge amount of time and consideration” into building very detailed career paths for its 22 employees. This involves an outline of the steps they need to take, as well as checklists to help them progress to the next stage in their careers.

As for pay, Francis describes a “baseline” of favorable compensation for each employee, which includes a quarterly bonus that is a percentage of the firm’s revenue. Upon this, the company layers “very good” benefits and a remote work-from-home program that gives employees lots of flexibility, she added.

However, the company’s culture is the most important piece in the talent jigsaw, according to Francis. “Every single employee knows that they are part of a family, and we are there for them through thick and thin,” she said. “You’re in a place that really appreciates you.”

Culture is also cited as critical by Peter Mallouk, president and CEO of private wealth management firm Creative Planning. “I think [advisors] like that we’re not a firm that requires them to sell products,” he told InvestmentNews. “They don’t have to go find their clients at the country club – clients come to Creative Planning.”

The company’s roughly 450 advisors also enjoy a lot of freedom, according to Mallouk. “We follow a very succinct planning and investment process,” he said. “There’s a lot of autonomy.”

Independence is important to advisors. Research released earlier this year by Cerulli Associates and 55ip found that approximately 10% of advisors are expected to transition their firms in 2025, either through consolidation or moving to new firms. Greater autonomy and the prospect of better technology were cited as key reasons for making the switch.

Technology is also being applied to the talent problem. SEI, which provides outsourced technology services to advisory firms, offers “Scale with Talent,” a set of tools that encompasses recruiting, onboarding, compensation, planning, and management. “It’s really all the key components of developing a talent strategy,” Shauna Mace, managing director for advisor services at SEI, told InvestmentNews. The company’s Scale with Talent workshop is one of its most in demand workshops, she added.

As for the advisor shortage looming on the horizon, the numbers certainly make for unpleasant reading. According to Charles Schwab’s 2024 and 2025 benchmarking studies, the RIA industry needs to hire 70,000 new staff over the next five years. This number does not account for attrition, retirements, or new firms.

Despite this trend, Francis Financial is finding it easy to attract talent, thanks in part to casting a wide net. “It’s talking to other people who might be interested in this field who are outside of the financial advice industry,” said Francis, adding that her firm has helped people successfully make a career shift from a range of backgrounds, including electrical engineering and optometry.

Creative Planning’s Mallouk says that his company’s relatively small size compared to, say, a Morgan Stanley, Merrill Lynch, or UBS, insulates it from the industry’s broader talent challenges.

“Because we’re such a small fish in the grand ecosystem of wealth management, it’s not an issue,” he said. “It’s a bigger issue for the wirehouses – if you’re employing tens of thousands or hundreds of thousands of people, demographic shifts are a very big issue.”

But he also acknowledges the scale of the industry’s problem. “The average age of a financial advisor is late 50s/early 60s, but at the same time, people are living longer, so there’s more of a need for financial advice,” he said. “There is a clear demographic shortage in this space.”