The US wealth management industry is facing a retirement crisis; not a financial shortfall but a talent shortage caused by retirement of thousands of advisors.
New research warns that recruiting new people into the industry is not happening fast enough to offset those retiring. And this is at a time when wealth management demand is increasing by a larger cohort of wealthy people, more complexity in their needs including greater reliance on personal savings amid fears of the long-term outlook for Social Security, and willingness to pay for financial advice delivered by humans.
McKinsey’s report highlights that the advisor workforce has only grown by 0.3% annually over the past decade and is projected to decline by 0.2%. By 2034, assuming current levels of advisor productivity are maintained, the report expects a shortage of around 100,000 advisors.
The firm estimates that the number of affluent households (with at least $500K in investable assets) will grow by 4-5% annually – far higher than the 0.6% annual rise in the general population. Its previous research revealed that wealthier households are willing to pay a premium for human-delivered financial advice rather than customized digital advice.
This all means that demand for wealth management services is set to grow and firms are expanding offerings to include a broader set of capabilities including tax, trust, estate, philanthropy, and more.
But while many productivity initiatives have been introduced, the report notes that most of the ‘quick wins’ in this regard have already been realized. That limits the ability of firms to serve more clients with their existing headcount.
Attracting talent has included recruiting advisors who want to switch from other firms, including those who choose to go independent, but long term new people will need to be brought into the industry even to replace those who leave through retirement or for other reasons.
Not only will firms need to have compelling strategies to entice talent that is also being courted by other professions, but growing headcount will also require faster growth for new talent and continued improvement of productivity for established advisors.
The report shows estimates based on three scenarios:
Among the measures suggested to address the estimated advisor shortage are structured programs and internships to increase entry-level talent, while also encouraging career switchers, and underrepresented groups. Also, boosting productivity using technology such as AI, along with team-based advisory models. Finally, succession planning to mitigate the impact of retiring advisors.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.