While the graying of the advisory industry creates the risk of having too few reps to meet the demand of aging boomers, it's a big opportunity for younger advisers eager to build their businesses.
While the graying of the advisory industry creates the risk of having too few reps to meet the demand of aging boomers, it's a big opportunity for younger advisers eager to build their businesses.
In the past four years, the number of advisers in the U.S. fell to 310,000, from 314,000, as many reps retired from the industry, according to a new report from Cerulli Associates Inc.
“The industry can't replenish advisers as fast as they're retiring,” said Jeff Strange, an associate director at the research firm.
According to Cerulli, the average age of an adviser is 49, although Mr. Strange acknowledged that it may be even older since the firm analyzed predominantly fee-based advisers — a group that tends to be younger. About 14% of the advisers they looked at are 60 or older.
To replenish the advisory work force, Mr. Strange said, the industry needs to strengthen training programs for younger people since roughly 10% of advisers leave the industry each year.
In recent months, a number of financial firms have launched training programs, but the report showed that a larger broker-dealer needs to add 2,000 to 3,000 advisers “just to keep pace.” For example, the report showed that Wells Fargo Advisors added 21,000 advisers in 2009, but the firm would need to hire an additional 2,000 advisers each year just to maintain its current ranks.
Of course, attracting younger individuals to the business is often more difficult for smaller independent firms, which have more-limited choices, said Michael Byrnes Jr., president of Byrnes Consulting LLC.
For young advisers, the aging of advisory business means more potential clients.
George Bowen, 40, for example, is considering buying the book of a retiring adviser. “This is really a great way to increase your book if it's a good fit,” he said.
