Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
Here’s a sobering fact for the future of financial advisors: the average age of all financial advisors is 50.9 years.
A Cerulli Associates report also found that 43 percent of financial advisors are older than 55 years old, and nearly 33 percent fall between 55 and 64 years of age.
The oldest advisors are found among independent broker/dealers, Cerulli also said.
“The advisor population agents, broker/dealers and custodians are at risk of losing AUM (assets under management) as advisors exit the industry,” said Kenton Shirk, associate director at Cerulli. “The independent channels are most at risk because they have the oldest advisors on average.”
The findings are included in The Cerulli Report: Advisor Metrics 2013: Understanding and Addressing a More Sophisticated Population.
What does the aging of advisors mean for the industry?
The industry can expect more consolidation as advisors merge or sell their businesses to larger practices. It also means new opportunities for young advisors looking to break into the field, especially as broker/dealers struggle to recruit young advisors to compensate for those approaching retirement, Shirk also said.
The Cerulli report recommended that companies encourage advisor teams to recruit junior advisors and train them in such areas as estate planning or retirement products to lower attrition rates, which is key as veteran advisors leave the industry faster than they can be replenished.
Financial services distribution industries are well aware that they are competing with other industries for top talent. The financial advisor profession suffered a minor bruise this week when U.S. News & World Report found that advisors ranked No. 41 out of the 100 Best Jobs in 2014, down from No. 32 last year and No. 23 in 2012, the first year the list was published.
Financial advisor jobs ranked high in terms of employability, growth and work-life balance, but low in terms of stress levels.
If there is a silver lining in the Cerulli report, it is that younger advisors are going to find it easier to break into the industry thanks to new technology lowering the barriers to entry. “An advisor doesn’t need a Wall Street pedigree, just an Internet connection and the trust of their clients,” the report said.
Thriving in the industry, however, remains an exercise in trust, value and looking out for the long-term interests of clients, the Cerulli report said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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