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This means at that time there will be , financial advisors. According to one recent report , the number of independent broker-dealer firms has been in a steady decline for the past decade, resulting in firms in Meanwhile, the number of RIA firms has increased from 9, to 15, over the same time period. Fidelity boasts 8, advisors. Coming in second and third, respectively, Charles Schwab has 1, financial advisors and TD Ameritrade has 6, Edward Jones has 14, advisors, and Raymond James has 8, financial advisors.
Edelman serves just over a million clients and has a team of financial advisors. CIBC has 8, clients and financial advisors. Hightower boasts 37, clients and advisors. Creative Planning has financial advisors and 33, clients. Mariner Wealth Advisors has advisors serving 23, clients. Are You Ready For ? This chart shows the various occupations closest to Personal financial advisors as measured by average annual salary in the US.
In other words, wages are distributed more evenly for Personal financial advisors shown in red than for the overall labor force shown in gray. The number of people employed as Personal financial advisors has been growing at a rate of 7.
This graphic shows the share of Personal financial advisors employed by various industries. Demographic information on Personal financial advisors in the US.
The average age of male Personal financial advisors in the workforce is This chart shows the gender breakdown of Personal financial advisors. Representing 6. This chart shows the racial and ethnic breakdown of Personal financial advisors.
The median age of Personal financial advisors is Many of them are for narrower products or services outside the scope of traditional advice, like the Series 31 for running a managed futures fund or the Series 79 to do investment banking. And many of those FINRA-registered individuals are in non-advisor operations or oversight capacities.
The actual number of people registered with FINRA who are truly client-facing with retail consumers and even in a position to give personal financial advice is less than half of the , And of course, many advisors do business in multiple channels, right? Historically, many of us who were FINRA-licensed were also licensed to sell insurance and annuity products with the state. And even some RIAs today maintain a state insurance license even if they don't have a FINRA license because they're doing fixed insurance products like implementing universal life for estate planning purposes.
Which means you can't even just add up the number of people who are registered under an RIA or under a broker-dealer or have a state insurance license because you have to deduplicate all the overlapping ones who span multiple channels or go into the firms directly and try to sample them to figure out how many there are.
Now, the organization I think that does the best job at trying to do all this messy counting process is Cerulli Associates.
They're an industry research firm, and their estimate is that the total number of financial advisors is , Just over ,, spread across all the different industry channels, from wirehouses to independent broker-dealers to RIAs. Now, the caveat here is that not all of those financial advisors really actually do much financial advising. Cerulli does have a pretty rigorous definition about how they count who's a financial advisor in order to count them properly, but they do set the bar fairly low.
And so, consequently, when Cerulli estimates there are over , financial advisors, their follow-up research has found that less than half of them even state they offer financial planning advice to clients. Now, I don't know quite what it means to be a financial advisor who doesn't give financial advice. I think it essentially means they are financial advisors who are really just in the business of selling financial services products because they literally say they're not even giving financial planning advice to their clients as a financial advisor.
Now, the truth is, even amongst those who say they're doing financial planning, some are very in-depth and comprehensive and some aren't going that deep and most of their financial planning is probably just giving the prepackaged output from some financial planning software.
But when more than half of the advisors don't even say they do that, give prepackaged software output, it means the true number of financial advisors who really give financial planning advice to clients is well under half of that , total, which isn't entirely surprising given that the number of CFP certificants is only about 82, And while I think there are some non-CFPs who still give good financial planning advice and maybe just didn't get the marks because in the past they weren't as significant and they don't want to go back and get them now, not all of those who are CFP certificants do comprehensive financial planning advice as well.
The number of advisors truly providing advice, if I call like truly being financial advisors who are compensated for giving financial advice, is likely less than the 82, number of total CFP certificants.
So that is a baseline. Let's talk about the trends a little. Cerulli's been predicting that the number of financial advisors would shrink significantly in the coming years. Back in , when there were just over , financial advisors, they predicted that within 4 years, essentially by today, we'd be down to only , , driven by the fact that nearly half of all financial advisors are over the age of 55 and there are more than 8, advisors hitting retirement age every year for the next decade.
And when you couple the nearly , financial advisors who will hit the retirement age cumulatively over a decade on top of the rising automation of robo and other technology tools, the prediction has been that the headcount for financial advisors was just going to shrink lower every single year for years to come as the industry would continue to struggle to attract next-generation advisors to replace all those projected to leave.
But as I've maintained for the past several years, I think Cerulli's forecast is dead wrong. And I don't say that with any disrespect to Cerulli. I think they do a fantastic job with their research and I recommend them frequently, but I think the projection on this issue in particular, that the domain of financial advisors is shrinking because a big wave of them are hitting retirement and technology is rising to replace them misses some really key points.
The first reason why we're not likely to see a decline in the advisor headcount in the coming years, despite being an industry where so many are over the age of 55, is simply that financial planning is not a business you retire from just because you're eligible for Medicare and your Social Security check. After all, remember, the original reason for social insurance programs like Medicare and Social Security was that back in the Industrial Age, most jobs were manual labor and at some point, you physically couldn't do them anymore.
Your body became obsolescent tools. So like old factory equipment that doesn't work anymore, you had to be retired from the factory. And most people's bodies started giving out in their 50s and 60s, so we associated retirement with being something and created those Medicare and Social Security programs as a backstop for those who physically had to retire and couldn't work anymore and needed to put food on their table.
But financial planning is not exactly manual labor. This is not a business where your body gives out in your 60s. Financial advice is primarily a business of intellectual knowledge. Client relationships bolstered by experience and a lifetime building of reputation in your community. And not only that, but a lot of those financial advisors aren't necessarily actually working that hard after 30 years. You know, by then, you've got most of your clients. You don't have to prospect so aggressively anymore.
You don't have to do as much of that time-consuming upfront work with new clients because you're not necessarily picking up a lot of new clients. You get to leverage three decades of wisdom and experience working with clients you like working with, potentially making hundreds of thousands of dollars a year and enjoying not only the financial rewards but just the psychological rewards of having great relationships and a meaningful positive impact on your clients.
Who retires from that just because you're eligible for Social Security check that's only a fraction of the income you're already making from the work that you're enjoying? Now, I do see a lot of advisors at this stage make some adjustments to their practice. Maybe you decide to start outsourcing some key parts of the business so you can focus more on just the client stuff that you enjoy.
Maybe you decide to let go of some small clients that just aren't a good return on your time anymore so you can free up that time for grandchildren on top of your existing clients that you keep.
Maybe you change firms or platforms one last time or tuck into a larger firm so that you can have a continuity plan if something does happen to you. But this is why I said six years ago that all these hand-waving predictions of a shrinking advisory industry and a looming succession planning crisis was going to be a total mirage. And that when the time came for the wave of retirements, advisors wouldn't be retiring, because for a lot of advisors, there's no reason to do that yet, at least not in your 50s and 60s, maybe in your 70s and 80s at some point.
But that means this wave of retiring advisors might actually stretch out not just over the next 10 years, but the next 20 to 30 years. There's no reason to.
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