Where Will You Get Your Advisors?

The wealth management industry faces a critical challenge: a projected shortage of 100,000 advisors by 2034, as highlighted in a recent McKinsey & Co. report, "The looming advisor shortage in U.S. wealth management." This deficit stems from a stagnant advisor population, growing at a mere 0.3% annually over the past decade and expected to decline by 0.2% each year for the next ten. Simultaneously, the demand for financial advice is surging, with fee-based advisory revenue rising from $150 billion in 2015 to $260 billion in 2024.?

Notably, the impact of robo-advising isn’t mentioned as a factor that might lessen the shortage (although technology that supports human advisors is mentioned). The report focuses on human-advised relationships, which is the preference of higher net worth investors, and further notes the demand for these relationships are currently growing three times faster than the general population.?

The core issue is a wave of retirements, with 42% of current advisors, representing 110,000 individuals, expected to leave the industry in the next decade. To bridge this gap, the industry needs to attract 30,000 to 80,000 net new advisors over the next ten years, a stark contrast to the mere 8,000 gained in the previous decade. McKinsey projects a need for 320,000 to 370,000 total advisors by 2034 to meet demand.?

While traditional recruitment efforts remain vital, we believe a significant augmentation through strategic marketing programs is essential. The report emphasizes attracting inexperienced advisors through on-campus recruiting, structured internships, rotational programs, and tapping into talent pools from direct brokerages and career changers. Additionally, it suggests reconsidering individuals who previously struggled in advisor development programs.?

To amplify these traditional recruitment methods, wealth management firms must implement comprehensive marketing strategies focused on:?

• Brand Building and Awareness: Establish a compelling brand narrative that resonates with potential advisors, highlighting the industry's impact and career opportunities. This involves targeted digital campaigns, social media engagement, and content marketing that showcase the value proposition of a career in wealth management.?

• Targeted Marketing Campaigns: Develop specific campaigns aimed at key demographics, such as recent graduates, career changers, and individuals in related financial fields. This includes leveraging digital advertising, personalized email marketing, and partnerships with universities and professional organizations.?

• Showcasing Career Pathways: Create clear and compelling career pathways that demonstrate growth opportunities and potential earnings. This includes highlighting mentorship programs, training initiatives, and the ability to specialize in specific areas of wealth management.?

• Highlighting Technology and Innovation: Emphasize the industry's adoption of technology, including AI and digital platforms, to attract tech-savvy candidates. Showcase how these tools enhance advisor productivity and client engagement.?

• Promoting a Positive Culture: Market the firm's culture, emphasizing collaboration, work-life balance, and professional development opportunities. This includes showcasing employee testimonials and highlighting the firm's commitment to diversity and inclusion.?

As with any marketing program, messaging needs to be honed to each target segment. In our work designing and implementing recruitment programs based on marketing tactics, we have emphasized a strong coaching/teaming orientation to former athletes, the positive impact for clients to disillusioned attorneys, and supported independence environments to wirehouse advisors not ready to fully make the leap to stand alone RIA.

Beyond recruitment, McKinsey points to the impact of a 10% to 20% increase in advisor productivity as a way to supplement the raw demand for advisors. This can be achieved through centralized lead generation, team specialization, optimized practice management, and the integration of technology, including generative AI. These improvements, equivalent to adding 30,000 to 60,000 advisors, are crucial to meeting the growing demand for financial advice.?

By combining robust marketing programs with traditional recruitment and productivity enhancements, wealth management firms can effectively address the looming advisor shortage and secure their future growth.??

JQLaCorte has helped RIA firms market themselves, bring on new RIAs in a supported independence environment, and find advisors from specific adjacent industries and professions. When you are ready to address this for your firm, give us a call.?