Here’s some good news: Total head count among financial advisors rose 1.1% in 2014, marking the first annual increase in nine years, according to Cerulli Associates.
“Many positive developments led to the head count growth last year,” said Kenton Shirk, associate director at Cerulli. “From the advisor perspective, there is a heavier focus on teaming and on-boarding rookie advisors into multi-advisor practices. Advisors are eager to hire junior advisors so they can refocus their own efforts on their largest and most ideal clients. There is also greater awareness and concern about succession preparedness.”
In a recent Cerulli report entitled Advisor Metrics 2015: Anticipating the Advisor Landscape in 2020, the Boston-based financial services industry research firm said the advisor profession saw a 12.7% drop in total advisor head count between 2005 and 2013. And it expects 2014 to be the start of a mini-trend of positive momentum with a small boost in head count during the next three years.
But here’s some bad news: Cerulli expects head count growth to reverse again in 2019 as advisor retirements increase. As noted in the report, 52% of independent advisors plan to retire within the next
“In 2020, Cerulli believes that modest head count gains will be trumped by a sizable uptick in advisor retirements,” Shirk said. “The industry’s head count will begin to decline once again at an even more pronounced rate than in the recent years.”
To mitigate that, Cerulli suggests the advisor industry put more focus on recruiting and grooming new advisors in the coming years.