A new study conducted by Cerulli Associates found that the overall financial planner population has been steadily decreasing and that only one category of advisors is expanding to make up for the loss.
The number of Retirement Income Advisors (RIAs) has grown steadily between 2004 and 2012, at an annual rate of about 8 percent, while other areas of financial planning have seen decreases of about 1 percent a year, according to Cerulli Associates. Cerulli Director Bing Waldert called RIAs the “sole growth in a shrinking industry.”
Another earlier study by Cerulli found that the number of financial advisors has fallen by 32,000 since 2005 due, in part, to older advisors retiring in droves and not enough young advisors to take their place.
The growth in the RIA industry has grown to address the issues of retiring baby boomers, and many law and accounting firms have begun offering these services. Another reason for growth is that many RIAs are breaking away from independent broker-dealers and are establishing their own advisory firms.
At the same time, many wealthy clients are bombarding the current number of advisors, thereby creating an industry ripe for new professionals. Said an industry professional: “This is why this is such a compelling career choice for young people.”
The Growth of Financial Advisors
The Bureau of Labor Statistics reflects this industry trend when they reported that the employment of personal financial advisors is expected to grow at a rate of 32 percent between 2010 and 2020, which is much faster than the average occupation. The BLS also reported that the surge in growth is likely due to an aging population and the large number of baby boomers who are seeking retirement planning advice from professionals.
Shortfalls in pension funds are also sparking a need for qualified financial advisors who can help their clients strategize their retirement planning given their reduced benefits.