Wealth Firms Face Succession Test as Advisor Retirements Loom

Wealth management firms must strengthen their recruitment and training programs as a large share of the industry’s financial advisors approaches retirement, according to the latest Cerulli Edge—U.S. Advisor Edition.

About 35% of financial advisors, who collectively manage 40% of industry assets, expect to retire within the next 10 years. More than one-quarter of those advisors are uncertain about their succession plans, increasing the risk of disrupted client relationships and lost assets.

Cerulli said firms will need to help veteran advisors create succession plans and transition their books of business to trained junior colleagues. However, the time and resources needed to develop new advisors remain significant obstacles.

Among practice management professionals surveyed by Cerulli, 73% identified the time required for rookie advisors to learn the business as a major challenge. Another 67% said day-to-day training demands too much time.

Cerulli recommends that firms adopt a long-term approach to recruiting and place junior advisors on larger teams with structured career development plans.

“Rookie advisors placed in larger advisor teams with long-term career development plans will be best positioned to create natural retirement and business succession paths for advisors,” said Olivia Morgan, a Cerulli research analyst.

That model can help retiring advisors monetize their practices while gradually transferring clients to colleagues who understand the business and its relationships.

Firms that promote clear, sustainable career paths may also gain an advantage when competing for qualified young professionals.

“A long-term approach provides both a retention and a recruitment strategy,” Morgan said, supporting a talent pipeline that can help wealth managers navigate the coming retirement wave.