The Industry Needs Help!
Based on those simple facts, it’s plain to see the wealth management industry is on the cusp of a demographic nightmare.
Compounding the problem, says Sandy Herzlich, vice president of retirement strategy at The American College of Financial Services, is the fact that the country’s advisors are retiring, along with their baby boomer cohorts, exactly when those clients need their services the most. According to Cerulli, nearly 60 percent of RIA assets are managed by advisors aged 55 and above.
Women are three times as likely as men to say they can’t afford to save for retirement and have significantly lower rates of financial literacy. Women also make up the majority of caregivers, and are three times more likely than men to quit their jobs to care for a family member.
Generally speaking, women earn less, save less, and live longer — but are still responsible for the same living expenses men pay. And since they live longer, they face additional costs, including more long-term and overall health care expenses.
New research from Fidelity Investments shows that 63% of Gen Y & Z investors believe working with an advisor is key to achieving financial success and 60% feel a heightened need to engage a financial advisor this year due to economic uncertainty. With 57% of existing client assets expected to pass to the next generation by 2045, this presents a significant growth opportunity.
More than $50 trillion is expected to pass from Baby Boomers to Gen Xers and Millennials in the upcoming decades. According to the U.S. Bureau of Labor Statistics (BLS), there were more than 330,300 financial advisors in America in 2021. That number is expected to increase by 50,900 by 2031, a faster than average rate of job growth.
