“Why more young advisers are needed to replace those retiring” - Philip James Financial Services (2024)

FAQs

Do I really need a financial advisor when I retire? ›

Many financial professionals will, for a fee, help you navigate your way to and through retirement. Using a financial advisor isn't mandatory. If you can't afford, don't trust, or otherwise would prefer not to use an advisor, managing your retirement on your own is always an option.

According to various studies and publications, the average age of financial advisors is somewhere between 51 and 55 years, with 38% expecting to retire in the next ten years.

Lack of work ethic. It takes a lot of hard work and discipline to break into a career as a financial advisor. While many are willing to work hard for a period of time, fewer are willing and able to maintain the high-level work ethic required to survive and thrive as a successful advisor.

Financial Advice Is Changing But the Need Isn't Going Away

And while technology may satisfy some of those needs, it's not a perfect solution or an adequate replacement for a human financial advisor.

Many of the issues around day-to-day finance will only get more important in retirement, as budgeting gets more important without new income coming in the door. The simple truth is that financial planning for the future never stops. If you can afford it, professional help can make that process much easier.

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

Allspring also noted via email response that 53% of near-retirees have used a financial adviser, which was about flat to last year's figure; the firm expects that percentage to remain steady. The survey did, however, find potential for retirement participants to seek individual services through their employer.

The study reveals that 70% of millionaires work with a financial advisor, compared to just 37% of the general population. Moreover, over half (53%) of wealthy individuals consider their financial advisors their most trusted source of financial advice.

Many financial advisers charge based on how much money they manage on your behalf, and 1% of your total assets under management is a pretty standard fee.

Financial advisors are most concerned about business development. Nearly 80% cite the challenge of finding “ideal” clients (Exhibit 1). While an “ideal” client will vary among financial advisors, sourcing them instead of less preferred clients is a big deal.

How long does the average client stay with their financial advisor? ›

For instance – did you know that according to a study¹ from Etrade Advisor Sales in 2019 – the average percentage of clients that leave during a given year is 20% within a year. And 25% within one-two years. Or - put another way - roughly one-fourth of new clients may leave within the first two years.

That position will allow other advisors in the area to go after your clients and pick them off with their marketing efforts. 5. The Statistics: 80-90% of financial advisors fail and close their firm within the first three years of business. This means only 10-20% of financial advisors are ultimately successful.

The Bureau of Labor Statistics has projected that 42,000 new financial advisor jobs would be added between 2022 and 2032. That will increase the total number of positions 13% over the decade from 227,600 in 2022 to 369,600 in 2032.

AI will change the game, but it is unlikely to replace financial advisors. Rather, it will likely be an enabler, helping advisors increase productivity and deliver better advice for complex client scenarios.

Robo-advisor and financial advisors can both help you invest successfully. However, your specific financial circ*mstances will help you determine which one is better for you. For example, if you're just starting to invest your money, the low fees and lack of minimums may make robo-advisors a wise choice.

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

Here's when you may want to forgo a financial advisor and do it yourself: You're confident in managing your own investments: If you are comfortable selecting and managing your own investments, you may not need a financial advisor. Perhaps you follow the markets closely and do your own research on potential investments.

If you're looking for help building a retirement nest egg, you most likely want a certified financial planner (CFP) with expertise in retirement planning. Other financial advisors who may specialize in retirement planning can be identified by various credentials following their names.

Those who use financial advisors typically get higher returns and more integrated planning, including tax management, retirement planning and estate planning. Self-investors, on the other hand, save on advisor fees and get the self-satisfaction of learning about investing and making their own decisions.