Rookie Financial Advisers Are in Short Supply 

High wash-out rates force firms to focus on recruitment and retention, according to Cerulli.


In 2022, financial adviser headcount grew by just 2,579 advisers, while the failure rate for rookie advisers was more than 72%, according to the latest research by Cerulli Associates.  

The financial advice industry continues to confront a succession crisis, Cerulli reported. In the next decade, 106,264 advisers are set to retire, making up 36.8% of industry headcount and 38.9% of total assets under advisement. Among advisers retiring within the next 10 years, 26.3% are unsure of their succession plan.  

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“Rookie advisers come from all different backgrounds,” Stephen Caruso, research analyst, wealth management at Cerulli, said in a statement. “Just 15% of rookies report financial adviser as their first career and only 43% of rookie advisers have previously worked in financial services.” 

Cerulli said key to rookie adviser success is structured training programs. Among new advisers, 45% reported that their responsibilities included managing small-balance accounts for a senior adviser. However, keeping rookies in a support role for too long can limit their growth, as well as their ability to develop their own clients, as 69% said they were tasked with growing their own client base from scratch.  

As firms face a shortage of advisers, they will need to focus on developing talent in-house, suggested Cerulli. Previously large broker-dealers grew their headcount primarily by luring away experienced advisers from competitors. Due to the pending demographics,  firms will have to concentrate efforts on the growth and development of rookie advisers.    

“A well-structured training program should gradually shift rookie advisers into production and provide a natural progression of their roles and responsibilities, so that practices can capitalize on a new resource without boxing a rookie into an operational or support role,” said Caruso. “RIA custodians and B/D home offices should actively support this transition process by providing best practices and a framework advisers can use to train future successors.”  

The Financial Industry Regulatory Authority, the self-regulating body, has been putting programs in place to bring a broader base of people into the industry and make it a long-term career, says Philip Shaikun, vice president and associate general counsel at FINRA. 

“We are working to make the industry more accessible to more people at an earlier stage,” Shaikun says. “We want to have a healthy, diverse industry where all perspectives are represented.” 

Shaikun notes initiatives such as making FINRA’s Securities Industries Essentials Exam accessible and available to students of all backgrounds, as well as making a path for individuals who temporarily leave the industry to rejoin without taking an exam, provided they complete annual continuing education 

The majority of new-adviser recruiting is through word-of-mouth referrals, with 64% of them recruited this way. However, Cerulli said this informal recruiting process makes it more challenging for firms to reach wide range of applicants.  

“Broker-dealers and registered investment advisers must find new avenues for connecting with potential candidates and spreading awareness about the profession,” said Caruso. 

Investment Product and Service Launches

FundFront introduces white label alternative investment platform; Wealth.com unveils AI legal assistant; Schwab to launch the Schwab High Yield Bond ETF.



FundFront Introduces White Label Alternative Investment Platform

FundFront, a provider of alternative investment technology and solutions, announced the launch of its white label alternative investment platform for the wealth management industry.

This turnkey wealth-tech solution allows advisers to offer alternative investment opportunities to their clients with minimal integration required.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“Recognizing the increasing demand for broader access to alternative investments, we see the need for wealth advisers to offer these opportunities to their clients within their existing advisory and custody framework,” Amin Naj, founding partner of FundFront said in a statement.

Wealth.com Unveils AI-Powered Legal Assistant Ester

Wealth.com, an estate planning platform, announced the official launch of Ester, an artificial intelligence legal assistant.

Ester makes high-quality estate planning more accessible, cost effective and scalable for financial advisers. The new product automates tedious tasks traditionally handled by financial analysts and in-house paralegals.

“No financial plan is complete without an estate plan and Ester will empower financial advisers to onboard clients efficiently and enable those clients to build the estate plan that suits their needs,” said Eduardo Fontes, senior vice president of data science at Wealth.com. 

Schwab to Launch the Schwab High Yield Bond ETF

Schwab Asset Management announced the launch of the Schwab High Yield Bond ETF.

With an expense ratio of 0.10%, the new ETF is priced in line with the lowest fee ETFs in the Morningstar High Yield Bond category. The ETF will provide simple access to the U.S. dollar denominated high yield corporate bond market.

“The Schwab High Yield Bond ETF is a timely addition to our lineup of fixed income ETFs as investors continue to seek out low-cost, straightforward products that help diversify their portfolios,” Nicohl Bogan, director of product strategy and development, Schwab Asset Management, said in a statement.

«