The Looming Advisor Shortage in US Wealth Management: A Strategic Analysis

Following several years of economic crosscurrents and fluctuating performance, the US wealth management industry is entering 2025 from a position of strength, with solid fundamentals in place. Demand for its services continues to grow as Americans become wealthier and their needs become more complex—for example, because of greater reliance on personal savings for retirement than in prior generations and the proliferation of sophisticated financial products to maximize wealth accumulation and preservation. This increasing demand is illuminated by clients’ growing willingness to pay for human-delivered advice.

There are, however, clouds on the horizon: questions concerning adequate supply for this healthy demand. We estimate that by 2034, at current advisor productivity levels, the advisor workforce will decline to the point where the industry faces a shortage of roughly 100,000 advisors.

Addressing this gap requires changing the advisor operating model to increase productivity (through lead generation, teaming, and an AI- and technology-enabled shift toward value-adding activities) and attracting new talent to the industry significantly faster than before. Successfully navigating the broad challenge would not only benefit the industry economically but also align with the mission of helping American families steer through the complexities of their financial lives.

In this article, we examine the growing demand for wealth management services, detail the looming shortage of advisors, and discuss what companies can do to put the advisor population on a more sustainable trajectory.

Growing demand for advice

Over the last decade, advice revenues have been the main economic driver of the US wealth management industry’s growth. In fact, we estimate that revenues generated from fee-based advisory relationships (a proxy for advised relationships) have grown from approximately $150 billion in 2015 to $260 billion in 2024 (6.4 percent CAGR), and growth in the number of human-advised relationships has outpaced population growth by three times in the same period (1.8 percent versus 0.6 percent CAGR in 2015–24). Looking ahead, the number of advised relationships will continue to grow; we estimate it could reach 67 million to 71 million by 2034, a 28 to 34 percent increase from 53 million relationships in 2024. Several underlying drivers are behind this growth:

• • Rising wealth of US population. The number of affluent households (those with at least $500,000 in investable assets) will grow at 4 to 5 percent per year, compared with 0.6 percent projected growth in the overall population, according to our estimates. The trend can already be seen today: the largest adult cohort, millennials (72 million people), has 25 percent more wealth than Generation X and baby boomers had at the same age.

• • Growing demand and willingness to pay for human advice. McKinsey’s Affluent and High-Net-Worth Consumer Survey of US investors indicates that clients increasingly seek more holistic advice as they age, and their needs become more complex across the full spectrum of planning services and balance sheet and investment products. In fact, the share of investors seeking more holistic advice grew from 29 percent in 2018 to 52 percent in 2023. At the same time, clients are increasingly willing to pay a premium for human advice (see sidebar, “Advisor fee rates stabilizing”). Almost 80 percent of affluent households surveyed indicate that they would rather pay a premium of 50 basis points or more for human advice than use a customized digital advice service priced at about ten basis points; 29 percent say they are willing to pay a premium of 100 basis points or more. Furthermore, among investors with more than $1 million in investable assets, the share willing to pay a premium of 100 basis points or more grew by 50 percent from 2021 to 2023.

This robust demand has not gone unnoticed. Firms across delivery models have been rolling out new advice propositions; for example, traditionally digital/direct wealth managers are rapidly expanding their full-service advice offerings. They have also been enhancing the depth and breadth of their planning services, such as basic financial, philanthropy, tax, family governance, trust, and estate. Some large wealth managers have launched career development programs; however, firms must do even more than they already are to upskill their advisors and improve talent attraction efforts.

Historically, the industry has been able to meet rising demand by making slow but steady gains in advisor numbers and productivity. However, capturing the advice opportunity will be more difficult as the advisor population ages and their numbers start to decline, and as the immediately accessible productivity gains are realized.

Declining advisor head count

The looming advisor shortage should come as no surprise to the industry. The advisor workforce has grown at a meager 0.3 percent per year in the last ten years (Exhibit 1). The outlook is even more challenging: Advisor head count is projected to decline by about 0.2 percent annually. Retirements outpace recruitment, as advisors are on average ten years older than members of similar professions. An estimated 110,000 advisors (38 percent of the current total), representing 42 percent of total industry assets, are expected to retire in the next decade.

Overall, based on historical and projected trends of population growth, wealth creation, and usage of human-advised services, our estimates suggest the industry could face a shortage of 90,000 to 110,000 advisors, or 30 to 37 percent of current head count, by 2034 at current productivity levels.

To date, the industry has answered the rising demand with productivity initiatives enabling advisors to serve more clients. These initiatives include advisor teaming; hiring of specialists to support advisors; rollout of digital account opening, reporting, and self-service (for example, updating basic account information, adding a dependent, requesting a wire transfer); and enhancements to advisor desktops and workflow automation (such as portfolio implementation and rebalancing). Continuing to increase advisor productivity will require the systematic application of an even broader set of levers, as most quick wins have been realized.

Without resolving this fundamental supply bottleneck, the industry will continue to find itself in a zero-sum competition for advisor talent. In fact, as competition for experienced advisors grows—in part, fueled by private equity investments in the registered investment adviser (RIA) model and growing awareness of the impending shortage—recruiting packages and associated expenses have been on the rise as firms compete for the approximately 27,000 advisors who switch firms or go independent each year. While experienced-advisor recruiting is critical to the success of many firms, the industry should also take a long-term view and develop sustainable strategies to attract more advisors to the industry, help them grow faster, and enable established advisors to be more productive.

Addressing the shortage with an advisor talent and productivity system

Solving the advisor capacity challenge will require a deep rethinking of the advisor operating model. Firms will need to increase productivity by 10 to 20 percent and attract new talent to the industry at a faster rate: 30,000 to 80,000 net new advisors over the next ten years, compared with 8,000 in the last ten years (Exhibit 2). All told, if the productivity gains are realized, the industry will need between 320,000 and 370,000 total advisors to meet demand by 2034.

This is the fundamental challenge wealth managers are facing. Addressing it will require a holistic approach that includes enhanced recruitment (targeting both inexperienced and experienced hires), a redefined advisor operating model with greater productivity, and well-designed succession solutions (Exhibit 3).

Recruitment of new-to-industry advisors

Two segments in particular represent the best options for attracting new advisors: entry-level talent and career switchers. In both cases, improving the value proposition of a career as an advisor will be critical to success.

Improving the value proposition of the advisor career path and development model for entry-level talent

New, inexperienced hires are an important and increasingly diverse talent pool. Women, who are becoming the primary decision-makers for more US families, are underrepresented in the advisor population, according to our annual North America Wealth Management Survey. Firms that recognize this and take steps to attract more female advisors will have a competitive advantage. In addition, each year, more than three million undergraduate and one million graduate students enter the US workforce, with women accounting for nearly 60 percent of the graduate pool (versus 15 percent of the current advisor population).

Today, only a few large wealth management firms pursue on-campus recruiting, structured internships, and rotational programs to attract top talent. Partially as a result, financial advisor does not seem to be a top-of-mind profession for most students. Some progress has been made; for example, the CFP Board in September 2024 launched a campaign aimed at promoting financial-planning careers to high school and college-age students. Still, more can be done.

Peer industries, like investment banking, consulting, and increasingly, private equity, have institutionalized recruiting for internships and entry-level jobs from top undergraduate and graduate programs. These similarly high-paying industries offer a clear value proposition and career path for entry-level roles. Meanwhile, wealth management’s predominantly sales-based commission model makes the industry less appealing and sometimes daunting for many young recent grads. Models that can help attract a broader spectrum of talent include reimagining the entry level (for example, as a team member versus as a solo practitioner), developing clearer career pathways, articulating the near- to midterm career value proposition, and ensuring a competitive level of guaranteed income at the outset. The resulting talent pool can be enrolled in rotational programs for better-matching career paths (business development, service-oriented, or specialist roles) and, in turn, a better success rate. Wealth managers who are a part of larger financial institutions can improve partnerships with other business units (say, investment banking and asset management) on rotational programs to attract, retain, and develop talent across the enterprise.

Wealth management firms should also not shy away from hiring junior advisors exiting one of the major advisor development programs. In many cases, individuals who “dropped out” simply may not have found the right fit at a given firm—for example, pursuing more sales instead of being service oriented. These candidates could excel in a different firm and culture and may have already obtained the requisite licensing and basic training.

US direct brokerage platforms are a bright spot in the talent arena, having shown early signs of success with a more bifurcated sales and servicing approach. All told, our analysis suggests that these firms have trained over 5,000 new advisors in the last five years. These platforms are emerging as leading talent developers, particularly with a new breed of advisors: young Certified Financial Planners (CFPs) focused on client service rather than sales. One direct brokerage, for example, added about 300 additional CFPs to its ranks in 2023, a 100 percent increase.

Tapping into new sources of talent by targeting career switchers

Beyond recent graduates, firms should look to tap new sources of talent. Career switchers can be divided into three distinct—but sometimes overlapping—segments, each with intrinsics or expertise required to be a successful advisor. These segments include adjacent financial services professionals with client service experience (for example, CPAs, trust and estate professionals), professionals from other industries with strong consultative sales skills (such as software sales), those with strong relationship skills (say, white-glove client service reps, executive assistants, and veterans). Additionally, wealth management companies can do much more to tap the skills and experience of women looking to change career paths. Wealth management firms with bifurcated sales and service models are better positioned to accommodate a broader range of talent profiles and skill sets. And establishing clear roles that cater to either entrepreneurial or empathetic profiles can attract a broader set of potential advisors.

Rethinking the advisor operating model to unlock productivity

Recruitment is unlikely to be enough. To address the advisor shortage, wealth managers must continue to invest in and increase the productivity of all advisor segments. The industry has made some progress in this direction, but a deeper rethinking of the advisor operating model and allocation of time is necessary.

In particular, the industry needs to significantly improve lead generation, teaming, and practice management (optimizing skills of team members, increasing specialization and leverage), and the use of technology enabled by gen AI (a focus on value-add activities and removal of tedious, low-value tasks). We estimate that these levers can increase advisors’ capacity industry-wide by 10 to 20 percent on average over the next ten years, equivalent to adding 30,000 to 60,000 advisors at 2024 productivity levels (Exhibit 4).

Centralized lead generation

Centralizing lead generation could free up 3 to 4 percent of advisor capacity by reducing the amount of time advisors spend on prospecting for new clients. The impact would be even greater for early- to mid-tenured advisors, who spend an average of 50 percent more time on prospecting than established advisors do on prospecting. On average, advisors currently spend approximately three hours per week prospecting for new clients. Prospecting activities include creating a social media presence, developing marketing collateral, hosting webinars and dinners, networking, screening prospects, generating proposals, and closing clients.

Aiding advisors with prospecting can involve several approaches across the sales funnel:

• Awareness and lead generation. Expand the scope of a centralized marketing team to include boosting awareness and consideration, developing sales collateral, networking at local events, and creating tailored value propositions and pitches. Smaller firms can outsource centralized marketing efforts to ad agencies or lead generation firms such as referral networks to free up advisor capacity. Firms with diversified businesses (for example, recordkeeping, retail banking) can