If the American population is growing older, as it is, and more diverse as measured by ethnicity and race, as it is, then is the advisor population changing as well?
We know that the number of broker-dealers has been falling. According to FINRA statistics, over the past five years alone there has been a 12% decrease in the number of member firms, from 4,578 to 4,028, while the number of registered reps and branch offices has remained flat since 2010 (638,881 and 163,303, respectively).
One proxy for the overall advisor population comes from the CFP Board of Standards’ data on CFPs. The first class of CFPs — 33 of them — graduated from The American College in 1973. As of August 2015, there were 72,668 CFPs in the U.S. with the following gender and age characteristics:
So currently, 49% of CFPs are aged 50 and older, which tracks with Cerulli Associates’ data from its Advisor Metrics 2013 study in which it cited the average age of what it calls financial advisors to be 50.9, with 43% over the age of 55.
On registered investment advisors, the 15th annual “Evolution Revolution” study by the Investment Adviser Association and National Regulatory Services counted 11,473 SEC-registered RIA firms as of April 2015, a 5.3% increase since 2014. Since the final implementation of Dodd-Frank advisor registration in June 2012, the IAA/NRS report says the number of SEC-registered RIA firms has increased by 9.2%.
As for the future, most observers and industry studies suggest that RIAs and dually registered advisors will continue to grow in numbers and in market share as measured by assets. However, in its 2014 Advisor Metrics annual study, Cerulli projected that nearly 25% of advisors will leave the profession within the next 10 years, and its 2013 Metrics study found that for every eight advisors leaving the profession, only three new advisors are ready to take their place.