6 New Findings on What Drives Advisors' Happiness: Kitces

He attributed the result to changes in financial services.

"As the industry becomes more independent RIA-centric, advisors have more autonomy than previous generations in building the practice that they want to build," Tenenbaum said. "The end result over the long term is a profession of happier advisors."

That's not to say that everyone was happy.

The Kitces report notes that supporting and investing in advisors' wellbeing "serves as a crucial business lever for advisory firms to minimize
the negative business consequences of turnover," that is, pressure on growth and profitability.

Both "thriving" and "unwell" advisors were motivated by a desire to serve others in pursuing their career, those deemed to be thriving more so, the report says. Thriving advisors reported a greater interest in personal finance and work-life balance among their other motivations.

Here are six study findings that indicate what's working and what isn't for advisors.

1. More admin work is tied to lower happiness.

The study found, predictably, that unhappier advisors spent more time on administrative and compliance work, Tenenbaum said. The happiest advisors managed to offload those tasks. But not all offloading methods are equally effective, he said.

Delegating administrative and compliance work to the advisor's own service team was most effective in reducing such work, better than using a centralized support team or technology, including artificial intelligence tools, according to Tenenbaum.

The study did find that having better tech is "strongly associated with advisor wellbeing," but not because advisors can meaningfully offload work to it, he said. "It's because using bad tech literally just stinks when you're an advisor."

2. There's a client-volume 'sweet spot.'

Serving 40 to 100 client households looks to be the sweet spot for advisor wellbeing, with the optimal number decreasing as client affluence increases, the study found.

"This range allows for enough revenue to ensure firm profitability and a healthy advisor take-home income, with advisors moving toward the lower end of this number-of-households range as the affluence of their client base … rises," the report says.

"Conversely, wellbeing falls for advisors serving fewer than 40 clients," who often lack a sufficiently large client base for the firm to be profitable or may feel an overconcentration risk, and for those serving over 100, where per-client profitability tends to fall or total work hours become unsustainable, it says.

Advisors with unprofitable clients can try to solve the problem by moving upmarket and or by trying to serve a greater number of less profitable clients more efficiently, which many advisors try to do, Tenenbaum said.

"What we find is that advisors who serve a large number of not super profitable clients are one of the less happy segments of advisors identified in the report," he said.

Advisors can increase revenue by moving upmarket over time, he added.

Broker dealer-affiliated advisors who use turnkey asset management platforms to more efficiently serve a larger number of less profitable clients, for example, report significantly lower wellbeing than those generating more hourly revenue by serving fewer, more profitable clients, the report says.

"This highlights how efforts to solve an 'unprofitable clients problem' through tech efficiency and outsourcing — rather than by moving upmarket to increase revenue per hour — ultimately undermine advisor wellbeing," it says.

3. Private equity deals seem to erode advisor happiness.

Some advisors "may be losing their sense of purpose and optimism about the future" as outside capital pours into the industry, the report says.

Among advisors at firms with no outside ownership, 44% strongly agree that their life has a clear sense of purpose and 58% are optimistic about
the future. In firms with any level of outside ownership, these numbers drop to 40% and 52%, respectively, the report says.

When a private equity firm is involved in ownership, the numbers for purpose and optimism decline further to 28% and 45%, it found.

4. Bad tech could lead to turnover.

One-quarter of advisors who are unsatisfied with their tech stacks are at high risk of turnover over the next five years, compared to only 1% of advisors with high satisfaction, the study found.

At firm level, the researchers found, tech stack satisfaction is the biggest wellbeing driver.

"This creates a crucial trade-off for advisory firms between the cost of better technology … and the cost of high advisor turnover," the report said, noting that firms with low tech satisfaction scores spend significantly less on tech than those with high scores.

5. Wellbeing grows with income — to a point.

The study also found that advisor wellbeing rises steadily with income during early earning years, but the relationship between income and wellbeing plateaus around $500,000, Michael Kitces, chief financial planning nerd at Kitces.com, noted in an X post.

"This suggests that once a certain financial threshold is reached, incremental income contributes less to meaningful improvements in lifestyle or overall life satisfaction," he wrote.

While income is positively associated with wellbeing, it has less impact than experience, tech satisfaction, work hours and control over one's schedule, consistent with the previous study, the report notes.

6. Career stage matters.

"The first driver of advisor wellbeing is advisors' level of experience, including the stage they are in within their careers. Years of industry experience emerged as one of the strongest predictors of advisor wellbeing," the study found.

"The reason is straightforward: as advisors spend more time getting 'reps' — navigating new client scenarios, building trust in meetings, converting leads into initial prospect meetings, and ultimately converting those prospects into clients — they tend to feel more capable in their roles, which aligns with greater wellbeing."

As a result, the report says, 28% of advisors with less than five years of industry experience fall into the "unwell" segment, compared to 7% with 20 years or more experience.

Advisors who join the industry right after college graduation tend to report lower wellbeing than those who switch careers and enter financial services with soft and transferable skills, the researchers found.