A recent study by McKinsey & Company underscores a looming issue within the wealth management sector: a potential short-fall of approximately 100,000 financial advisors by 2034. This anticipated shortfall is attributed to an aging advisor workforce and an increasing demand for financial advice.
The study highlights that a significant portion of current financial advisors are nearing retirement age, with an estimated 110,000 advisors expected to retire over the next decade. This represents 42% of the industry’s assets, creating a critical need for new talent to fill the gap. Furthermore, the demand for financial advice is projected to grow substantially, with the number of advised relationships potentially increasing by 28% to 34% by 2034, reaching between 67 million and 71 million.
Despite the increasing demand, the advisor workforce has experienced slow growth, expanding at only 0.3% annually in recent years. This trend is expected to worsen, with a predicted decline of about 0.2% per year over the next decade. Such a shortage could lead to challenges for wealth management firms, including difficulties in meeting client demand, potential impacts on client relationships, and a strain on the ability to provide personalized service. Recognizing these trends, as the Managing Partner of Northwestern Mutual Eastern Iowa, we are taking proactive steps to counteract these challenges and position our firm as a leading player in the financial planning sector.
In Cedar Rapids, we recently completed an expansion of our office to accommodate more advisors and staff, enhancing our ability to serve our community effectively. Last fall, we completed a new office in Bettendorf, providing additional space and resources. Looking ahead, we are set to open a new location in Platteville, Wisconsin. These expansions are not merely about physical space; they represent our dedication to fostering an environment where new talent can thrive.
Attracting and cultivating new talent is central to our strategy. We are actively inviting individuals to join us as advisors, nurturing a new generation of financial professionals equipped to meet the evolving needs of people from around the country. This initiative aligns with our commitment to create the most financially secure communities.
The importance of having a financial advisor is underscored by recent findings that only 44% of Americans feel financially secure, compared to 65% who have an advisor. Among our clients at Northwestern Mutual, an impressive 78% report feeling financially secure, showcasing the value and peace of mind that professional financial planning can offer.
As we navigate these challenges, our proactive approach not only prepares us to meet future demands but also reinforces our dedication to client satisfaction and financial security. By investing in infrastructure and talent development, we are setting a benchmark for how financial firms can adapt and thrive in a changing landscape.
Our efforts are a testament to our unwavering commitment to ensuring that clients receive the personalized and effective financial advice that has become synonymous with the Northwestern Mutual brand. As we continue to grow and evolve, we remain steadfast in our mission to create more financially secure communities in all of America, one person, one family, one business at a time.
In closing, I am optimistic about the future of Northwestern Mutual Eastern Iowa. We are well-positioned to navigate the challenges ahead and continue our legacy of impact in financial planning. Our expansions and initiatives are not just about meeting today’s needs; they are about anticipating tomorrow’s opportunities and ensuring that we are ready to seize them. Together, we will continue to make a meaningful impact in the lives of our clients and the communities we serve.
Kalvin Grabau Keele, CLU, ChFC is managing partner at Northwestern Mutual Eastern Iowa.
