The Adviser Shortage: An Opportunity for Independent RIAs

The financial advice profession is facing a critical challenge: an adviser shortage at a time of increasing demand for financial advice. According to Cerulli, the number of advisors grew by just 2,706 in 2022, barely offsetting trainee failures and retirements. Over the next decade, 109,093 advisors plan to retire, comprising 37.5% of industry headcount and 41.5% of total assets. Meanwhile, the rookie failure rate hovers around 72%. This shortage presents an opportunity for independent Registered Investment Advisors (RIAs) to differentiate themselves and attract clients.

Independent RIAs have several advantages that can help them capitalize on the adviser shortage. First, their flexible business model allows them to develop specializations that appeal to the evolving investor. For example, in our survey, Independent Broker/Dealers, RIAs, and Insurance Broker/Dealers were more actively responding to their clients' tax needs than other firm types. RIAs can take advantage of their flexible business model to tailor their business to the preferences of today's investors.



Second, independent RIAs believe in the importance of goal-based financial planning, but may lack a tech stack to support their unique needs. In our Voice of the Advisor survey, RIAs indicated more than any other firm type that they believe investors value advisors who help them reach their financial goals. However, when we asked advisors across firm types about the tech stack they use to support their unique needs, RIAs may lack the appropriate tools to deliver on this promise.

To capitalize on the adviser shortage, independent RIAs should focus on the following strategies:

1. Emphasize goal-based financial planning: Independent RIAs should invest in technology and focus on goal-based planning to attract clients who are looking for a more holistic and personalized approach to financial planning.
2. Offer a broader range of products and services: As investors are exposed to more investing information than ever before, they are responding with anxiety and decision paralysis. Advisors who proactively offer a broader product palette can demonstrate expertise and the ability to personalize their recommendations to client interests. Independent RIAs can capitalize on this trend by offering a diverse range of products and services tailored to their clients' needs.
3. Prioritize client alignment and autonomy: Independent RIAs can differentiate themselves by prioritizing client outcomes and offering greater freedom of action within the confines of the fiduciary standard. This approach can lead to higher job satisfaction and attract new clients keen to make the most of specialized services.

By capitalizing on these opportunities, independent RIAs can attract both advisers and clients, driving growth and success in the industry. The adviser shortage presents a unique opportunity for independent RIAs to differentiate themselves and meet the evolving needs of clients.