FA Pay to Increase — If They Can Prove Their Value
The number of financial advisor jobs, as well as their compensation, is expected to rise in the next several years, Investor’s Business Daily writes. But advisors who can’t justify the higher fees they charge over cheaper robo-advice alternatives may see a pay cut, according to the publication.
The Bureau of Labor Statistics estimates that the number of jobs for financial advisors will rise from 249,400 in 2014 to 323,200 in the next seven years, Investor’s Business Daily writes. And that’s following a decline in advisor ranks from 2008 to 2013, according to the publication.
At the same time, the average financial advisor is now in their 50s and more than 50% of advisors will likely retire in the next decade, Michael Kitces, director of wealth management for Pinnacle Advisory Group, tells the publication.
Demand for financial advice, meanwhile, is only expected to rise as more baby boomer clients reach retirement, he says.
But advisors are increasingly facing competition from digital advice providers, Investor’s Business Daily writes. Many self-directed investors will be attracted to robo-advisors, Katherine Mauzy, principal of financial advisor talent acquisition at Edward Jones, tells the publication.
And that means the spread between the highest-paid financial advisors and the lower-priced robos will have to narrow, affecting advisors at the higher end of the pay scale, according to Kitces.
To continue commanding higher fees, advisors will need to demonstrate the added value they bring over a simple digital platform, Craig Lemoine, a professor of financial planning at The American College of Financial Services, tells Investor’s Business Daily.