Confronting the Advisor Shortage: Scaling Your Practice for Sustainable Growth

Imagine this: You’re sitting across from one of your most valued clients—the type of relationship you’ve cultivated over the years. They’re looking for clarity on their estate plan, but you know your team is stretched thin. You’re behind on emails and haven’t had time to prepare as thoroughly as usual. You see the concern in their eyes and feel it in your gut. This isn’t the level of service they expect—and it’s not the standard on which you’ve built your reputation.

Now, take a step back. This isn’t just a rough day. It’s a preview of a future many advisory firms are racing toward. A future where advisor shortages, rising demand, and burnout intersect—endangering not only growth, but also your clients’ trust, your team’s well-being, and the very future of your firm.

As the wealth management industry progresses, the demand for advisory services is stronger than ever. Fueled by increasing wealth, more complex financial situations, and a desire for personalized guidance, many Americans are seeking professional advisors for comprehensive financial expertise. However, this surge in demand arises when our industry is confronting a looming advisor capacity crisis.

The Capacity Crunch: Why You Should Be Concerned

Assuming advisor productivity remains consistent with current levels, a recent study by McKinsey projects a shortage of 90,000 to 110,000 advisors by 2034—a gap equal to 30-37% of today’s total advisor headcount. What are the primary drivers?

• Retirements: Over the next decade, 38% of advisors (approximately 110,000 professionals) are expected to retire. These individuals currently manage 42% of the industry’s total assets.
• Stagnant Recruiting: The number of advisors has increased by only 0.3% per year over the past decade, which falls short of meeting demand.
• High Failure Rates: The current failure rate for rookie advisors is 72%, which is stifling the talent pipeline.

At the same time, the advisor population is declining, and client demand is accelerating:

• 80% of affluent households prefer to pay a premium of 50 basis points or more for human advice over low-cost digital platforms.
• 29% of investors are willing to pay 100 basis points or more for personalized advisory services.
• Comprehensive planning has become the industry standard, with the share of investors seeking holistic advice rising from 29% in 2018 to 52% in 2023.

This collision course threatens your ability to grow and puts the quality of advice and service your current clients rely on at risk. When capacity is maxed out, service inevitably suffers—advisors get burnt out, clients begin to notice, and if you can’t scale your advisor team to match your success, you risk losing the very relationships you worked so hard to build.

A Path Forward: Embracing the Team-Based Model

If you want to protect your clients and your firm’s future, it’s time to rethink your business model. For solo advisors, this means migrating to a team-based practice. Cerulli Associates research demonstrates that team-based practices consistently outperform their solo peers:

• $100 million vs. $72 million – Median AUM per advisor in a team-based model compared to a solo model.
• $1.6 million vs. $1 million – Average household relationship size for clients of a team-based practice compared to a solo practice.
• 59% of wirehouse and national broker-dealer advisors now work in teams—signaling a decisive industry shift.

For most of our readers, this will come as no surprise. For those already building a billion-dollar business or ranked as a top professional in our industry, you are likely already operating as a team-based model.

However, when your firm’s value is tied exclusively to one or two leaders (who will eventually retire), that value will inevitably diminish. Developing an ensemble practice allows you to cultivate the next generation of professionals, creating a business that endures beyond you.

A team-based model also brings complementary skill sets to your firm, differentiating you in the eyes of sophisticated clients. Whether you serve corporate executives with complex compensation plans or offer specialized expertise in retirement income, estate planning, or philanthropy, the right team elevates your client experience.

Additionally, with advisor shortages intensifying, increasing productivity quickly becomes a non-negotiable. McKinsey estimates that productivity improvements could unlock 10-20% more capacity over the next decade – the equivalent of adding 30,000 to 60,000 advisors at current productivity levels. Key drivers of enhanced capacity will include:

• Teaming and Specialist Support: optimizing team skills, delegating non-advisory tasks, and creating career paths for next-generation advisors.
• Technology Integration: leveraging CRM platforms, workflow automation, and AI-driven client insights.
• Centralized Lead Generation: reducing prospecting burdens on advisors by centralizing marketing and business development.

It's time to reconsider the 72% of individuals who enter the profession and “don’t make it.” While they may struggle to find new clients, many possess the relational and technical skills to excel as advisors. Good advisors consistently find new ways to serve and deepen relationships with existing clients—generating referrals and organic growth from within. That kind of revenue generation is distinct from hunting in the jungle for new prospects. While your firm will always need senior partners to drive new business, institutionalizing your business development efforts can create a steady stream of leads. It’s time to rethink the advisor role in our industry—more on that in a future article.

Future-Proof Your Practice: Seven Pillars of Sustainable Growth

Ultimately, if you are genuinely building an enduring firm, you are simply the custodian until the time comes to transfer it to future owners. The goal is to build a practice that thrives well beyond your tenure—ensuring fiduciary continuity for your clients while safeguarding enterprise value.

To scale sustainably without eroding client trust, you must prioritize:

1. Team-Based Growth: Build ensemble teams with clearly defined roles, utilize specialist talent, and empower your next generation to take the lead. Teams enable your firm to serve clients more comprehensively, reduce dependency on any single advisor, and ensure continuity as your business scales.

2. Productivity Enhancements: Implement technology and improve operational efficiencies to serve more clients without sacrificing quality. Leverage CRM systems, automate workflows, and use AI-driven insights to streamline processes. A time management study by Michael Kitces revealed that less than half of an advisor’s week is spent on client-related activities, with only 20% dedicated to direct client conversations. You should optimize to free up time for high-impact client interactions.

3. Continuous Capacity Management (CCM): Proactively monitor and manage your team’s workload to ensure you have the capacity to meet growing client demand without compromising service quality. CCM helps prevent burnout, enables timely hiring decisions, and positions your firm to scale sustainably, even as the industry grapples with an advisor shortage. Regular capacity assessments allow you to stay ahead of growth needs rather than reacting when it's too late.

4. Talent Development: Recruit, train, and mentor future advisors. Creating professional development plans aligns personal growth with your firm’s long-term goals and encourages team members to take ownership of their professional journeys. Retaining top talent also requires fostering a culture of mentorship, recognition, and shared purpose. Developing specialists within your team can further distinguish your firm and deepen client relationships.

5. Profitability: Rising costs linked to running a wealth advisory business—particularly labor costs and inflation—require a strong emphasis on profitability. Firms must find a balance between growth and financial discipline, consistently reviewing expenses and seeking ways to enhance margins without compromising client service. Sustainable scaling involves keeping healthy margins to reinvest in talent, technology, and growth opportunities.

6. Cybersecurity Vigilance: Treat cybersecurity as a strategic priority, safeguarding data and protecting client trust. Mark Hurley’s 2024 whitepaper, “Confronting the Realities of Cyber Threats,” underscores just how critical this often-overlooked risk has become:

   • Cybercrime is projected to reach $10.5 trillion annually – surpassing the global illegal drug trade in scale and scope.

   • 82% of financial service breaches originate from remote work vulnerabilities.

   • Wealth managers face heightened regulatory scrutiny from the SEC, making cybersecurity both a compliance requirement and a key driver of client trust and enterprise value.

7. Purpose: Anchor your firm’s growth in a collective sense of purpose. Align your team around a dual commitment to professional development and client service excellence. Inspire every team member to see their growth not as an end in itself, but as a means to better serve clients and contribute to the firm’s sustainability. When growth is grounded in purpose, it drives both personal fulfillment and long-term success for your firm and your clients.

These seven pillars work in unison to ensure your firm can grow sustainably while maintaining the trust and confidence of your clients. The advisory landscape is evolving rapidly, and those who proactively address capacity, talent, and operational challenges will be best positioned to thrive in the future. Together, these pillars represent a holistic approach—People (Team-Based Growth, Talent Development, CCM), Process (Productivity Enhancements, CCM), Profitability (Profitability), Protection (Cybersecurity Vigilance), and Purpose—that ensures your firm scales with strength, resilience, and enduring client trust.

Final Thoughts

The advisor shortage is a generational challenge—and also an opportunity. Finding strong advisor talent in today’s competitive landscape demands the same level of commitment that you apply to prospecting for clients.

Always strive to recruit talent ahead of any capacity concerns. It’s better to hire the ideal candidate and integrate them into the firm before a need arises than wait until capacity constraints require a quick hire.

Hiring in advance boosts team morale and allows new hires to fully acclimate before jumping into the deep end. It also avoids overburdening an understaffed team just to achieve minor bottom-line improvements.

Lastly, make a concerted effort to step back from specific responsibilities and allow others to step forward. This will empower your business to thrive without becoming dependent on any one individual and help you better understand your firm's hiring needs.

Firms that embrace team-based growth, harness technology, and prioritize purpose, talent, and security position themselves to meet demand while building resilient, future-ready enterprises.

Coaching Questions for Advisors:

1. Ideally, what do you want the team you’re building to accomplish, and what characteristics/qualities will be most critical to achieving that objective?
2. Considering the clients you hope to attract and the skills/expertise they will require, what would you consider your firm’s most pressing hiring needs?
3. What actions will you take this year to ensure your firm remains ahead of capacity concerns? What actions will you take to attract and cultivate future leaders?
4. Where in your business might you still be the bottleneck? What additional shifts will you take to step-down from specific responsibilities this year, allowing others to step up?

About ClientWise LLC

ClientWise is the premier business and executive coaching firm working exclusively with financial professionals. We specialize in helping clients optimize growth and maximize revenue by engaging as a knowledgeable partner in accomplishing specific and significant business results. Our full-service coaching program empowers financial advisors, wholesalers, managers and executives to enhance performance through customized, action-oriented solutions based on each client’s specific vision and situation.

Our certified coaches are members of the International Coach Federation (ICF). They adhere to ICF’s strict code of ethics and have the experience and insight to work with you on the unique challenges and opportunities you face each day.

Drawing from an in-depth knowledge of the financial industry, ClientWise’s mission is to professionally develop industry leaders and consistently raise the bar for industry service, commitment and integrity. Simply put, our singular focus is to help you get clear, get focused, and get results.