The inherent beauty of the investment management profession is its applicability to all people. Investing requires a global perspective, and it transcends cultural, social, and economic boundaries.
Investment professionals serve clients in multiple capacities across an organizational spectrum of boutiques, middle-market firms, and global financial institutions.
A confluence of factors reinforces the opportunity to launch a financial advisory firm, but here are five of them:
1. There will be plenty of demand for advice:
Roughly 10,000 US residents will reach retirement age every day for the next decade and half. The number of Americans age 65 and older is expected to more than double by 2050 to 89 million people.
2. The shift from defined-benefit (DB) to defined-contribution (DC) retirement plans:
Retirement income and longevity risk is now the responsibility of the employee rather than the employer. US 401(k) retirement assets currently exceed $4.4 trillion .
3. Investors have difficulty picking the right financial products:
The proliferation of exchange-traded funds (ETFs), the advent of self-directed brokerage, and the digital revolution create confusion for those attempting to make the most-informed investment decisions. The average lifespan of a company listed in the S&P 500 has significantly decreased from 67 years in the 1920s to 15 years today .
4. A dearth of young financial adviser talent:
There are more financial advisers over the age of 70 than under the age of 30. The average age of a financial adviser exceeds 50. Four out of 10 financial advisers will reach retirement age in the next 10 years, and 42% of this demographic lack a succession plan .
5. Investors seek professionals with qualified credentials:
The 2008 financial crisis and infamous individuals such as Bernie Madoff have eroded trust in the financial services industry. The investing public, as outlined by the Consumer Financial Protection Bureau (CFPB), is vulnerable to confusion about professional designations and certifications, which affords further credibility and trust to those who have earned the CFA charter .
Congratulations! You are considering the merits and feasibility of launching your own investment advisory practice!
