Key insights
- A wave of financial advisor retirements coupled with unrealistic investor return expectations poses a risk to US equities. The advisor shortage may exacerbate the impact of flawed financial plans based on overly optimistic projections, potentially leading to lower savings rates and increased risk-taking. This could translate to reduced investment in equities and increased market volatility as investors adjust to underperformance.
An estimated 110,000 advisors, representing 38% of the current workforce and managing 42% of total industry assets, are expected to retire within the next decade. This creates a substantial supply-demand imbalance, with fewer advisors available to serve a growing client base with increasingly complex financial needs.
Compounding the advisor shortage is a critical disconnect between investor expectations and market realities. Although recent research only provides a snapshot of consumer sentiment, US investors expect annual returns of 12.6% in 2025, down from the 15.6% reported last year, but above historical market averages of approximately 10 percent for the S&P 500. This gap creates planning risks and sets the stage for client disappointment. Investors making financial decisions based on higher-than-average returns will likely under-save for retirement, take on excessive risk, make poor asset allocation decisions, and delay critical life milestones such as home purchases and family planning. Financial plans built on these ambitious projections will fail if individuals pursue the traditional advisor route, leading to retirement shortfalls and financial insecurity. The magnitude of this expectations gap represents both a significant market risk and a critical need for services that can set realistic expectations and guide sound personal finance.