Schwab: RIAs Must Double Hiring to Match Growth
Registered Investment Advisors (RIAs) will need to double their hiring to keep pace with projected growth, according to a recent Schwab industry report. The report signals that structured mentorship programs are a critical tool for retaining and engaging the necessary influx of young talent.
- The industry will need to hire more than 70,000 new staff over the next five years to keep up with growth, a figure that does not account for attrition, retirements, or the formation of new firms. Recruiting staff to handle this demand now ranks as the second-highest strategic priority for RIA firms. - This hiring surge is driven by strong growth, with RIA firms seeing a 16.6% increase in assets under management (AUM) and a 17.6% rise in revenue in 2024. From 2019 to 2024, the compound annual growth rate for AUM was 12.6%. - The talent shortage is intensified by demographics, as approximately 37% of current financial advisors are expected to retire within the next decade. This creates a significant succession planning challenge, as only 42% of RIA firms report having a formal succession plan in place. - Companies with formal mentorship programs see significantly higher employee retention—a 72% retention rate for mentees versus 49% for those not participating in a program. Mentees are also five times more likely to be promoted. - Bulge bracket banks typically offer large, structured training programs for undergraduates, while boutique firms favor a more hands-on, "learn-on-the-job" approach from day one. A newer trend sees private equity firms and hedge funds bypassing the traditional two-year banking analyst path to recruit top undergraduate talent directly. - Compensation is a major factor in attracting and retaining talent, accounting for 68% of an RIA's total expenses in 2024. Across all roles in the RIA industry, total cash compensation increased by 23% between 2020 and 2024. - To find new talent, 35% of RIA firms recruit from colleges and universities. Beyond campus recruiting, firms heavily rely on personal and professional networks, as well as sourcing talent from competing RIAs and other financial services firms like banks and trusts. - The use of AI is becoming a key strategy to manage capacity constraints, with 68% of firms reporting some use of artificial intelligence. The most common applications are for administrative support (43%), generating marketing content (38%), and drafting client correspondence (31%).
