The Canadian financial advisory landscape is facing a critical challenge: retaining new talent. A significant number of aspiring advisors are leaving the industry within their first three years, a trend that raises concerns about the future of financial planning and wealth management in the country. While hard data on the exact attrition rate in Canada remains elusive, insights from industry veterans suggest a complex interplay of financial pressures, unrealistic expectations, and a lack of robust support systems.
Adam Bighill, an associate portfolio manager at Wellington-Altus Private Wealth in Winnipeg, vividly recalls the stark reality of his early days. "The hardest moment my first three years was honestly receiving a commission payout for the month of probably $17.00," he shared in an email interview. "This obviously came nowhere close to even paying my cell phone bill, let alone my parking downtown." Bighill’s experience, though extreme, highlights the precarious financial tightrope many new advisors walk.
The financial services industry, particularly the wealth management sector, has historically relied on a commission-based or asset-gathering model. This structure often necessitates a significant ramp-up period before an advisor’s client base generates enough recurring revenue to provide a sustainable income. For new entrants, this can mean months, if not years, of working for minimal compensation while investing heavily in building their practice.
The U.S. Experience: A Cautionary Tale
While direct Canadian statistics are scarce, the situation in the United States offers a potential preview. A 2023 report by Cerulli Associates, titled "US Advisor Metrics 2023," indicated a staggering rookie advisor failure rate exceeding 72 percent. This figure measures trainees who departed before becoming fully established advisors. Although this data pertains to the American market, it underscores a broader industry challenge that likely resonates north of the border.
Canada’s Aging Advisor Population
Compounding the issue of new advisor retention is Canada’s aging advisor demographic. Data from Investor Economics, part of ISS Market Intelligence, reveals that the average age of a Canadian advisor is nearing 53, an increase from approximately 50 in 2015. Alarmingly, advisors over the age of 55 now constitute nearly 40 percent of full-service brokerage advisors, managing about half of all industry assets and revenue. This trend, coupled with insights from LIMRA’s materials for its May Canada annual conference, describes a full-time advisor population that is both aging and contracting. The departure of experienced advisors, without a robust pipeline of new talent, poses a significant risk to the continuity of client service and the overall health of the industry.
The "Head Start" Advantage: What Fuels Survival?
Upon examining the experiences of advisors who have successfully navigated their challenging early years, a common theme emerges: most had a distinct advantage that new entrants typically lack. These advantages often provided a crucial financial cushion or a structured support system that mitigated the immediate financial pressures.
Adam Bighill, for instance, entered the industry in 2019 while simultaneously playing professional football for the Winnipeg Blue Bombers of the Canadian Football League (CFL). "My paycheck from professional football allowed me to subsidize my learning and ability to build my business in the early years," Bighill explained. "I was working and building for nearly free, while meeting the rigorous demands of pro football, knowing that one day I could make it pay off." This dual career path provided him with the financial stability needed to invest time and effort into his nascent advisory business without the immediate pressure of generating a livable income from it.
Thomas Brière, a senior wealth advisor and portfolio manager, emphasized the role of persistence but acknowledged his fortunate circumstances. "That said, I was fortunate to have an excellent mentor and to join an established business, which made this stretch easier in my case than it is for many," Brière stated in an email. His experience highlights how mentorship and integration into an existing, successful practice can significantly ease the transition for new advisors.
Gabriel Zitoli, a financial advisor at The McClelland Financial Group of Assante Capital Management Ltd., found a different pathway to financial viability. Instead of building his own book of business from scratch, he operates within a model where he doesn’t own a book. "I didn’t have to build my own book, and I don’t own one today. That structure makes the early years far more financially viable, because you start with a base income, although it also limits upside potential," Zitoli shared. This model provides a foundational income, albeit with a cap on potential earnings, which is a stark contrast to the commission-driven model that can leave new advisors with little to no income for extended periods.
Bighill further credits his integration into Charlie Spiring’s team at Wellington-Altus. "When I got my license in 2018, I took a few interviews across the industry and everybody said that ‘when I retire, then give them a call’," he recalled. "When I met with Charlie and Wellington Altus, he said why not start right now?" This proactive approach from leadership, offering an immediate opportunity rather than a future promise, was instrumental in Bighill’s ability to begin building his career without delay.
Heather Holjevac, a Certified Financial Planner (CFP) at Holjevac Financial Group, benefited from starting her career within a large financial institution. "Working within a large financial institution gave me structure, exposure to different areas of financial services and the opportunity to learn from experienced professionals," Holjevac said in an email. This environment provided a comprehensive learning experience and access to seasoned professionals who could offer guidance and support.
The Root Causes of Advisor Attrition
Several factors contribute to the high attrition rate among new advisors. The shift in revenue models within the industry is a significant driver. Brent Allen, executive vice president and head of sales and distribution at IG Wealth Management, explained, "As the industry has moved toward fee-based advice and recurring revenue, a new advisor building from scratch needs clients and a foundational level of assets before the practice produces enough recurring income to support the business." This transition from upfront commissions to a more sustainable, recurring revenue model, while beneficial in the long run, creates a more challenging initial phase for new advisors who are essentially building a business from the ground up.
Holjevac points to the inherent difficulty of building a business from scratch. "I think we underestimate how difficult it is to build a business from the ground up. Commission-based compensation, the pressure to find new clients and the time it takes to establish trust can create financial strain before an advisor has had the opportunity to establish themselves," she stated. She further elaborated that "being a good advisor and building a successful business are two very different skill sets." This distinction is crucial; many individuals may possess strong analytical and client-facing abilities but lack the entrepreneurial drive and business acumen required to establish a thriving practice.
Brière echoed the sentiment that new advisors often expect immediate returns. "I think a lot of people want everything right away. They expect to walk in, sign clients left and right and live off their book quickly," he observed. "Business development happens over a long period: you plant seeds and harvest them years later." This disconnect between expectations and the reality of long-term business building is a common pitfall.
The financial gap between effort and reward is present regardless of the business model, according to Zitoli. "There’s a building period where your pay doesn’t match your effort, whether you’re building your own book or being assigned clients through a firm," he said. He also noted that many new entrants are drawn to roles that are more analytical or portfolio management-focused, rather than the client acquisition and business development inherent in traditional advisory roles.
Further contributing factors identified by Brière include market-linked income and a misalignment with the firm’s culture or structure. Fee-based advisors’ income fluctuates with market performance, and some individuals may simply "not have found the right firm" that aligns with their working style and professional aspirations.
What’s Missing for Emerging Advisors?
The conversations with seasoned advisors reveal critical gaps in the support and development provided to new entrants. Brière highlighted the absence of clearly defined goals early in his career. "What was missing early on was clearly defined goals, whether from my mentor, my team or the firm," he stated. Without a clear roadmap and measurable objectives, new advisors can feel adrift and struggle to prioritize their efforts effectively.
Zitoli emphasized the lack of inter-firm collaboration. "What’s missing is collaboration with advisors outside your own firm," he said. "Sharing information is often seen as giving up a competitive edge, when there’s a lot we could learn from each other." This insular approach hinders the dissemination of best practices and collective problem-solving within the industry.
Holjevac noted a shift in mentorship, particularly post-COVID-19, with a focus on products and sales rather than holistic business development. "Today, I think we need more practical mentorship that goes beyond products and sales to include client acquisition, business development, relationship building and the realities of running a business," she urged. She also lamented the loss of in-office collaboration. "Additionally, just being in an office environment, which facilitates collaboration is missing post Covid."
Brent Allen underscored the responsibility of firms to provide comprehensive support. "A firm has to do more than recruit someone and wish them well," Allen asserted. "Training, a clear framework, mentorship, and ongoing coaching all matter. New advisors need help developing both their planning skills and the business disciplines required to build a sustainable practice." This sentiment points to a need for structured onboarding and continuous development programs.
Industry Responses and Future Directions
In response to these challenges, IG Wealth Management has been actively working to widen entry points for new advisors. Allen detailed their approach, which includes internships within advisor teams, salaried planning roles with established client bases, an entrepreneurial path with income support during the start-up period, and team-based roles within existing practices. "Few firms are hiring new advisors, and we are proud that IG is a place that can still support the right person with an amazingly rewarding career opportunity," Allen stated. This multi-pronged strategy aims to provide diverse pathways and financial stability for aspiring advisors, with IG reporting year-one retention rates above 80 percent for their newly appointed entrepreneurial advisors.
Holjevac advocates for a fundamental shift in compensation and business models, including a greater adoption of fee-for-service planning. She passionately stated, "We can’t keep recruiting young people into an industry that expects them to build a business using yesterday’s business model without giving them the tools, mentorship and financial runway to succeed." Her statement encapsulates the urgent need for the industry to adapt its practices to attract and retain the next generation of financial advisors.
The implications of this attrition are far-reaching. A shrinking advisor base, particularly as the existing workforce ages, could lead to a significant gap in financial advice availability for Canadians. This could disproportionately affect younger generations and those with less complex financial needs who might be overlooked by an overburdened system. The long-term health of the Canadian financial advisory sector hinges on its ability to create an environment where new talent can not only enter but thrive and build sustainable, rewarding careers. This requires a concerted effort from industry stakeholders to innovate, invest in mentorship, and reimagine the support structures for emerging advisors.
