The retirement of baby boomers is proving a boon for many different parts of the U.S. economy, from small businesses to big corporations, from individual products to entire sectors and industries. One example from a multitude is the occupation of personal financial advisor.
With the significant advances made in digital technology in recent decades, many were concerned technological unemployment would consume financial advisors thanks to the rise of powerful artificial intelligence in finance, like the proliferation of robo-advisors. But as is often the case with these developments, the threat of long-term technological unemployment tends to be overstated — unless we’re talking manual labor — and, if anything, the technology has been complementary and not displacing.
Instead, the aging of the baby boomer generation has made financial advisors more relevant than ever. As baby boomers approach retirement, they’re more likely to need planning advice from personal financial advisors. Plus, once they’ve reached retirement, longer lifespans mean they’ll need to make their finances stretch longer than in the past, hence further increasing the demand for financial planning services.
According to the Bureau of Labor Statistics (BLS), the future prospects for financial advisors look good. The average annual income of financial advisors is $124,140 as of 2017, according to the latest data from the Bureau of Labor Statistics’ Occupational Employment Statistics. The employment of financial advisors is projected to grow 15 percent over the 10-year period from 2016 to 2026. That equates to employment of personal financial advisors reaching 312,300 by 2026, up from 271,900 in 2016.
Even if people think they’re fine without a financial advisor, the truth is most Americans would absolutely benefit from having one. According to a survey by CIT Bank, less than a fifth of Americans said they were saving enough to meet their overall savings goals and future plans. The vast majority of Americans either are not saving nearly enough, or much worse.
10 States Where Financial Advisors Earn the Most Money
The average salary of a financial advisor certainly varies by state, and there are general patterns. Geographically, the highest-paying states for financial advisors are primarily in the Census regions Northeast, South and, to a smaller degree, West.
Here’s a breakdown of the top-10 states in which personal financial advisors earn the most, based on the BLS’s mean annual wage data.
Five Northeastern states are among the top-10 states, comprised of three New England states — (3) Connecticut, (5) Maine and (6) Rhode Island — and two Middle Atlantic states — (1) New York and (8) New Jersey. Three places from the South ranked, all located in the South Atlantic division: (4) District of Columbia, (9) Florida and (10) North Carolina.
These geographic locations make a lot of sense considering the number and concentration of businesses within the financial sector in these states. New York of course has New York City, complete with Wall Street, the Financial District, and for that matter, still the financial capital of the world. Nearby Connecticut is part of this regional concentration of financial power, as is Rhode Island to some degree.
Meanwhile, North Carolina has become a center for banking, with Charlotte home to the headquarters of Bank of America. California boasts dynamic economic regions such as Los Angeles, the San Francisco Bay Area, Silicon Valley and San Diego, each with their fair share of finance companies employing financial advisors, and of high-income residents in need of financial advisors to help manage their money.
10 States Where Financial Advisors Earn the Least Money
On the other end of the spectrum are the 10 states in which financial advisors earn the least on average. These states tend to lay in the Midwest, South and, unexpectedly, New England.
Vermont is New England’s one outlier in terms of financial advisor salary. In every other New England state, financial advisors earn an average annual wage in excess of $100,000. In Vermont, the average annual income is only $76,050 — likely the result of low demand for their services in the state.
In the other low-paying states, factors like low demand affect financial advisor incomes, as do broader economic conditions. For instance, many of these states have lower-than-average cost of living, which is great in terms of cheap products and services. But it also tends to mean lower wages, and the majority of these 10 states have median household incomes less than the current U.S. median of $57,652, according to the Census Bureau.
How Much Financial Advisors Earn in All 50 States
Moving beyond highest and lowest, here’s a look at average financial advisor salary by state. The breakdown includes the annual mean wage for personal financial advisors in 2015, 2016 and 2017, as well as the change in average income from 2015 to 2017.
The states that have seen the greatest increases in income are a mix of states in the West, South and Midwest. Arizona, for instance, saw incomes rise by 26.1% between 2015 and 2017, growing from an average annual wage of $81,760 to $103,130.
Oregon too saw incomes rise from below $100,000 to now $114,510. Mississippi saw the fourth largest increase in incomes, from $84,930 in 2015, up to an impressive $100,280 in 2017, in a state in which the median household income is only $42,009.