Virginia, Minnesota and California had multiple spots in Smart Asset’s annual report Best Cities for Young Financial Advisors to Start Their Career, released this week.
“We found that the top-ranking cities in Virginia and Minnesota have lower living costs and slightly higher pay than pricey Bay Area cities,” said Mark LoCastro, a spokesperson for Smart Asset. “San Francisco and Fremont, however, stand out for the high demand for advisory services. More than 30% of households in these Bay Area cities earn $200,000 or more. That is well above the studywide average of 8.4% for that metric and provides a promising potential client base for young financial advisors.”
In 74 metro areas out of the 100 cities, the average earnings for financial advisors exceed $100,000, a report by Smart Asset found. Financial advisor pay increased much faster in some parts of the country than it did in others.
“In the Richmond area, for example, average pay for advisors increased 25% year-over-year, from $128,820 in the 2020 study to $160,670 in the 2021 edition,” LoCastro said. “In the New York City metro area, however, we found that average pay for advisors increased by just 2.42% between the 2020 and 2021 editions of this study ($165,830 to $169,850).”
Their methodology was to compare the top 100 largest U.S. cities across five metrics that looked at the job situation for financial advisors (average FA earnings and rent as a percentage of FA average earnings) and on demand for advisory services (percentage of high-earning households, financial advisor search volume relative to population and percentage of the population almost in retirement).
Last year, the calculation for average search volume for FAs was slightly different. Rather than analyzing the search volume for FAs across the 100 largest cities, this year the company considered the search volume for FAs in each city relative to its population compared to the average search volume.
“We changed the metric on searches for financial advisors to be relative to population so that larger cities did not have an advantage relative to smaller cities we considered,” according to Smart Asset’s press release.
The search volume data comes from Smart Asset’s financial advisor matching tool. “Young financial advisors” refers to advisors who are building their book of business and are likely to rent.
“Even if you’re financially savvy, it’s important to remember that where you start your career can have a huge impact on your personal finances and your ability to reach your financial goals. When you are evaluating if a city is a right place to build your book of business, be sure to run the numbers and consider key factors like job demand, income growth potential and housing affordability,” LoCastro said.
Scroll down to see the top 20 cities for young financial advisors.