Advisers good at retirement planning — except their own

Survey reveals surprising lack of urgency given to succession

By Liz Skinner

Mar 12, 2013 @ 3:22 pm (Updated 3:46 pm) EST

retiremen planning, succession

Financial advisers continue to put off planning their own retirement even though an overwhelming majority of them are at least 50, a new survey shows.

About 68% of advisers have no formal succession plan for their business, according to an SEI survey of 100 advisers released today. Of those who have a plan, about 39% said they still aren't sure exactly to whom they'll transition their business when they go.

About 47% of advisers who have a succession plan said they expect to transition their businesses to an “identified internal buyer,” and 14% plan to sell to an “outside buyer,” the survey said.

Advisers who haven't actively positioned their firms to be attractive to outside buyers or internal successors are going to be disappointed when they want to retire or move on to do something else, said John Anderson, head of practice management at SEI Advisor Network.

“Advisers are going to have a big surprise coming,” he said. “Unless they have a dedicated effort to making sure they have the right clients and the right infrastructure, they are not going to have anything to sell.”

Firms should prepare their businesses to have future worth by harmonizing their processes and procedures, and examining their client base, Mr. Anderson said.

About 54% of advisers said they have no plan in place to attract younger clients, even though most of them have an aging client base, according to the survey.

Advisory firms also need to consider whether they have “the next generation of leaders” among their ranks who can bring in younger clients, Mr. Anderson said. Hiring talented young advisers is no easy task, however, as only about 3% of advisers are under 30, he said.

To attract the next generation of advisers, Mr. Anderson recommends that firms embrace technology, offer training programs and have a team environment ready to teach young advisers.

Tom Licciardello, an adviser with Compass Capital Corp., said it's difficult to make time to think long-term about the future. He worked with SEI to develop an internal succession plan.

“I took a step back to look at the big picture and to make sure that the firm would survive without me,” Mr. Licciardello said. “I'm now putting a plan in place that will transition the firm to my daughter when I'm finally ready to retire.”