Advisers neglect own retirement planning
Financial advisers continue to put off planning their own retirement even though a huge majority of them are…
Financial advisers continue to put off planning their own retirement even though a huge 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 last Tuesday.
Of those with a plan, about 39% said they still aren’t sure to whom they will transition their business.
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 showed.
Advisers who haven’t actively positioned their firms to be attractive to outside buyers or internal successors will be disappointed later on, 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 lack a plan to attract younger clients, though most have an aging client base, the survey showed.
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, Mr. Anderson recommends that firms embrace technology, offer training programs and have a team environment in which to teach young advisers.
It is difficult to make time to think long-term about the future, said Tom Licciardello, 63, an adviser with Compass Capital Corp.
He worked with SEI to develop an internal succession plan.
“I’m now putting a plan in place that will transition the firm to my daughter when I’m finally ready to retire,” Mr. Licciardello said.
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