Advice business must improve succession planning

Study finds 28% of aging adviser population unsure about who will take over

Mar 7, 2018 @ 12:25 pm

By InvestmentNews

More than a quarter — 28% — of advisers who are within 10 years of retirement are unsure about succession, posing a problem for all channels of the advice business, according to a new study by Cerulli Associates.

Confirming widely known demographic trends, the Boston-based research firm found that although the adviser population is aging (the average age is 50), the majority have not made plans concerning succession.

"Advisers who are 55 years old or older manage 36.9% of assets and comprise 39.2% of headcount," said Marina Shtrykov, a researcher at the firm, who added that filling the pipeline with quality talent poses a challenge for all broker-dealers, whether advisers are employees or independent. Only 11.7% of advisers are under the age of 35, she added.

Although adding younger advisers to teams led by senior advisers seems to be the preferred route to a solution, the teaming approach has its own challenges, Cerulli said.

"The skill set needed to be a good leader and manager differs from the one needed to perform well as a financial adviser," Ms. Shtrykov said.

Cerulli said home offices must provide more assistance and training to help advisers become better mentors and to develop career paths for rookies.

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