Making room for the next generation of advisers

Many financial advisers are choosing to delay retirement, but where does that leave their younger colleagues?

Mar 4, 2019 @ 10:28 am

By Joni Youngwirth

Recently, I read an article in the November issue of the Harvard Business Review (What Happens to Younger Workers When Older Workers Don't Retire) that got me thinking. It focused on the world of symphony orchestras, where many principal oboists are eschewing retirement. As a result, younger players are giving up, changing careers or lingering as a result of "slot constraints."

Sound familiar? It's something that I see playing out in our industry as well. Although financial advisers are getting older, many are choosing to delay retirement. It seems their passion for their work surpasses any interest in writing the next chapter. But I think we must ask ourselves where this leaves the next generation of advisers.

If you find yourself struggling with making this transition, or even thinking about it, the ideas presented here may help you establish a retirement plan, stick to it and make room for the next generation.

Set a date

Some tenured advisers hire less seasoned advisers with the intention of retiring in, say, four years. But, inevitably, the tenured adviser decides to work for a couple more years, and then a couple more, and so on and so on. The once-new adviser burns out, stuck in a holding pattern waiting for the promised slot to open up. To avoid this unfair scenario, start by putting your retirement date in writing — and sticking to it.

(More: Three keys to succession planning)

Create a retirement plan

I've heard from many advisers that their spouses are begging them to retire. Those significant others may have put their own retirement on hold, waiting for their mates to stop working. Dreams of adventure, travel and spending time together go unfulfilled.

If this sounds like you, try creating a formal retirement plan. You might include the extent of your work in retirement, relationships to be fostered, health and wellness factors that may come into play, and passions you'd like to pursue. Of course, you will also need to consider your own financial readiness and how your lifestyle may need to change once you're not working.

Put it into practice

Once you have a general plan, put it into practice! What does it feel like to take a vacation that is twice as long as usual, or have an unstructured day where you spontaneously find things to enjoy? Try making a list of things you've never gotten around to, and just start doing them.

Establish a firmwide "turnover date"

As firms transition from solos to ensembles, the importance of addressing retirement age becomes increasingly important. Develop a turnover-date policy that applies to everyone, whether they are 40, 50 or 60. I think you will find that doing so will go a long way toward reducing intergenerational conflict.

(More: Boomers: Envision your business transition plan)

Get a mental health checkup

Accountability for spotting decreased capacity among clients is becoming critical. But we also need to be mindful of spotting it among ourselves. As Alzheimer's affects more people we know and love, this is serious business. A periodic mental health checkup will help protect you, your firm and your clients.

Shift into a lower gear

For those not ready to stop working cold turkey, try downsizing to a limited number of clients, reducing compensation commensurately.

Explore the possibilities

Delayed retirement among advisers is something that many of us don't want to talk about. But I think it's time to have these conversations, and I hope the ideas presented here can get them started. For the sake of the next generation of advisers, I encourage you to explore the possibilities. You just might like what you find!

(More: Why financial advisers need to actively manage their continuity plans)

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.


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