Aging advisors face a decision: Retire or keep current

There are far too many aging financial advisers who don’t want to retire, yet don’t bother to stay up to date with the latest trends and technologies in the industry. Frankly, if you’re an advisor who is not keeping up, do your clients a favor and retire.

I completely understand the reasons why people don’t retire from this industry. For starters, the pay is pretty darn good. If you’ve been an advisor for a couple of decades and have a decent-sized client book, you’re making a great living. This industry pays well.

And clients don’t like change. Most clients would rather see their advisor continue to work late into their 70s than have to go through the hassle of meeting a new advisor. A well-executed succession plan could certainly make the process seamless, but people get comfortable with the advisor they know and would rather stick with a known commodity than with the unknown.

Further, many advisors enjoy working well past normal retirement years. They enjoy the client relationships that have been built up over years and appreciate the sense of purpose their work provides. Their preference is to continue working, albeit typically at a reduced workload, rather than fully retire.

The problem, from what I’ve noticed, is there are a lot of advisors who no longer take the time to upgrade their services to their clients. They continue to make themselves available to their clients, and meet with them periodically, but most of the interactions with their clients are social in nature. They simply aren’t providing the level of service they would receive from a younger, hungrier advisor.

I’m 58 years old and started in this industry in 1990. Back then, financial planning was fairly basic and building an investment portfolio consisted of selling a bunch of commissioned mutual funds. There are many clients that I acquired during the early 90s that are still clients of the firm. I evolved with the times and now provide robust financial planning, tax guidance, estate planning, fee-based investment management and more, but I could have easily taken a more relaxed path with my clients and changed very little. Most of the clients would have stayed with me, regardless.

Technology, along with commission-free trading, has transformed this industry. Today, we can use technology to do real-time tax-smart trading, such as tax-loss harvesting or harvesting gains. Technology can build and manage a portfolio around a concentrated position. Direct indexing can build personalized portfolio strategies for a very low cost. There are new products that can help minimize risk. Tax analysis can be done with the ease of electronically uploading a tax return, enabling an adviser to be tax-wise with their planning.

The list goes on and on.

For those aging advisors who continue to learn, grow and offer new solutions to their clients, awesome. Continue working as long as you continue to grow. But for those advisors who are on Easy Street, spend more time golfing or traveling than improving their trade, it’s time to pass the reins to someone who is on top of her game.

Your clients deserve great advice, not simply a long-term friend.