Succession planning, the wealth management industry’s ticking time bomb, is very much on the minds of advisors, according to the latest research from Edward Jones, which also found that very few are prepared for it.
The research, released on the first day of the Future Proof Festival in Huntington Beach, Calif., was conducted in partnership with Morning Consult, and surveyed 233 financial advisors between July 14 and 18 this year. The study found that 59% of senior financial advisors expect to fully transition their practice within the next five years. However, four in 10 financial advisors have yet to document any succession plan.
“What the research has revealed is the human dynamic of this,” Jason Henderson, head of financial advisor recruiting at Edward Jones, told InvestmentNews. “Retirement is a highly emotional decision – it greatly impacts identity, it greatly impacts legacy, it greatly impacts clients.”
Specifically, the complicated nature of succession was cited as a hurdle – 71% of respondents agreed that the complexity of succession planning has caused them to delay thinking about it. Set against this backdrop, more than half (61%) of advisors said that finding someone they trust enough to hand their practice to is emotionally difficult.
“Many of them will just delay it – it’s the classic ‘kick the can down the road’,” said Henderson, who is attending Future Proof this week. “There’s also the element of finality.”
There is also the looming succession crunch facing the broader wealth management industry. Research released last month by Cerulli Associates found that approximately 35% of all financial advisors, who manage 40% of industry assets, plan to retire within the next 10 years. The study also found that more than a quarter of advisor’s express uncertainty about their succession plans.
“There’s a whole tidal wave of retiring advisors that are now faced with this,” Henderson told InvestmentNews.
After spending 17 years as a financial advisor, he also has first-hand experience of succession. “When I moved into a different role here at Edward Jones I had to transition my practice, so I have been through a transition – it was very beneficial to talk to others who had been through that.”
Henderson explained that Edward Jones encourages its advisors to start talking about succession issues five to 10 years out from their retirements. The brokerage giant also discusses succession planning as a topic at its internal conferences and has internal practice management consultants who can advise advisors on succession issues.
He also sees great value in industry events such as this week’s Future Proof. “There’s a tremendous amount of learning that comes from gathering advisors and learning from each other,” he said.
&Partners has also added a $357 million Texas family practice, while Janney recruits a $250 million Edward Jones advisor in Miami
Linda Patel will lead J.P. Morgan Advisors in Florida and Georgia as Bank of America adds nonprofit specialists in New York
Interval funds and other semi-liquid or illiquid products are typically two to three times more expensive than plain vanilla stock or bond mutual funds or exchange-traded funds.
The royalty statements looked normal - until someone checked the electronic files.
They allegedly fabricated SEC certificates to dupe investors.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
