Advisors Are Nearing Retirement, but Who’s Taking Their Place?


Most advisors have seen headlines about the concerning lack of young talent backfilling the ranks. According to JD Power in 2019, the average age of financial advisors clocked in at 55 years old. JP Morgan recorded that 44% of RIA’s are north of 60 years old. That number has been growing, showing little to no signs of climbing.

Trajectory leads to a coming problem with many facets. While advisors (and their clients) age, Cerulli Associates estimates there will be a wealth transfer in the area of $48T over the next 25 years. Wealth is cascading into younger hands, and there’s a building shortage of advisors to help manage it.

This is an industry-wide question, but it’s also a question you need to answer as an individual advisor. It impacts your future growth plans. It impacts your ability to sell your business to up-and-coming talent. It impacts the options available to entrust your clients to new, capable hands.

Today, we’ll focus on looking ahead to the aging advisor challenge, the current demographic issue, the future challenges for the industry, and how young advisors can prepare for today’s world. 

What Happens to the Clients?

The biggest question for many regarding the aging advisor issue is this question: “What happens to your clients when you retire?”

Under normal conditions, it’s generally a sensitive window when a trusted advisor retires. Clients can feel nervous about being passed to a new advisor or even practice. With the shortage of young advisors coming up, many advisors may have a hard time finding internal succession plans, not giving advisors the opportunity to train their proteges. Advisors may need to pass their clients to new firms that are entirely new to their clients.

Until there are new advisors filling the younger ranks, advisors need to be aware of preparing their clients to be cared for once they decide to retire. One way you can do this is to identify an RIA that can help you with your continuity. At WealthPlan Group, we can help retiring advisors connect their clients with trusted relationships under the same brand and community. You can enjoy your transition with a higher degree of confidence in the people who will be caring for your clients.

Are Younger Advisors Capable of Strong Financial Planning?

Another challenge with client continuity is that older clients with accumulated wealth often prefer older advisors, as they are seen to have more experience and knowledge. Most advisors remember the younger days of hustling to build their businesses. 

You probably asked a few wealthier households to trust you despite your lack of a resume. Now in the future, you have to tell your clients to trust younger hands again. How do you build that trust?

One of the best solutions to this challenge is to have enough overlap between older advisors and their younger successors. Your clients can build confidence knowing there have been years worth of runway where you can help them learn from your experience.

Will the Age Problem Accelerate the Tech Solution?

Advisors are also keenly aware of the recent advancements of robo-advisors and A.I. It’s created a tense conversation around the future of the financial advisor. Younger households are not looking for financial advisors at the rate of their parents, even as their net worth accumulates. For many, that behavior gap paired with their tech comfort zone is suggesting a tech-first trajectory in financial planning.

Advisors are always adopting new technology, but they are now competing with technology for clients like never before. Technology is actively aiming to meet a wider variety of needs. The result is a growing overlap with the advisor’s list of services.

The lack of young advisors hustling to build their own client lists widens the opening for direct-to-consumer technology to fill the gap. Older clients have built their wealth with the support of traditional advisors, but they’re passing their wealth to a generation with an entirely different set of preferences. The industry is primed for substantial change, and the age gap is a key reason.

How Should Advisors Be Preparing for the Widening Age Gap?

Now that we’ve talked about the high-level challenges for the future, what should advisors be doing to prepare for the future of their business? For most advisors, this boils down to two priorities:

  • Passing your clients to advisors marked by excellence and integrity
  • Protecting the value of your book of business to exit on your terms

Here are a few suggestions:

Start planning succession 10 years ahead of time.

Every advisor should explore different options for succession – internal, within your RIA, outside acquisition, etc. It’s a very complex decision, and it requires thorough due diligence to vet your options.

That’s why you should have an eye on your continuity plan well in advance, with 10 years being a common recommendation. It gives you enough time to consider options like hiring or training younger advisors who are in-house. If you’re considering selling your business to your RIA, it gives you time to research the best fit for continuity. Whatever your plan, you want time on your side.

Keep innovating, even when you are approaching the finish line.

To keep serving your clients well and preserve your valuation, don’t coast on your business model as you approach transition. The challenge is doing this on your own. It’s helpful to stay connected to other advisors who are also committed to innovating the business model – finding new efficiencies and value for clients. Keep evolving. Pass a strong business to the next set of hands.

Face the Future with the Right RIA Support

If you’re looking for lasting success for your advisory firm, you need to plant your business in rich “soil”. Surround your practice with the resources you need to help you solve problems and introduce new efficiencies. 

At WealthPlan Group, we are committed to equipping our advisors with everything they need to succeed. If you’re looking for an RIA that helps you build a firm without compromise, start a conversation with our team.

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