How Onslaught of Retirees Threatens an Advisor’s Practice

"Some advisors may say, 'I make enough money,' and that's fine if they want to run it out themselves, but they can't sustain and build on something that way," Farrell adds. "They still need to hire good people, invest in technology and other issues specific to the successful management of the practice."

Advisors may not be as aware of the looming threat as they should be, because the number of client interactions are far less in the accumulation stage, "and there are fewer tax consequences when adding to an account."

In the distribution stage, however, many clients will typically have between three and six accounts, all with different tax structures and implications.

"The health issues that will occur as they get older, combined with family members and heirs that typically get involved as clients grow older will consume more of the advisor's time," Farrell concludes. "Something like an estate settlement is extremely time consuming and expensive. Eventually, advisors might charge extra for this, but the business model as of now is that it is included in the advisor's fees."

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Charlie Farrell will be a speaker at this year's Think Retirement Income Conference in Boston on Oct. 10 and 11. For more information and a list of other speakers, please visit www.thinkretirementincome.com.