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Retirement Planning > Retirement Investing

Many advisors don’t have a business or retirement plan

By Warren S. Hersch

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Half of financial advisors do not have a written business plan. Of those that do, large firms are more likely than small practices to have one.

These findings, among others, are unveiled in a new report from the Financial Planning Association, “The Future of Practice Management.” The study polled nearly 2,400 financial service professionals to probe them about current and future trends related to managing and growth of an advisory practice.

The survey found that 46 percent of financial advisors do not have a retirement plan for themselves, yet 40 percent are planning to retire within the next 14 years. Also, only 25 percent of advisors have a succession plan to ensure their business transitions appropriately when they retire. The percentage with a formal plan increases slightly to 31 percent at ages 60 to 64 and to 41 percent at age 65-plus.

“Though some advisors may not be ‘practicing what they preach,’ a likely culprit for their inability to plan for their own future may fall squarely on a simple lack of time,” the report states. “The study revealed that while advisors recognize that time management is among the most important business attributes they can possess, they are struggling to manage their time effectively.”

The report reveals also that many advisors are planning to change how they position their practices with clients within the next five years. The study shows that:

  • 76 percent of money managers indicate they will change. Of those who plan on changing, 44 percent will transition to wealth managers.
  • 72 percent of investment planners indicate they will change. Of those who plan on changing, 46 percent will transition to wealth managers.
  • 53 percent of financial planners indicate they will change. Of those who plan on changing, 62 percent will transition to wealth managers.
  • Only 30 percent of wealth managers are planning to change.

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