Respect your youngers and get ready for the next generation of advisors.
Those are two key messages for financial advisors contemplating retirement that are included in a new report from Cerulli Associates.
“As a critical succession cliff approaches and aging advisors begin retiring in greater numbers, younger advisors and candidates will increasingly wield stronger leverage,” states research analyst Marina Shtyrkov, one of the authors of the report. “Firms will need to take their preferences into serious consideration because this next generation will ultimately shape the financial advice business.”
According to Cerulli, the average advisor is 50 years old and close to one-third (28%) of those within 10 years of expected retirement — presumably many of the 50-year-olds — lack a certain succession plan.
Advisors 55 and older account for close to 40% of the total number of U.S. advisors, which Cerulli puts at 312,000, citing multiple sources, and 37% of assets under management.
Older advisors will have to attract and train quality talent in order to retire with the business intact. Firms need to seriously consider the preferences and needs of younger advisors as well as their firm’s existing compensation models, work/life balance expectations, training support, mentoring and company culture, according to Cerulli. They also also need to develop career paths for rookie advisors to groom them over time.