Like the cobbler whose children have no shoes, many financial planners have not planned for their own retirement. A new study released by the Financial Planning Association in partnership with Janus Henderson reveals that 73% of financial advisors don’t have a written succession plan, including 60% of those within five years of retirement.
“Despite helping clients to design a meaningful vision for their retirement, many advisors are unclear about their own plans for retirement,” the report notes.
The smaller the firm, the less likely the advisor has a plan. Just 13% of firms with less than $50 million in assets have a succession plan compared with 60% of firms with assets topping $500 million.
(Related: Why Advisors Avoid Succession Planning)
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Among those advisors with a plan, 72% are focused on the value of their business while 57% are focused on its transition. The latter figure can be especially problematic for the teams that remain when the principal advisor retires and for the clients that the firm wants to retain.
“Succession planning is critical for financial advisors, not just for the benefits of the clients so they know they will be taken care of when their advisor retires, but for the benefit of those on the advisor’s team who need to know how they will be impacted when the senior advisor or principal decides to retire,” said 2018 FPA President Frank Paré in a statement.
Among those advisors with a plan, 39% worked with an outside consultant to create it and 18% worked with someone in the broader organization, for example, within their broker-dealer organization. The survey notes that these two resources are not mutually exclusive.