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30% of Advisors Changed Their Retirement Plans Due to Pandemic: Ameriprise

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What You Need to Know

  • A significant number of advisory firm owners have still not created a succession plan for their business.
  • Advisors say their clients are shifting to more conservative investments and delaying their homebuying plans.
  • They say their most pressing challenge is the current investing environment.

Thirty percent of financial advisors have changed their expected retirement dates because of the COVID-19 pandemic, according to the findings of a recent poll by Ameriprise Financial.

Perhaps the most concerning finding, according to Ameriprise, was that 25% of advisors within 10 years of retirement said they did not currently have a succession plan in place, despite the aging advisor workforce.

That is an ongoing dilemma that several industry executives have pointed to in recent years as a major cause for alarm. David DeVoe, CEO and founder of DeVoe & Co. said during a 2020 webinar that the industry “is facing a potential crisis here with succession planning.”

At the recent EDGE conference in Hollywood, Florida, DeVoe said succession planning remained a major issue, with many advisors still “challenged” when it comes to “putting succession plans in place.”

The average marketplace advisor is 15 years away from retiring, according to Ameriprise.

While 61% of advisors polled said they had a succession plan and had communicated it to the intended recipients, 25% said they did not have a succession plan yet, and 14% said they intended to sell their practices.

Other Survey Findings

Ameriprise conducted a blind survey of more than 260 advisors from across the industry (wirehouses, regionals, RIAs, etc.), starting in April, to identify key trends regarding retirement, client behavior changes and market confidence in the industry, it said.

The most common client behavior changes seen by advisors were a shift to more conservative investments (42% of advisors) and delaying plans to buy housing (29%).

According to the poll, advisors see the current investing environment as the “most pressing challenge industry advisors face.” Thirty-four percent of advisors saw that as the No.1 challenge, while 65% saw it as a top three challenge.

That was followed by acquiring new clients, with only 17% citing it as the top challenge but 50% citing it as a top three challenge.

Also cited as top practice challenges were building workflow efficiency and managing through the pandemic, each cited by 12% of advisors as the top challenge and by 44% as a top three challenge.

Tools and processes designed to “drive efficiency” represent an “important growth resource for more than half of all advisors, which could help to alleviate the challenges of today’s markets,” according to Ameriprise.

That was cited by 55% of advisors as the growth resource that was top three in importance. It was followed by advisor-facing technology (cited by 41% of advisors), financial planning capabilities (40%) and client acquisition support and client-facing technology (38% each).

Although hiring support was not one of the top growth resources cited by advisors (cited by just 26%), practices had an average of three current open positions, Ameriprise noted.

(Photo: Bloomberg)