Advisors offer some insight into why upwards of 50 per cent of advisors don't have their own retirement plans in place ... and this includes those daunting succession plans too.
It’s a daunting undertaking – passing your hard-earned book into the hands of another.
After 30-odd years of forging client relationships, building a referral base and ensuring hundreds, perhaps thousands, of people are financially set for the rest of their lives, you’re expected to give it all away to the next up-and-comer?
But your time to retire will inevitably come, and it’s best to be as prepared as possible when it does.
Despite this, according to a report, The Future of Practice Management, released in January by the Financial Planning Association, almost half of financial advisors aren't set up for their retirement.
The poll, which surveyed about 2,400 financial service professionals in the United States, found that 46 per cent of financial advisors do not have a retirement plan themselves, yet 40 per cent are planning to retire within the next 14 years.
On top of that, only 25 per cent have a succession plan in place to ensure business falls into the right set of hands. This percentage increased slightly by age, with 31 percent at ages 60 to 64 and to 41 percent at age 65-plus, knowing who was going to take over their book.
“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.
Winnipeg-based financial advisor, Doug Lochhead, of Granite Financial Group, believes avoiding the succession plan – one of the advisor’s most challenging tasks – is a huge problem for the industry today.
“It’s going to be a real issue for the industry,” he says. “We provide a very specialized experience based on advice … there’s going to be a lack of people through the advice channel, other than the banks.” (continued)
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Lochhead, himself, does not have a formal succession plan in place, though his son will likely inherit his book. He attributes this, not just to a lack of time, but the overwhelming task of finding the right person to take the reins.
“Our business is a transfer of trust, so you have to find somebody who is the right fit, who is willing to come in and take over the legacy,” he says. “And, it’s difficult to do that because not everybody wants to put in the time and the hours and the commitment that it takes to be an independent financial advisor.”
Judy Chung, of B.C.-based Facet Advisors, attributes the lack of foresight – be it with retirement or succession planning – by the advisor to the “what I know, I don’t need help with” syndrome. She believes advisors put this kind of planning on the backburner because they are busy helping others prepare for the future. The last thing they want to do when they sit down at night is ponder their own retirement plans, she says. And, they certainly aren’t going to reach out to their colleagues for help, she adds.
“Dr. Heal Thyself is always a problem. When you are work on a particular thing, you are not going to go home and work on it for yourself,” she says. “There are doctors, who will go to other doctors to get treatment, but an advisor will very rarely go to another advisor for help … Because we are experts, we just don’t think that we need the help that everybody else does.”
Chung suggests firms start encouraging advisors to ‘buddy-up,’ and provide financial, retirement and succession planning advice to each other.
“That is what we need to begin doing. We can’t be objective about our own financial plans,” she says. “We need to do a better job training each other and not be so competitive of each other when it comes to sharing advice.”
Related Stories:
Wondering how to stage a successful succession?
Advisors lack incentives for succession planning
Choosing an exit? Should you milk your book’s value or build it?
After 30-odd years of forging client relationships, building a referral base and ensuring hundreds, perhaps thousands, of people are financially set for the rest of their lives, you’re expected to give it all away to the next up-and-comer?
But your time to retire will inevitably come, and it’s best to be as prepared as possible when it does.
Despite this, according to a report, The Future of Practice Management, released in January by the Financial Planning Association, almost half of financial advisors aren't set up for their retirement.
The poll, which surveyed about 2,400 financial service professionals in the United States, found that 46 per cent of financial advisors do not have a retirement plan themselves, yet 40 per cent are planning to retire within the next 14 years.
On top of that, only 25 per cent have a succession plan in place to ensure business falls into the right set of hands. This percentage increased slightly by age, with 31 percent at ages 60 to 64 and to 41 percent at age 65-plus, knowing who was going to take over their book.
“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.
Winnipeg-based financial advisor, Doug Lochhead, of Granite Financial Group, believes avoiding the succession plan – one of the advisor’s most challenging tasks – is a huge problem for the industry today.
“It’s going to be a real issue for the industry,” he says. “We provide a very specialized experience based on advice … there’s going to be a lack of people through the advice channel, other than the banks.” (continued)
#pb#
Lochhead, himself, does not have a formal succession plan in place, though his son will likely inherit his book. He attributes this, not just to a lack of time, but the overwhelming task of finding the right person to take the reins.
“Our business is a transfer of trust, so you have to find somebody who is the right fit, who is willing to come in and take over the legacy,” he says. “And, it’s difficult to do that because not everybody wants to put in the time and the hours and the commitment that it takes to be an independent financial advisor.”
Judy Chung, of B.C.-based Facet Advisors, attributes the lack of foresight – be it with retirement or succession planning – by the advisor to the “what I know, I don’t need help with” syndrome. She believes advisors put this kind of planning on the backburner because they are busy helping others prepare for the future. The last thing they want to do when they sit down at night is ponder their own retirement plans, she says. And, they certainly aren’t going to reach out to their colleagues for help, she adds.
“Dr. Heal Thyself is always a problem. When you are work on a particular thing, you are not going to go home and work on it for yourself,” she says. “There are doctors, who will go to other doctors to get treatment, but an advisor will very rarely go to another advisor for help … Because we are experts, we just don’t think that we need the help that everybody else does.”
Chung suggests firms start encouraging advisors to ‘buddy-up,’ and provide financial, retirement and succession planning advice to each other.
“That is what we need to begin doing. We can’t be objective about our own financial plans,” she says. “We need to do a better job training each other and not be so competitive of each other when it comes to sharing advice.”
Related Stories:
Wondering how to stage a successful succession?
Advisors lack incentives for succession planning
Choosing an exit? Should you milk your book’s value or build it?
