Close to Retiring? Uh-Oh, So is Your Financial Adviser

Wealth Advisers are an aging group. Yours may retire just when you need him most. Here's how to handle the transition.

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If you have a financial adviser, odds are this person is contemplating his or her own retirement, as well as yours. That doesn’t mean you’re being cheated out of the attention your finances deserve. But it does suggest that your account will be handed off to a colleague sooner than you may expect.

Like postal clerks, clergy, and bus drivers, wealth managers are growing old in a line of work with a slow replacement rate. The average age of a financial adviser in the U.S. is 50, reports consulting firm Accenture. Meanwhile, financial advisers past the age of 60 control $2.3 trillion of client assets.

Most alarming: These trillions of dollars will be up for grabs over the next decade as fewer than one in three advisers has a formal plan for handing off their client list. You could be part of a bidding war as rival firms vie for your adviser’s book of business, or you may be handed to an inexperienced financial adviser who inherits the account at your old firm.

Succession planning within the adviser community is a hot topic. Firms are looking for ways to keep all these assets from jumping ship. Your main concern should be ending up with an adviser you trust and making sure important planning matters don’t slip through cracks during a transition.

This is no small matter. My father was an able manager of his own money but when he passed away some years ago my mother needed advice. During the transition—the search for professional help—her portfolio plummeted. Ultimately her accounts landed with a young man at her long-time bank, and he seemed as interested in generating fees as he was in doing the right thing.

Now millions of baby boomers are heading into retirement at the same time as their financial adviser, losing a trusted caretaker of their money. This can lead to costly gaps and disruptions in planning, as my mother experienced. It may lead to unwanted solicitations from other firms. It may require a search for a new adviser on your own, and without fail it will lead to administrative headaches as you update your accounts.

“Clients want to know that their Adviser is acting in their best interest and often wonder what is motivating a switch after so many years,” says Kendra Thompson, an executive at Accenture Wealth and Asset Management Services. “They do not always feel comfortable being handed off. It’s important that the trusts be there well in advance to any transition.”

If you have an older financial adviser:

  • Understand the coming transition. Ask now about your adviser’s retirement date and how he or she intends to handle your account. Do you want to stay with the firm? Do you want to try someplace new? Do you want your adviser to handpick a successor? How quickly will someone new get up to speed?
  • Look for an upgrade. You may be happy with your adviser but there’s always room for improvement. This is your chance to reset expectations and clarify how your needs are changing. “You may be retiring and looking at income and investments differently,” says Thompson. “You may be helping children start out in careers or purchase a home, or looking for help with your estate.” Make this clear and you’ll get something out of the transition besides a headache.
  • Ask questions. You want to know all your options if you get notified about a transition. “Most Advisers and their teams are too busy with the process to listen to how clients needs are changing and what a transition may mean for them,” says Thompson. That means you have to take charge—and you should always feel free to change the relationship if the balance of fees for service no longer feels right.