Finding the Successor to Your Business. Where Can You Find the Next Generation of Advisor to Take Over Your Practice?

Finding the Successor to Your Business. Where Can You Find the Next Generation of Advisor to Take Over Your Practice?


By: Abby Salameh, Chief Marketing Officer
Published August 16, 2017

Originally published at WealthManagement.com as a special feature in the Mid-Year Outlook 2017

It comes as no surprise to learn that over 65% of financial advisors have no fully documented succession plan according to a recent study Private Advisor Group conducted. After all, advisors in the independent channel are often times solo practitioners who are working their way towards their own retirement as they help their clients with the same.

With the average age of an advisor close to 60 according to research firm Cerulli Associates, one would expect on a logical level that independent advisors would be seeking for the next generation of advisor to take over their practice. But they are not. Why?

I asked 3 advisors in the Private Advisor Group office (who are over 50 years old) when they thought they would retire and the response was consistent. “The relationship I have with my clients runs long and deep. It is recurring revenue and a relationship I can handle from most anywhere. Why would I give that up now?” It is true that in today’s virtual world, advisors can service their clients from anywhere, allowing them to continue working well into their elder years. But while they continue to age, so do their clients. And the older their clients get, the less their business will be worth if they look to monetize it in 10 years from now.

For forward thinking advisors who recognize this phenomenon, the struggle is real. After all, there are no formal training programs for independent financial advisors. Which means, according to consulting firm Moss Adams, it is estimated that there will likely be a shortfall of at least 200,000 advisors by 2022.

Where are advisors finding this ever-elusive next generation of financial advisor? According to the research we conducted, there is no dependable destination to find one. Of the advisors surveyed who found and hired a junior advisor, only 3.7% found the advisor through an industry specific career center like the FPA, CFP Career Center, Advisor Ahead, etc. Interesting to note, an overwhelming 48% found this associate as a referral from someone he or she knew. And that referred person had zero financial services experience. He or she was a friend of a client, son or daughter of a friend or client.

The benefits of hiring a junior advisor have been well documented: to be the successor to your practice, to engage with the next generation of client, to delegate responsibilities to focus on other things, and so on. But, even if you are one of the few successful advisors who has employed a junior advisor or is willing to find one, the pressure to ensure your firm is attractive to that potential candidate requires specific activities and responsibilities.

If you are interesting in learning more about going independent with Private Advisor Group, contact Charlie Latimer.