What Happens If Your Advisor Retires?

1/19/2023

 Investors are generally very loyal to their financial advisor, according to research conducted by Spectrem Group with investors with $100,000 to $25 million of net worth (not including the value of their primary residence.) Relationships generally last for at least 15 years or longer. But many have not considered what they might do should their financial advisor retire.

Spectrem recently asked investors the age of their financial advisor. While 9% indicated they didn’t know their financial advisor’s age, another 9 percent indicated that their financial advisor was over the age of 60 while 29 percent indicated their advisor was between the ages of 51-60. Other investors had younger advisors with 38% indicating their financial advisor was between the ages of 41-50 and 15 percent indicated their financial advisor was under the age of 40. Generally, younger investors tended to have younger advisors with 45% of Millennials indicating their financial advisor was between the ages of 30-40.

Because most advisors are below the age of 60, concerns about their financial advisor retiring in the next 5 years are relatively low. Only 15 percent of investors are concerned or very concerned that their financial advisor will retire in the near future.

When investors were asked what they might do if their advisor retired or unexpectedly passed away, the good news for most advisory firms is that 41 percent of investors indicated they would stay with the firm that their advisor is with. Another 21 percent would stay with the firm for a period of time to see how things go.

Advisory firms would be wise to introduce clients to additional team members and experts within a firm, especially as an advisor becomes older. This will allow for a seamless transfer upon an advisor’s retirement. Investors would prefer to keep their assets and their relationships in a stable environment. However, it is important to address these issues with investors as an advisor gets older. It is likely that once an advisor reaches the age of 60 that his or her clients will begin to wonder about future plans.