Is Your Advisor Retiring?

10/1/2021

The financial advisory industry has been aging for quite some time, with fewer and fewer individuals deciding to enter the industry and become a financial professional.  This has resulted in the gradual aging of financial advisors as an occupational segment. Are investors concerned about their financial advisor retiring? What will an investor do if their financial advisor decides to retire?

Spectrem Group recently researched those issues with wealthy investors. Only 15 percent of investors are concerned about their financial advisor retiring in the next five years, and around a quarter of investors were neither concerned nor unconcerned. That concern changes significantly however among younger investors, with 47 percent of Millennials indicating that they are concerned about their financial advisor retiring at some point over the next five years. This concern may be because if their financial advisor is significantly older than they are, the investor many be concerned that the advisor will not be working throughout their entire financial journey. Working investors are also slightly more concerned about their financial advisor retiring in the next five years than investors that are already retired.

Regardless of investors being concerned or not about their advisor retiring, many will be forced to decide in the event of their advisor retiring. Forty-one percent of investors would stay with the firm their advisor was with if their financial advisor were to retire. Twenty-one percent would stay with the firm their advisor had been with for a certain period, evaluating how things are going and then make a decision. Only eight percent of investors would find a new firm if their financial advisor were to retire, and 13 percent of investors don’t know what they would do if their financial advisor were to retire. Younger investors are more likely to seek out a new firm, with 24 percent of Millennials and 16 percent of Gen X indicating they would find a new firm if their advisor were to retire. Older investors are more likely to not know what they will do, as 17 percent of WWII investors indicate that they do not know what they would do in the event of their financial advisor retiring. Women are more likely to stay with the firm their advisor had been with than men, with 51 percent of women indicating they will stay with the firm compared to only 36 percent of men who feel similarly. 

Retirement is one of the primary topics that investors discuss with their financial advisor, but that conversation is usually one-sided, with investors rarely asking about when their financial advisor plans to retire. Having that conversation is important to have however, so investors are not faced with having to decide what to do without adequate notice.