When Your Advisor Retires


Retirement is a goal for many individuals.  It also looks different for everyone and is something that most have to work many years to achieve. Planning for retirement is a common reason why investors seek out the support of a financial professional. A financial advisor works with them to ensure they are preparing properly for their retirement, and that they have developed the right financial plan to successfully navigate them throughout retirement. What very few investors think of is that the very person they are counting on to help them through the entire process of planning and execution of a beautiful retirement may indeed be thinking about retiring themselves. What should investors do if their financial advisor is considering retirement? Is this a topic that investors are even concerned about?

Recent Spectrem Group research indicates that this is not a significant concern for most investors, with only 15 percent of investors being concerned about their financial advisor retiring in the next five years. Nearly a quarter of investors are indifferent to the potential worry about their advisor retiring, and 61 percent of investors are not concerned about the possibility of their advisor retiring in the next five years. Just because they are not concerned doesn’t mean they should be, as 38 percent of investor’s primary financial advisors are 51 years old or older. Fifty-six years old is a bit early for many individuals to retire, but 60-65 years old remains a common retirement window for many individuals.

It is not surprising that investors typically have advisors that are closer in age to themselves, with younger investors more likely to have younger financial advisors, and older investors likewise. Nearly two-thirds of WWII investors primary financial advisors are at least 51 years old, making it a reasonable conclusion to arrive at that many of those financial advisors will retire at some point in the next five years. What is fascinating however is that these older investors are simply not worried about the possibility of their advisor retiring, with only four percent of WWII investors indicating they are worried about their advisor retiring in the next five years.  

That lack of concern is offset by those younger investors who are far more concerned about the possibility of their advisor retiring, with nearly half, 47 percent, of Millennials indicating they are concerned about the potential of their primary advisor retiring in the next five years. The age ranges of their advisors don’t necessarily agree with their worry, given that 45 percent of their advisors have an age between 30-40 years old. It is possible that younger investors, and younger advisors, are more open with their possible retirement plans than older investors, or they are more likely to want to retire earlier. It is also possible, as we have seen with many studies, that Millennials are just more worried than older investors about many things.

Regardless of if the investor is worried about the advisor retiring or not, there likely will come a day when the advisor decides to retire and the investor will be faced with a decision to make. Does the investor stay with the firm the advisor was with when they retired? Do they stay for a while just to see how things go, or do they find a new firm once their primary financial advisor retires? The most common option for investors is that they would stay with the firm their advisor is with, as indicated by 41 percent of investors. Twenty-one percent of investors would stay with the firm for a period of time to see how things go before making a decision. Younger investors are more likely to venture out and find a new firm, with 24 percent of Millennials indicating that is what they would do if their advisor were to retire, compared to less than five percent of Baby Boomers and WWII investors that would do the same.

It should not come as a surprise to investors that their advisor also has dreams of retirement, so investors would be wise to understand the timeline to retirement for their primary financial advisor. This would allow investors the opportunity to think about what the best course of action is prior to their financial advisor retiring. This is also a good conversation to have when considering hiring an advisor, as few people want to start working with an advisor that is thinking of retiring in the next several years.