What Happens to You When Your Financial Adviser Retires?

Unless you’re working with someone at least 20 years younger than yourself, chances are you will need to find new help sometime during your retirement.

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Fresh out of college, I entered the financial planning industry. In the first few years, like those who had come before me, I often heard age-based objections. Why would I trust a 22-year-old with my life savings?

In the last few years as I’ve entered my 30s, I have seen a shift: A lot of people want to hire me because their adviser has, or is about to, retire. This change of heart reflects some rather sobering numbers. According to researcher Cerulli Associates, the average financial adviser in the United States is 51. Thirty-eight percent of advisers expect to retire within 10 years, just as demand for their help is accelerating — not only because of our aging population but because 60% of American workers are being forced into retirement earlier than expected.

If you are looking for someone to do the planning necessary to get you through your golden years and want to hire a Certified Financial Planner™, good luck. There are more CFP® professionals over the age of 70 than under the age of 30.

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What does that mean for you? The person who got you to retirement is probably not going to be the person who gets you through it. That adviser will be on a journey of his own.

Take a Team Approach

Morgan Stanley and Merrill Lynch each have more than 15,000 financial advisers. If you work with someone in the bank channel, that firm will have no problem finding someone else to pair you up with. But is it that simple? When you initially hired that person, it was likely based more on qualitative factors than quantitative. For example, maybe you hired your adviser because you thought they’d be a trustworthy partner, not necessarily because they said they could beat the market. Will your new adviser possess those same traits?

If you find yourself working with an adviser in a big firm, I suggest that you actively seek out a team where you work not only with the senior adviser, but also the next-gen members. Become acquainted and comfortable with those younger team members. If you stay put, they are the ones who will have to turn your nest egg into a retirement income stream.

Seek a Retirement Income Specialist

The journey to retirement is volume-based. Volume of savings, time and returns should leave a disciplined investor with enough resources to walk away from their careers with confidence. However, swinging for the fences in retirement, especially the first 10 years, can hurt you, as it is usually accompanied by volatility. Those first 10 years, which are often referred to as the “fragile decade,” are when sequence risk should be weighing on your conscious. In plain English: What if the market goes down as you start to pull your money out?

The point, as with many things in life, is that what got you to where you are isn’t the same thing that’s going to get you where you are going. The growth portfolio you relied on during your working years is not typically the one you want as you start to take money out. Ask yourself, “Does my adviser specialize in growing my portfolio or turning my assets into income?” If the answer is the former, retirees and soon-to-be retirees may want to make a change. There is almost never a contract that ties you to an adviser or a firm for any period of time. It is your money, and you can take it where you please.

Ever since the global financial crisis, more and more advisers have been leaving wire houses (banks and large broker/dealers) and forming teams as a Registered Investment Adviser, or RIA. There are two key terms in the last sentence.

  • “Team” is the first. If you retire at 65, your life expectancy is 84.3. That means that you need the money to last another 20 years, at least. Unless your adviser is planning on retiring 20 years after you, you need someone on that team who is at least 20 years younger than you.
  • The second term is “RIA.” They, along with CFP professionals, are the folks who are, legally, fiduciaries. If you’re depending on this money to pay your bills, don’t you want someone who is obligated to put your interests ahead of his or her own?

There’s no law saying you must have an “adviser.” There are more good robo firms every day. Companies like Betterment, Wealthfront and Schwab Intelligent Portfolios have seriously reduced the price of asset management. Would one of them make sense for you? First, you have to be comfortable with technology and the concept of an algorithm determining what is bought and sold. Second, you have to be comfortable doing some of the planning on your own, or hiring a third party to do that part for you. For those who are paying a broker to do nothing but manage money, the robos offer a cheaper, but untested, model.

The Bottom Line for Retirees

Like it or not, if you’re a Boomer, it’s the Millennials and Gen X/Y members who will manage your investments in retirement. The downside is that the economic cycles you lived through, they read about in a book. The upside is that they are often hungrier, more creative and more attentive. You’ve created a plan to get you to where you are. The unfortunate reality is that 73% of financial advisers don’t have a succession plan, and 32% of them are within 10 years of retirement. It’s time for you to figure out who will manage your retirement income.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Evan T. Beach, CFP®, AWMA®
President, Exit 59 Advisory

After graduating from the University of Delaware and Georgetown University, I pursued a career in financial planning. At age 26, I earned my CERTIFIED FINANCIAL PLANNER™ certification.  I also hold the IRS Enrolled Agent license, which allows for a unique approach to planning that can be beneficial to retirees and those selling their businesses, who are eager to minimize lifetime taxes and maximize income.