Your Financial Adviser Wants to Retire, Too

As the wealth management industry faces a wave of retirements, it's time for you to consider whether your adviser has a succession plan -- and what you should do about it.

Senior financial adviser working with a couple who are clients
(Image credit: Getty Images)

When you hire a financial adviser, it’s common to work with someone your own age. So when you’re ready to retire, your adviser might be, too—right when you need the person most.

Kevin Smith, executive vice president of Smith Wealth Advisory Group in York, Penn., a financial planner for more than 30 years, can appreciate why clients might be thinking about his future retirement. “I’m not retiring any time soon, but I can see my clients wondering, ‘What will we do when Kevin is gone?’”

As it happens, the wealth management industry is about to face a wave of retirements. The average age of financial advisers today is about 55, with 20% of industry professionals currently 65 or older, according to a 2019 study from J.D. Power. Whether your adviser is nearing retirement or not, you’ll want a succession plan in place before you need it.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Ideally, your adviser should already have one, and if you’re unsure, ask. At Smith Wealth Advisory Group, where clients get an entire team of advisers consisting of multiple generations, the succession plan is built in. “My clients are already getting to know and working with these other advisers,” Smith says. “That helps prepare us for a seamless transition.”

Succession planning is a concern for all advisers, not just those nearing retirement. Even though Luke Chapman, president of SFS Wealth Management in New Castle, Del., is only in his 30s, he intentionally built a team with other advisers. “I could just as easily be hit by a bus,” he says. “That’s why it’s so important that my clients have relationships with at least one, if not two, other advisers in our practice.”

If your adviser’s succession plan includes other advisers, meet them and learn about their background. “Do they have the same qualifications, the same specialties? Do you trust them as much? Make sure you aren’t just getting passed off to your adviser’s son, the ‘heir apparent,’ who only got his license last week,” warns Chapman.

And if there isn’t a succession plan? “That’s just not acceptable, and they need to develop one for you,” says Smith. “If they cannot do that, you need to accept the risk, or consider moving.”

Not every departure is planned. A sudden illness, an unexpected retirement, family emergencies and even death can leave you in a bind. Smith remembers one such situation: “We had a couple who had been working with their adviser for decades. He handled their taxes as well as their investments. When he passed away, they had no idea where their money was. We spent three hours with them just to figure out what was going on.”

So what should you do if you discover that your adviser has moved on? “Don’t panic but don’t delay finding another relationship,” says Chapman. He suggests asking friends and family for referrals. Organizations like the CFP Board and the Financial Planners Association have search engines for finding advisers locally.

If your adviser worked at a firm with other planners, you could request another adviser there. In fact, you may already be assigned to someone else. This can be convenient because you won’t have to move your accounts, but it’s not a great sign that the firm didn’t have the forethought to build this relationship sooner.

If you don’t feel an immediate connection with that person, request interviews with other advisers at the same firm, and don’t feel obligated to stay. “No one firm or company owns your business,” says Chapman.

Changing firms has its downsides. You’ll need to transfer your portfolio, which could force you to sell some funds and replace them with the options at the new firm. Plus, it may not be feasible to move some assets, like annuities, to another company without incurring surrender charges.

Working on a succession plan now with your current adviser means you won’t need to scramble for a replacement later. The CFP Board’s motto is “Let’s Make a Plan.” That applies just as much to your adviser’s retirement as your own.

David Rodeck
Contributing Writer, Kiplinger's Retirement Report