Does your financial advisor have a succession plan?
Your financial advisor has most likely done quite a bit of planning for you. It's one of the big things we do. We plan. Despite the fact that they are in the planning industry, they may not have a plan for themselves. And, that lack of planning might not be good for you either.
Advisor Group, one of the largest conglomerates of independent broker-dealers in the industry, asked their affiliated network of advisors if they had a documented succession plan. Eighty-two percent of financial advisors responded with no, they did not have a plan. Financial Planning magazine suspects that “countless firm founders are still paralyzed when it comes to appointing an heir apparent.” Not only do advisors not have a plan, but many of them are not doing anything about it.
Knowing whether your financial advisor has a succession plan should be critically important in your decision. After you have invested the time and energy, it is important to know who is going to be there for you in your golden years.
Is your advisor the same age as you or older?
This issue is compounded when reviewing advisor demographics. The Certified Financial Planner Board of Standards shows that 49% of CFPs are age 50 and older. A study by Cerulli Associates in 2013 indicated the average age of advisors to be 50.9 years of age, with 43% of advisors being age 55 or above. (Also, the Cerulli study is now four years old!) So not only do most advisors not have a backup plan, but many of them are likely to start retiring in the near-term.
These two data points should jump out as a chief concern for anyone utilizing financial advisory services! If you already have an advisor or are evaluating firms, you should be asking questions about who is going to be there for you when your advisor retires or can no longer provide the quality advice that you need.
Who is going to be there for you if your advisor retires?
One of the things we emphasize at Willis Johnson & Associates is our team-based approach. Every client of ours gets two members on their team, a senior advisor, and a support advisor. With our approach, there is more than one person intimately familiar with each client's financial situation. We support our team of wealth managers by investing heavily in continuing education and training to ensure that every client receives the quality service and experience that they deserve. We understand life can throw a couple of curveballs and that is why it is critical for financial advisors to have a business continuity plan for when they can't be there for you.
