Financial advisors across all channels of the financial services industry are aging. Yet, many advisors remain unprepared for their retirement. This is particularly ironic, given that a main task for an advisor is to help his or her clients deal with retirement issues.
The average age of all advisors surveyed for Investment Executive’s Report Card series has risen to 48.8 from 46.7 in 2008. Insurance advisors are the oldest, at 50.5 years of age; followed by advisors with dealer firms, at 50.4; then brokers, at 48.2; and advisors with banks and credit unions, at 44.1. But despite all this grey hair, fewer advisors are planning for their retirement – only 29.7% say they have a documented succession plan in place, vs 44.3% in 2008.
There are several reasons why advisors avoid planning for their own retirement, including not knowing where to turn for help, not having enough money to retire or simply wanting to avoid the topic altogether, says April-Lynn Levitt, a career coach with the Personal Coach in Calgary: “It’s kind of like when people, in general, don’t do their wills; it’s because they don’t want to think that about that [subject].”
Advisors in the insurance channel are a little less likely to avoid the topic, as 49.3% of insurance advisors say they have a documented succession plan in place. Waterloo, Ont.-based Sun Life Financial (Canada) Inc. leads the pack in the insurance channel, as 72% of its advisors who were surveyed say they have a formalized succession plan in place.
Sun Life advisors say they appreciate the guaranteed buyout policy their firm offers. Says a Sun Life advisor in Ontario: “They reward you well for the business you underwrote and put on the books.”
This program, called Commissions On Release, is a guarantee by Sun Life to buy an advisor’s book at any time based on the commissions it generates, says Vicken Kazazian, senior vice president of the firm’s career sales force. In such cases, clients are reassigned to other advisors. The firm also helps advisors get started in creating a formal plan with a successor of the advisor’s choosing through seminars held ever year.
As well, 58% of surveyed advisors with Winnipeg-based the Great-West Life Assurance Co. (GWL) have a plan in place, yet most admit that the program has a few wrinkles to iron out. “It’s still a work in progress,” says a GWL advisor in Ontario. “But they’ve hired consultants to help formalize the process a bit more.”
GWL began its current succession-planning support in 2002. The program is promoted through GWL’s regional directors and provides help through various initiatives and consultants. Says Hugh Moncreiff, senior vice president of the firm’s Gold Key distribution network: “We recognized early on that we needed to support our advisors in their succession-planning processes.”
Advisors with the dealer firms, though, aren’t as concerned about succession planning – only 18.6% of those surveyed have a documented succession plan in place. That’s down drastically from 41.1% in 2008. Advisors with Mississauga, Ont.-based Investment Planning Counsel (IPC) are the exception, as 36.7% say they have a documented succession plan in place. John Novachis, IPC’s executive vice president, advisory services, says the firm promotes its structured succession program, from getting started in the process to signing on the dotted line.
Brokers also are hesitant about having a documented succession plan, with only 17.7% of those surveyed reporting that they have a formal plan in place. According to many advisors with Toronto-based BMO Nesbitt Burns Inc., of whom only 14% have a succession plan in place, retirement is simply too far away to give it any real thought.
That attitude may soon be changing, says Bill Brown, Nesbitt’s national sales manager: “Advisors may not be aware of all that we’ve done to provide support in the succession area, but it’s certainly something that’s attracted more attention over the past year.”
Meanwhile, 52.8% of surveyed advisors with the deposit-taking institutions say they have a retirement plan. However, these advisors contribute to a pension plan rather than having to craft a plan to sell their businesses.
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