Even though 70% of Brokerage Report Card respondents still don’t have documented succession plans in place, many executives say they’re not worried about their aging advisor population. They believe having younger advisors working with older colleagues will prove to be the best strategy in the long run.

Although the average age of advisors has risen slightly, to 47 from 46.5 in 2006, they don’t seem to be in a hurry to have their succession plans set in stone. With companies allowing advisors to continue to work longer, the retirement process seems to have been delayed. And even though some advisors may feel that they are too young to be worrying about retirement, others are unaware that their firms have succession plans available to them.

At RBC Dominion Securities Inc. in Toronto, only 29% of surveyed advisors had a documented succession plan in place. Rather than setting up a true succession plan, the firm acts as a “middleman” for the transaction between the vendor of a book of business and the purchaser. DS then helps to finance the purchase and ensure the transition is smooth.

“We make sure it’s a proper fit,” says David Agnew, managing director at DS. “And, at the end of the day, it’s really driven by the advisors seeking other advisors who would do a good job with their client base. They don’t have to go somewhere else to monetize their business. They are extremely well compensated, in terms of the transition. And it’s a smooth transition, without being disruptive for the client.

“Within our firm,” Agnew continues, “we have such a great of group of advisors who are younger than the average age, and we provide some great training and leadership. That gives our senior advisors comfort that there will be somebody to transition their clients to.”

Although the issue is a concern for the entire industry, the problem is under control at DS, he says: “Many older advisors are contemplating the team and partnership structures, and that is how we can accommodate it.”

Of all the Edward Jones advisors surveyed, only 16% say they have documented succession plans; they rated its importance at a 7.2, slightly lower than the overall average of 7.7.

“It doesn’t exist for us. It’s pathetic,” says an Edward Jones advisor in British Columbia. “I can’t sell my book, and they don’t buy me out. The program Edward Jones has is just to hand off your book to another broker. It’s definitely lacking.”

However, Gary Reamey, principal and head of the firm’s Canadian division in Mississauga, Ont., says Edward Jones has a documented succession plan, called the “sunset retirement program,” for retiring advisors. “It’s typically a three-year program, in which they have a new person come in and share commissions,” Reamey says.

That program also entitles advisors to earn profits from the firm in the form of limited partnership interest — even in retirement. But although it may be beneficial for some advisors, others may not hold a limited partnership or see themselves ever qualifying for it; the monetary value of their book would be worthless to them.

Meanwhile, at Winnipeg-based Richardson Partners Financial Ltd. , 71% of surveyed advisors already have a succession plan set up — the most of any firm in the Report Card. Last year, the firm introduced a retirement transition plan and ensured that all its advisors were aware of its existence as soon as it was rolled out.

“We can work with advisors to transition their business,” says Sue Dabarno, president of Richardson Partners. “As advisors look to their retirement years, they want to understand what value they have created in their business, how to transition it and, in many cases, how to still play a role in the client relationship.”

With so many at Richardson Partners setting up their succession plans, it seems the firm’s advisors are happy with what they are being offered, giving the company an 8.9 in the category, second-best overall. As one advisor in Quebec says, “The firm took the best of all the other firms’ plans, got feedback from us and rolled it into one.”

Wellington West Capital Inc. , also of Winnipeg, has 58% of its surveyed advisors set up for retirement. Chairman and CEO Charlie Spiring says the firm has very little concern about the aging advi-sor demographic because its advisor population is somewhat younger to begin with. Nevertheless, by partnering younger advisors with older ones, the firm hopes to encourage older advisors to search for and pick the right partners for their clients.

@page_break@Even this is not a “documented” succession plan, the firm’s advisors gave the company a 9.1, the top score in this category.

“The brokers are responsible for negotiating their own deal,” Spiring adds, “and we give them full latitude to sell to whom they want.” IE