As more people work past the
traditional retirement age, what does that mean for succession plans?
Nov 12, 2018 @
5:06 pm
By Joni Youngwirth
Advisers across the
industry have been encouraged to get their continuity and succession plans in
place. By and large, they've heeded the advice.
Still, advisers
approaching retirement see the same statistics they show their clients about
more people working beyond the traditional retirement age. And like their
clients, they, too, want to remain relevant. This has many advisers
reconsidering when to stop working or what type of career to pursue next.
How does this
changing viewpoint affect the established succession plan? As you might
imagine, some advisers who have found a successor, trained that individual and
have confidence in his or her ability to lead the business may be having second
thoughts. They may put off signing the buy-sell agreement, which, in turn, puts
them at risk of losing their heir apparent.
On the other end of
the spectrum are the younger advisers who expected to become part of a
partnership but are instead left holding the bag for everything — seeing clients,
running operations and developing new business. They assumed they would be
working alongside the tenured adviser, but the tenured adviser is out pursuing
new dreams.
The age factor
One issue that
plays into these scenarios is the ages of the tenured adviser and the new
adviser. Although age alone does not account for maturity, experience or
confidence, it can influence the success of transitions. Consider these two
scenarios to see what I mean.
The founding
adviser of a firm is 66 and the Next-Gen adviser is 27. The senior is anxious
to shed much of the daily work and assume a more flexible schedule, perhaps by
working fewer days per week or even taking off weeks or months at a time. But
at 27, is the younger adviser ready for and receptive to such a level of
responsibility? Does the younger adviser want the senior to totally disappear
from daily operations?
Or take the case of
a 57-year-old adviser who brings on a 37-year-old replacement. The replacement
may be eager to spread his wings and try his hand at running all aspects of the
business, but the senior adviser is in her prime and has no intention of
letting go of anything substantial for the foreseeable future.
These cases are
polar opposites, but both are influenced by the age factor. In one, the younger
adviser wants and needs the close, ongoing presence of the senior adviser. In
the other, the younger adviser wants the senior adviser to transition the
business and have less of a presence.
Now combine either
scenario with an adviser who is simply not ready for retirement. This adviser
may be financially prepared but hasn't figured out what to do with life
afterward, an in-between state that would resonate with many clients nearing
retirement.
Difficult
conversations
So how can advisers
make sure they're doing the right thing in these situations? Here are a few
guidelines:
• Senior advisers: Be clear with
younger advisers about how many hours you intend to work, as well as how much
of that time will be devoted to being a financial adviser versus pursuing your
next career. Outline the periods when you will be absent, whether for travel or
other passions, to help set expectations among all parties, including spouses
or significant others. If retirement is on the horizon, develop clarity around
what that looks like: What will be your purpose, how will you use your time,
what passions will you pursue?
• Younger advisers: Be sure your
senior adviser understands how much you expect him or her to be present and
participating in the day-to-day business. Suggest that you both put together
job descriptions that articulate the responsibilities and roles you will play.
Consider revisiting these descriptions every six months to make sure you're
still on the same page.
With clarity comes
understanding and a more effective working relationship. Whether you're an
older adviser who's winding down your first career or a younger adviser
reaching your peak, your partnership is evolving. You are entering a new
situation. Be flexible, open and honest, and be prepared to address challenges
as they arise.
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