Advisor Retirement Survey Finds Lack of Preparedness Detrimental to Effective Succession Planning
OMAHA, NE –(Marketwired – July 31, 2014) –
- 117 independent financial advisors surveyed on their own retirement plans
- 50.5% or 59 of the respondents do not plan on retiring until age 71, if at all
- 39.9% of respondents intend on selling business to another advisor or merging with a younger advisor at retirement age
- 41.1% of respondents expect the sale of their businesses to represent 26-50% of their retirement assets; 14% expect it to fund 51-100% of their retirement
CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange-traded funds (“ETFs”) within individual investor portfolios, has released survey results on a study it did of its affiliated advisors, focused on the advisor’s own retirement plans and objectives. The survey, conducted in the first quarter of 2014, surveyed 117 independent financial advisors from across the country.
The survey found that 50.5% or 59 of the respondents do not plan on retiring until age 71, if at all, indicating that advisors plan on working longer than the average retirement age. On top of that, most expect the sale of their businesses to fund the majority of their retirement with 41.1% of respondents expecting the sale of their business to represent 26-50% of their retirement assets and 14% expecting it to fund 51-100% of their retirement.
It’s Wake Up Time
“It is clear to us that independent advisors need a wake up call — they are relying overwhelmingly on their businesses to fund their retirement,” said Todd Clarke, CEO of CLS. “But they fail to account for the fact that should something happen to them, or if their business does not sell for the right price, they, like most Americans will be woefully underfunded for retirement.”
While 39.9% of respondents intend to sell their business to another advisor, or merge with a younger advisor at retirement age, only 19 advisors in the survey indicated they have a completed, formal succession plan. CLS believes that as the advisor industry continues to age, options are emerging for succession planning beyond the typical solution of selling a practice. And for many advisors, despite assumptions, selling their businesses may not provide the financial means to fund their own retirements.
A recent whitepaper outlining the survey findings and examining specific advisor case studies, can be found here: http://clsinvest.com/file/content/pdfs/advisoriq/succession.pdf
Clarke continues: “Selling a practice, while seemingly an attractive option may not be in the advisor’s best interests, or may not be what the advisor truly wants to do. Advisors need to consider putting in place business planning strategies that will provide continuity of the firm, with the option of continuing to stay involved in the practice.”
CLS supports the notion of “reinventing” an advisory practice irrespective of an advisor’s desire to sell — rather, the advisor should make a focused effort to establish legal agreements, creating operational efficiencies, and potentially bringing in junior staff. At minimum, advisors owe it to themselves and their clients to take action now, positioning themselves with the most choices, flexibility, and options for enjoying their businesses and careers, while ensuring their clients are well taken cared for.
For the complete survey result set or to interview a CLS spokesperson on the findings of the study and whitepaper, please e-mail [email protected] or call 973-460-7837.
About CLS Investments
CLS Investments is an Omaha-based, family-owned and operated boutique registered investment advisor managing in excess of $6 billion. As one of the largest third party money managers and ETF strategists in the U.S., CLS partners with thousands of advisors, plan sponsors, and institutions to offer a full suite of outsourced portfolio management solutions for more than 35,000 individual investors. CLS specializes in creating portfolios based on a distinct risk budgeting methodology and active asset allocation approach. The CLS investment process is governed by systematic research across asset classes and strategies and the continuous measuring of risk. CLS first claimed compliance with the Global Investment Performance Standards (GIPS) in 2002, and the firm’s portfolio performance going back as far as 2003 has been independently verified. CLS is a member of NorthStar Financial Services Group (NorthStar), which currently has more than $224 billion* in assets under management and administration. To learn more, visit www.clsinvest.com