Firms make it easy to stay put for the entirety of an advisor’s career, yet many are feeling “uncomfortable” with that notion—worrying that what got them “here” may not get them “there.”
Most wirehouse advisors don’t typically spend a lot of time thinking about their end game. And industry studies bear that truth: It’s reported that some 70% of financial advisors do not have a formal or written succession plan.
With the average age of financial advisors in the late 50s, that’s a pretty alarming statistic.
Yet, the reality is that many aging advisors really don’t have to think much about succession. They work in a model that can take them from “cradle to grave”—that is, from novice in-house trainee to retire-in-place veteran. In fact, wirehouse “sunset programs” – which make it possible for advisors to monetize their life’s work without having to change firms – are just the safety net that they can rely upon.
While the path of least resistance is to stay with a single firm for the entirety of one’s career, we’re hearing more and more from those who feel “uncomfortable” with the status quo—worrying that what got them “here” may not get them “there.”
As one advisor put it, “Despite the imperfections with my firm, if I knew with certainty that there would be no further changes from now until the day I retire, I’d be inclined to commit to spending the rest of my professional life here.”
Unfortunately, though, guarantees like that don’t exist.
Why the status quo may no longer be “good enough”
Life in the wirehouses has changed a lot in the past decade—a level of change which has accelerated in the last few years. Modifications to compensation, a hyper-vigilant compliance culture and a stringent regulatory environment have left advisors feeling vulnerable and with far less control over their business lives. And many struggle with their firms’ “corporate agenda” driving the bus, as well as “management to the lowest common denominator” hindering creativity and growth.
But there’s even more at play: It’s the frustrations being voiced by next gen partners and junior members of the team that are hard for a senior advisor to ignore. These younger advisors recognize that being bound to a firm for the life of the retiring partners’ sunset agreement could eliminate optionality and ultimately diminish the value of the business overall.
As a result, senior advisors are more often recognizing that what had been “good enough” may no longer be—compelling them to widen their lens and reconsider their futures. As such, they may be examining their options because:
- They’re thinking of their business as a business—and are more driven to maximize enterprise value.
- They’re considering the legacy they will leave behind for their clients and next gen.
- They’re wondering if there could be another option that would allow them greater freedom and control.
The result of this thought process is that advisors often find their goals out-of-sync with those of their firms.
Becoming aware of this incongruency has served as a resounding wake-up call for many senior advisors. To close the gap requires gaining further clarity on whether they should finish their careers where they are or opt to go elsewhere—and it starts by answering these thought-provoking questions:
“How have the changes at my firm impacted me, my team and my business?”
“Am I limited in any way as to the products, services and technology I can access on my clients’ behalf?”
“Am I 100% confident in my relationships with my clients?”
“Is my team committed to me and are we all on the same page regarding our collective futures?”
“What are the options beyond my firm?”
While every advisor should assess the alignment between “where he is and where he wants to be” on a regular basis, it doesn’t necessarily mean that the outcome is to make a move.
But, it does mean that the most responsible and prudent course of action is to be well-educated and self-aware—making certain that finishing his career in place is indeed congruent with the goals of the entire team.