US advisers face ‘critical’ business succession cliff edge situation: study

A large number of financial advisers based the United States could face a ‘critical’ business succession situation unless they make changes to their plans according to a new study that has been released.

The Cerulli Associates study – entitled US Advisor Metrics 2017: The Next Generation of Planning, discusses advisers’ expansion of comprehensive financial planning offerings in response to competitive pressures, the consolidation among advisor practices, and a continued increase in succession awareness.

The study found that while awareness about continuity and succession risks has increased in recent years, more than one-quarter (28%) of those within 10 years of their anticipated retirement are still unsure about their succession plan.

Aging advisers

“Financial advisers are aging, and the industry has been scrambling to find a proactive solution to this demographics problem. Advisers who are 55 years or older manage 36.9% of assets and comprise 39.2% of headcount,” said Marina Shtyrkov, a research analyst at Cerulli.

“Filling the pipeline with quality talent poses a challenge for broker/dealers (B/Ds) and independent firms. Advisers and B/Ds should consider how existing compensation models, work/life balance expectations, training support, mentoring, and company culture meet younger generations’ needs.”

“As a critical succession cliff approaches and aging advisors begin retiring in greater numbers, younger advisors and candidates will increasingly wield stronger leverage. Firms will need to take their preferences into serious consideration because this next generation will ultimately shape the financial advice business,” she said.


Building and managing a team poses a “challenge” for many advisors, Shtyrkov points, as, she says, the skillset needed to perform well as a financial advisor differs from the one needed to be a good leader and manager.

“Advisers who excel in their day-to-day work with investments or financial planning can struggle to groom junior advisors and hire quality staff,” she said. “A lack of clear communication regarding expectations, goals, and a path for growth can derail junior advisor hiring attempts.”

Kenton Shirk, director of Cerulli’s Intermediary practice, added that home offices need to provide advisors with extensive guidance and support for “hiring and onboarding rookies”.
“A mis-hire could cause substantial disruption and distract a lead advisor from his or her core responsibilities,” he said. “Advisers especially need help developing career paths to groom rookies over a period of time, and they need guidance on how to be an effective mentor.”

Gary Robinson
Head of Video and Ezines at Open Door Media Publishing. Deputy Editor, International Investment. An experienced journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as a fully qualified IFA, Gary works across both International Investment and InvestmentEurope titles. Previous video production credits include projects on BBC, C4 and SKY.

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