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The Problem of Aging Advisors is an Opportunity for Some

By Rita Raagas De Ramos June 13, 2019

The aging financial advisor population is often seen as an industry problem that needs to be solved -- but some see it as an opportunity to be seized.

When the CFP Board launched a campaign two years ago to encourage more advisors from groups that remain minorities in the industry – specifically “millennials, women and people of color” – the group said CFPs above the age of 70 outnumber those under the age of 30, and more than 20% of CFPs were retiring at the time.

In this year’s batch of top Financial Times 400 broker-dealer advisors, around 26% belong to the 60-and-over age group. The FT 400 advisors are scored by FA-IQ sister publication Ignites Research on six broad criteria: AUM, AUM growth rate, experience, advanced industry credentials, compliance records and online accessibility.

“I’m fortunate because I’m 45 [years old], so I’m hopefully going to be able to benefit from these senior advisors who are retiring,” says Kim Luu-Tu, Virginia-based CEO of Generations Wealth Management, part of Ameriprise Financial. “We hope to be able to take on more of the practices of these senior advisors. That’s a huge opportunity.”

Kim Luu-Tu

Luu-Tu says she is currently in talks with a 72-year-old advisor and his team about potentially taking over their practice and absorbing it into Generations, which specializes in multi-generational financial planning.

“The interesting thing is they have not developed any strategies to tackle the [client] attrition issue. They have not talked about how to do multi-generational planning,” says Luu-Tu, who is among this year’s FT 400 advisors. “And they want their clients to be taken care of by someone who’s experienced and knowledgeable in multi-generational planning.”

“Of course,” being able to secure the clients and assets of the retiring advisors’ practices depends largely on whether they can “get top dollar for their client accounts,” Luu-Tu says.

With any growth that comes alongside acquiring new practices, the challenge of providing quality service will intensify too, according to Luu-Tu, who believes one solution is hiring junior staff from banks.

Companies like Generations can “pull someone from the banking side of Merrill Lynch, for example, and help that person get proper [advisory] training and support to be able to build a practice and to be able to service clients even if we end up with 2,000 clients,” Luu-Tu says.

Luu-Tu says she services around 300 clients at Generations, which she founded in 1997. She services around 200 more with her associates.

Christopher Cooke, Indianapolis-based partner and senior institutional consultant at Cooke Financial Group, believes retiring advisors will provide an “enormous opportunity for money in motion” over the next 10 to 15 years.

“There’s going to be a huge turnover of advisors in the next 10 to 15 years. And I think [advisory] teams that position themselves to have a good reputation, good products and good service levels are going to be able to capture many of those assets in motion,” says Cooke, who has been an advisor since 1992 and is also among this year’s FT 400.

Christopher Cooke

Cooke believes smaller broker-dealer firms or RIAs will have a greater chance of competing with wirehouses and large broker-dealer firms in the coming years, in part due to the technology that “has closed the gap” when it comes to product availability and client servicing. Cooke Financial is part of the financial advisory group David A. Noyes & Co., which launched the hybrid RIA and broker-dealer network Sanctuary Wealth Partners in May of last year.

In a previous interview with FA-IQ, Richard Kelton, Albany, N.Y.-based partner at the Kelton Financial Group, which is part of Northwestern Mutual Wealth Management, says it’s important for aging advisors to “make sure that the process that they built with their clients doesn’t end when they end.”

In his practice, Kelton brought on both of his sons, Ryan Kelton and Sean Kelton, as part of his succession planning strategy.

“I’ve talked to both of the children about how important it is to me that … we make sure that legacy from us to them doesn’t end when I decide to retire,” whenever that may be, Kelton says.

Meanwhile, Raymond James is working on a new platform to connect advisors and their potential successors, which it plans to roll out by the end of this year. Through the platform, the sellers will be able to review the potential acquirers’ profiles and reach out to them, as reported.