Many large institutions have been bustling around while attempting to implement a plan to retain business. This is because of older brokers who continue to age and who have even older clients. On April 18th, a six-person panel at the Securities Industry and Financial Markets Association (Sifma) addressed this issue of succession planning.
Chief administrative officer private wealth management at Robert W. Baird, Scott Falk, said there are two approaches that work well for their organization to talk transferring business to a younger advisor:
First, there are Baird qualified teams which is a creative group with various generations of advisors. Within this team there are certain rules and incentives to carry this on. Second, there is the codified succession planning. Baird has put together a binder of information and in turn formalized a program to make it easier for advisors to prepare in advance and accomplish succession plans.
Specifically, business growth begins to slow down, usually through attrition (either for health reasons or age), for advisors aged around 50. The problem typically comes to fruition when it comes time to sell their book and advisors do not have much left. It is said the most serious concern is when advisors reach the average age of 59 and do not have a plan in place to recruit younger representatives. Advisors fall victim to this problem when they fail to plan to transfer client relationships and the problem is right there in front of them. Not to mention, the number of advisors to take over the book is not very deep.
Another solution for this problem was created by RBC Wealth Management – US. That firm created a plan that creates a team with an “anchor,” which facilitates conversation between the advisors. An “official” team, according to the firm, has to have a formal strategy with roles and responsibilities as well as a succession plan for death and/or disability.
There are other firms that have used different spins on the aforementioned plans to prevent this issue from occurring. Either way it is nice to see that firms are recognizing the issue of the aging base of brokers and have been active to implement plans to remedy the problem.
