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The RARE Advisor: Next Gen Advisor Woes & Opportunities

The RARE Advisor: Next Gen Advisor Woes & Opportunities
Jun 13
2024

Are you operating a practice and you need to figure out your succession plan? Or maybe you’re the advisor who is going to take over in the future. There’s a lot to consider and it has to go right. In this episode of The RARE Advisor, we’ll talk about what happens when that next phase sets in.

 

It's no secret that we are very active in the merger, acquisition, succession, and transition space for financial advisors - we do a tremendous amount of work in this area. We do the best we can to help our advisors in all of these various capacities; whether they're looking to grow through acquisition, whether they have succession issues, or whether they're cultivating and grooming a next gen advisor to come up and solve some of their succession issues (but, equally important, provide opportunity for the future of the business and the future of that next generation of advisor). We also help whether they're looking at various mergers to continue to grow, whether they need us to come in and mediate between two advisors who are on the USA Financial platforms that are looking to merge or acquire one or the other, or whether they look they're looking for us to help negotiate an acquisition outside of our network. Bringing capital to the equation and discussing lending is a big piece of it. All of these are things that we can assist with, and we ourselves are acquiring practices as well. So, lots of different angles that we help people cover in this space.

But today, what I really want to chat with you about is what's going to happen when that next phase sets in; whether you consider it a next gen transaction, or whether it's some other form of transaction or acquisition that then has to run that practice when the primary advisor is looking to depart. Those challenges are very real, and most advisory practices struggle in this area. It's just a difficult thing to find the right personality, the right fit, someone that clicks, who understands what it took to bootstrap your practice from nonexistence into a viable business - that is a very different set of skills compared to what it takes to run a practice that's already up and operating. Sometimes that's not the same skill set, it's not the same personality. So we're not always looking to duplicate the original advisor as much as we are looking to complement where the future of that practice is going and what is going to best serve it moving forward. Now you layer on top of that the difficulties of finding the right person, and candidly, the difficulties of this business. This industry is highly lucrative. It is a great success opportunity for many people, but you have to be the right person because it's not easy. But it is very gratifying to help investors, to help clients grow their financial future, and to be growing a business alongside of that. Many people can't do it, but those who can do very well at it. Because of that, there's a lot of washout in our industry.

Now, there's an article that came out in Investment News recently, titled 'Tracking down the NextGen stars'. It's from June 3, 2024 and I encourage you to check out the entire article. But really, what caught my attention more than anything else is the graphic that they illustrate, titled 'Look to the Future'. What they're telling us is that 56 is the average age of a financial advisor across the industry. And unfortunately, each year that ticks by it's bumping up - not a full year, but a good chunk of a year. 20% of current advisors say that they are less than five years away from retirement. 36% of current financial advisors say they'll retire in the next decade. So somewhere between like 20% to 36% of advisors are going to be moving out of the industry in the next five to 10 years. And here's the real crux of the issue: 75% of financial advisors with less than three years of experience leave the industry - a 75% failure rate. So grooming the next gen becomes the real challenge.

We have developed all kinds of programs to assist you in this space. If you'd like to work with us in that area, please let us know. We just ran a Next Gen Summit, all about targeting and discussing issues for next gen without anybody else in the room. We spent two days with them to assist them in their growth in their career, so that they have the chops to take over when you're ready to create your succession. It's something you need to consider earlier, rather than later. People who wait and say, "you know, I think I'm going to be done this year", that's not how it goes in this industry. If you've got any kind of quality practice at all, you're looking at minimum three to five years, and probably longer if you have to groom your successor. So lots to think about. We'll help you if you want us to. 

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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With more than thirty years of working with and coaching successful advisors, host Mike Walters (along with other leaders in the industry), discusses what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, Mike Walters shares insights and success stories that make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.

The RARE Advisor is also a podcast! Subscribe today via Apple Podcasts, Google Podcasts, or your preferred podcast listening service for easier on-the-go listening

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