Successful financial advisors craft smart plans for clients' retirement years. But a fear of losing identity and purpose often causes these advisors to resist their own retirement.
"The reason advisors hang on is entirely psychological," Casey Jorgensen, head of the Dynasty Institute for Adaptive Leadership, tells ThinkAdvisor in an interview. "[Potential] successors at firms are frustrated to the point where they're leaving and starting their own firms."
In one-on-one talks with Dynasty Financial Partners' advisors, Jorgensen focuses on helping them navigate the emotional side of retiring.
The turnkey asset management program is putting more focus on advisor succession planning and their firms' need to plan ahead. A post-career plan for the retiring financial advisor is a big component of that.
"We need to talk about the next chapter, not about what an advisor is leaving behind but what they're moving toward," the CFP stresses in the interview.
Jorgensen was previously with Raymond James as a business development strategist and part of its succession and acquisition department.
Here are highlights of our conversation:
THINKADVSIOR: There's been so much talk over the last decade about the "silver tsunami" of financial advisors retiring. Has this occurred?
CASEY JORGENSEN: We've seen lots of M&A activity, but do we see advisors retiring at the rate we anticipated? No.
Why not?
It isn't a lack of valuation or interest or viable buyers [of practices]. The reason advisors hang on is entirely psychological. This is happening in other industries too — and even in politics.
How significant is the issue of financial advisors' fear of retiring?
It's urgent. We see [potential] successors at firms are frustrated to the point where they're leaving and starting their own firms.
At Dynasty, staff advisors are breaking away from the breakaways who opened their own firms because succession promises aren't being fulfilled.
What are the implications?
It creates a huge problem for the industry if we don't talk about the softer side of retirement and help advisors who have built the industry.
When do advisors start saying, "I'm not ready to retire"?
That's part of the problem. Firms don't impose a mandatory retirement age because clients are loyal to their advisors.
If an advisor in their late 60s or 70s hasn't communicated any sort of succession plan to clients, they begin to wonder what their plan is.
Why are advisors afraid to retire?
On the surface, you hear things like, "It's not a priority for me yet; I have many productive years ahead." "I can't find a qualified successor." "The next generation can't afford to buy me out." "I'm worried about how my clients will react."
But what are the underlying reasons?
What it really comes down to is that they don't know their identity outside of their career. They're nervous about not having an income stream. They feel like they have nothing to retire to, yet they still have a lot of energy.
Also, they don't want to be a burden to their significant other or grown children.
So, really, they're reluctant to get out of the groove they're accustomed to?
They have muscle memory of "This is what I do." So they're scared to go outside of what they know.
Fear of retirement presents a problem for the next generations, clients, their families and ultimately, the valuation of the business.
