Retirement is something we all dream about. A slower pace. Opportunities to travel. And more time to spend with family and friends.
Financial advisors talk to their clients all the time about retirement, but what should they be thinking about when retiring and transitioning their own business?
According to Cerulli, a research and consulting firm specializing in asset management and distribution trends worldwide, the average financial advisor is age 51, and 38% of financial advisors are planning to retire in 10 years.
With retirement on the horizon, there are special considerations that must be addressed when transitioning a financial advisory business or a wealth management business. Business succession and ownership transition aren’t a one-size-fits-all approach for every business.
Tom Dierdorff, managing director and group head of financial services for Regions Bank and Regions Securities, said the unique nature of financial advisory services being a human capital business requires a different approach.
“Unlike a lot of financial advisors’ clients who might be business executives or small-business owners where there is very clearly a going concern of a business after retirement, so much of the value of a financial advisory business and a wealth management business is tied up in the relationships of the founder-owner, who are also the key producers of the business,” Dierdorff said.
The more financial advisors can build a business that’s not dependent on them personally, the more liquidity they’ll be able to have when they are ready to retire.
That helps ensure the buyer that the business can move forward – and be successful – with new employees and producers.
Regions’ Financial Services Group is comprised of corporate and investment bankers with significant experience in structuring and executing credit, capital markets and strategic transactions for companies and private equity sponsors active in the financial services industry. Dierdorff and his team of associates work with financial advisor clients and can help them with retirement guidance and solutions.
Dierdorff and Dietrich Moor, managing director and group head of asset and wealth management coverage for Regions Bank, recently spoke with Maria Rosati of Eminence Communications to discuss succession and ownership transition plans for financial advisors. Learn more in the video below.