What Happens To Your Portfolio When Your Financial Adviser Retires?

When you look at the average age of a financial adviser, you can see that most of us are over the age of 50 and potentially looking at retirement in the next five to ten years.


What Happens To Your Portfolio When Your Financial Adviser Retires?

This creates a potential issue for both the business and the clients that the business serves. Many firms out there are one- or two-person bands, and so when the adviser retires, the company tends to get sold to a national consolidating firm.

The loss of personal service 

This can be a concern for many of the firm’s long-time clients as their money will then be managed by new hands, who may not be able to provide clients with the same personal level of service that they benefited from earlier. 

With those firms that have been consolidated, there have been a number of instances where the level of service has fallen for the clients. This means that they are left with two choices: either they continue with this national firm or they must find someone else to manage their funds.

Both of these options can be very stressful for people who have spent the last 10–20 years dealing with the same person.

The importance of a succession plan 

However, all of these problems can be avoided if the firm in question has a well-thought-out succession plan. At Applewood Independent, we understand the need to have such a plan in place when I retire, so that all of our clients (and their future generations) are able to receive that same level of personal service long after I’m taking a lesser role. 

Our succession plan revolves around Alex (my son), along with a young talented team that continues to grow the business and service clients, without the need for us to sell. 

My wife and I intend to slow down the amount of work we are doing in the business over the next few years and take a more hands-off approach in order for Alex and the team to step in and continue running things. 

Helping clients to feel confident that their money is in safe hands

This helps clients to feel very confident that they will continue to enjoy the same level of service from us that they have received for nearly 25 years, for as long as they and their next generations need us. 

Of course, these plans don’t just happen overnight. We are in a fortunate position where Alex is now just as good at the job as I am, due to the ongoing training that we have given him and the young team here over the last 20 years.

This transition will allow Kay (my wife) and I to take some time off and enjoy our retirement, knowing our clients are in safe hands and the business can continue to thrive.

Succession needs to be planned from the start

A succession plan is vital to any independent financial advice business and needs to be considered almost as soon as you start serving clients. 

What happens to your money should the worst happen and your long-serving financial adviser is incapacitated for a while, or passes away?

Who is managing those funds and making sure they are being invested correctly? 

It’s essential that someone else is able to come in and take up the torch should the worst happen. For example, at Applewood Independent we have four advisers here who are all capable of running things should one or two of us be away for some time. 

On top of that, we are always looking to expand the team and bring in new juniors to train up so that our pipeline of talented people never runs out. There will always be someone at Applewood Independent who can serve our clients, that is the most important thing. 

All of this means that we can keep operating and growing the business. For instance, last year was our busiest year ever, and we are beating it by some mark already this year!

Make sure you ask about your adviser’s succession plans

There isn’t anything wrong with having your money managed by a small, independent, one-person band. Many of them can provide a very high level of service.

However, you need to be sure that they have a succession plan set up. Anyone who has money put aside for their future needs to be treated at an individual level, and a large national firm may not do that. 

So if you’re looking for an adviser or already have one, you should ask them about their succession plans. Ask them about what will happen when they retire or die. Those are very important questions for the long-term future of your funds, for both you and your family.

It’s important to remember that the money you are putting aside is a multi-generational thing. In many cases, clients are putting away money for their children or grandchildren, so it’s vital that you are confident that the money is going to be well managed, 10, 20, or even 50 years from now.

I hope this has been useful, and if you have anything else to add, I’d love to hear from you. To find out more, feel free to get in touch by emailing david@applewoodindependent.co.uk.

The views expressed in this article are those of the author and do not constitute financial advice. Applewood Independent Ltd is authorised and regulated by the Financial Conduct Authority. For financial advice designed for you and your specific circumstances, please contact the author using the contact details provided in this article or, alternatively, contact the Applewood Independent Ltd office on 01270 626555.

The value of your investment can go down as well as up, and you may not get back the full amount invested.

Past performance is not a guide to future performance.


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