When it comes to taking care of their own finances, it turns out that planners aren’t much better than their clients.
Almost half (46%) of all the nearly 2,400 planners who participated in a new FPA study this year say they have no retirement plan. Another half say they have not written a business plan for themselves, while 75% have no succession plan for their firm.
The findings are part of the inaugural study of the
FINDING THE GAPS
“We just asked a very broad range of questions of advisors,” Littlechild says. “We dug in to ask, ‘Where are the gaps?’ [The answers] will form the basis of some more quarterly studies on an ongoing basis” from the institute.
Even among those advisors age 65 or older, only 41% said they have a succession plan, the survey found.
Larger firms are also more likely to have a plan in place than their smaller peers, the study found.
The survey also found more planners shifting toward calling themselves wealth managers.
For the purposes of this study, the FPA defined wealth managers as those planners who specialize in comprehensive wealth management and transfer issues, including stock-option planning, executive compensation, complex trust and estate planning and charitable giving. The definition is the same one used in
The study found that:
Participants in the study included financial advisors, junior-level advisors, support staff and non-advisor management, according to the FPA.
The study also identified other business challenges. While advisors want to expand by identifying prospects who are good candidates for their services, the FPA says, the study found advisors aren’t even defining who they serve. Only 25% of planners have a formal definition of their ideal client, and only
38% of those say that three-quarters of current clients fit that definition. Fewer than half (43%), meanwhile, had set an asset minimum.
It's imperative for advisors to plan more broadly for themselves and for their businesses, Littlechild says, asking questions like "What do I want for my life? What size of business do I need? … What is my exit plan?"
Those answers can shape a planner's business, she says: "Your business goals drive your business model. Those should help define the ideal client."
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