Does Your Advisor Have a Succession Plan?

When your Edelman advisor is unavailable, it’s good to know we’ll still meet your needs

Team of financial advisors

Here’s a scary thought, at least for clients of some financial advisors: 

You call or email your advisor — and get no response. You didn’t know that your advisor was hit by a bus the day before.

Or maybe your advisor fell ill and landed in the hospital. Or perhaps he or she left town for a vacation.

When you need your advisor — say, to help with an urgent question or to withdraw money from your accounts — you need to know your advisor will be there for you.

And it’s not only your advisor’s death, disability, injury or illness that you need to worry about. What about your advisor’s retirement? After all, if he or she is helping clients prepare for and manage retirement, wouldn’t you think your advisor is planning to retire too?

This situation can leave clients exposed, because many advisors are solo practitioners. Fortunately, that’s not a worry for clients of Edelman Financial, because our business continuity plan, which has been in place and refined over many years, protects you against all these scenarios.

The same is not true of all advisory firms, however. A survey by SEI Advisor Network found that only 45% of the nearly 800 advisors questioned said they have a business succession plan. And when SEI probed further, it found that only 20% have a plan that actually appears workable.

The Securities and Exchange Commission is aware of this problem and is preparing rules requiring advisors to have effective business succession plans in place.

However, the SEC doesn’t regulate all advisors. It oversees only those who manage more than $100 million in client assets — large firms such as ours.

Smaller advisors — those who serve far fewer clients and manage less than $100 million — are regulated by the states. In April, the North American Securities Administrators Association released a model rule requiring that all advisors create and implement an effective succession plan.

That’s welcome news — because it’s vital that all advisors provide a way for their clients to have their needs addressed in the advisor’s absence. 

As I said, we’ve had a viable continuity plan in place for years, and you can review its details at Here are the essentials:

Every Edelman planner adheres to the firm’s philosophy and methodology on financial planning and investment management. We call it One Face, One Voice. Everyone undergoes training — supported by continuing education — to ensure that every client receives the same advice and experience.

Sure, clients get a financial plan and advice that are completely tailored to their specific needs, including their personal situation, goals, risk tolerance, time horizon and other factors. But no client need be concerned that the investment recommendations are the whim of any individual. Instead, all of us adhere to the firm’s aggregate approach. Thus, each client gets the collective wisdom of all of us — resulting in consistent, comprehensive advice.

Each Edelman planner maintains records of every client meeting and conversation — not only to help them with follow-up and execution but also to provide context for a successor planner when transition becomes necessary. This might be caused by a planner’s being away for a short time (vacation or illness, say), by a planner’s decision to retire (which has happened a few times) or by the sudden death of a planner (which, sadly, happened once).

That’s life. And while we’re helping you prepare for your future, we need to make sure our own lives won’t interfere with yours.

The average age of financial advisors across the industry is 51, according to Cerulli Associates. During the next five to 10 years, 20% are expected to retire. 

“Firms will get overwhelmed by retiring advisors over the next decade,” says David Goad, a consultant who works with many independent advisory firms. He estimates that about half of clients will need to find new advisors. This is especially problematic for clients of solo advisors — one-person offices — who make up a whopping 85% of independent advisors. 

You can be glad that, as our client, you don’t have to worry about this problem.

Originally published in Inside Personal Finance October 2015

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