Aging advisers and clients – what are the pitfalls and examples of best practice?

Financial Advisory

21 April 2016

Financial Advisory

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Facilitated by: Jeremy Oakley, KPMG

Written by: Jenny Schuster, Owen James Group

Overview:

Clients are living longer, whilst financial advisers are primarily in 45-60 age brackets. This can create issues on both sides as advisers seek to engage with both their aging clients, and seek to bridge the intergenerational gap and engage with the millennials.

Pension freedoms and reforms have made it more imperative for advisers to work with later life clients. Here, both pension wealth pots and inheritance tax also need to be taken into consideration.

Headline finding 1:

Financial advisers need to adapt their offerings to meet the specific needs of their clients. No two family offices are the same. When looking at the aging client, there are two primary issues:

a)     Clients in later life need more specific help and support;

b)    When advisers become older, they can get more confident and stuck in their ways – need to be able to adapt to meet the needs of the next generation, particularly if you are looking to keep the relationship with your client’s offspring.

Furthermore, the wishes and will of aging clients should be respected and should not be patronised.

Headline finding 2:

The question was raised as to whether the average age of the adviser is staying within the 45-60 year age bracket, or if we are seeing movement to older or younger.

Indication was made that becoming an adviser is becoming more and more of a vocation and profession and they age may fall as more university graduates enter the field.

Furthermore, RDR has rooted out a lot of the older advisers.

It was also commented that if the average age of the adviser stays middle aged, then that is not too bad. One participant commented that it is not so much the advisers’ age that matters, as what comes out of their mouth and clients are smart and should be able to see this value.

Headline finding 3:

In terms of succession planning and selling your business, it is important to consider that you are not just buying an advisory business, you are buying part of a brand that runs across different areas. For example, the CEO will not know every single detail of the business, but in order to make a good investment, you will need visibility at all levels.

When asked if anyone had sold a business, the answer was no, although members in the audience had previously bought advisory businesses.

Headline finding 4:

We are seeing a movement of Life Companies back into distribution which could pose new challenges and opportunities, particularly if Life Companies decide to adopt robo-adviser tools.

Headline finding 5:

The aging client also needs to be considered from an operational perspective and it needs to be ensured that staff and advisers are equipped with the right skill set to work with those who may have special needs based on their age.

Any next steps?

The following areas were identified as needing more clarification:

-       How does one attract younger advisers?

-       Is their training for working with older clients?


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