Aging planners and clients distance advice from next generation
Baby boomers will be the last generation focused on financial advice and retirement incomes with financial planners needing to convince Generation X and Y to take up advice according to Rubik chief executive Iain Dunstan.
However planners themselves will need to make shifts and introduce younger planners as the sector itself continues to age with the majority of its client base.
Dunstan made the comments at the launch of Business Health’s Future Ready report which found that an overall improvement in the health of financial planning practices over the past two years despite dealing with the uncertainty around the Future of Financial Advice legislation.
Dunstan said the baby boomers understand and are focussed on issue like superannuation and retirement while the next generations are not as focused on life expectancy and retirement.
“The industry has an obligation to drag Gen Y and X into the financial planning world because they are not coming voluntarily and scaled advice gets you on that journey and all participants will be better for that exercise,” Dunstan said.
Business Health director Terry Bell said that 54 per cent of planners had clients over 60 and this group would begin to move away from the need for active management of their portfolio.
“The opportunity is with their children who are approaching 40. Practices have to move out of the conventional and traditional – what they have done – and tap into the next generation where things like estate planning, philanthropy and corporate planning come into play.”
Rod Bertino, also a director with Business Health, said planners may already be offering these services but have inadvertently siloed clients who are unaware of other advice services available to them or their families.
“A lot of practices provide these solutions but perhaps they have not been diligent enough in educating and reminding clients of the depth and breadth of the offer and clients have pigeon holed the adviser thinking they came for super or rollover advice only,” Bertino said.
However planners are creating their own business risks with the average age of planners with equity in their practice being 59 according the report, with only 9 per cent of practices in the report having an effective succession plan, and with 62 per cent of practices being single owners and subject to high levels of key man risk.
“One in two admitted to us their business could not run without them. They may not be as big an issue if the average age of the owners was 35 but when overlaid with the age of 59 it might not be their choice as to when and how they exit,” Bertino said.
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Jason Spits
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