Do financial advisors retire?

Financial advisors help their clients to prepare financially for retirement and then assist them to transition from income earner to income recipient. But when advisors reach that life stage themselves, many tend to postpone their retirement.

“The current trend is for advisors to continue working for as long as possible,” says Samir Abdul, Chief Operations Officer at Masthead Financial Planning (MFP). He attributes this to two key factors: recurring income and client relationships.

“Advisors are accustomed to their level of monthly income, which has built up over time, plus their company benefits if they are employed at a corporate. If they leave the industry, they forfeit their benefits and some of – or all – their income. Many are not keen to do that,” he says.

Many advisors also enjoy the lifestyle the profession offers. Their passion to help people achieve financial goals becomes their way of life and they form strong relationships with clients through regular interaction over many years.

“They earn their clients’ trust, working with them in the intimate space of personal finance and socialising on golf courses and around braais. They walk with their clients every step of their life journey. It is tough to end these deep relationships that may even span several decades,” says Abdul.

A fixed retirement age
In some instances, advisors have no control over their retirement age. They may want to work longer but are eventually forced to leave their corporate employer when they reach the compulsory retirement age. These are the tied agents who work for insurers and banks.

“As they approach retirement age, employers often encourage advisors to leave sooner. This is to make way for younger, more energetic employees who are happier to chase new business targets,” says Abdul.

“We believe advisors who can and want to provide advice and good service should be able to continue looking after their clients, no matter what age they are and as long as they remain Fit and Proper,” Abdul states. MFP has many planners in their 60s and 70s who do just that. The oldest MFP planner is currently a semi-retired 80 year old.

Supportive environment
Advisors do not need to start or run their own advice business to do this, Abdul explains. They can continue working beyond conventional retirement age if they move into a supportive environment that empowers them to do so.

“MFP advisors, for example, have access to a fully operational licensed financial services entity with back-office administration and compliance support. They are equipped with value-adding tools to help them meet clients’ needs and can advise on and recommend financial products from an array of options and providers. This frees them up to focus on delivering service to their clients. This is exactly what many advisors want,” he says.

In addition, they can set their own targets, work at their own pace and decide how many clients they want to manage. As they move towards semi-retirement, they can choose to reduce their working hours to travel, focus on a hobby or spend more time with grandchildren.

Change is invigorating
He says that advisors who leave the corporate world to gain more autonomy and extend their working years are often re-energised by changing things up. One advisor who thought of retiring within seven years, but instead joined MFP, has since doubled her income. Being able to retire on her own terms, she no longer wants to leave the advice industry.

“Advisors continue to prove that age is just a number, while we believe talent has no expiry date and experience has no substitute,” says Abdul. “Enabling mature, skilled and passionate financial advisors to stay on longer in the industry is not just a win for MFP or the advisors. Ultimately, clients are the biggest winners.”