Financial advisors spend their time helping others prepare for retirement, but they are notorious about not planning for their own futures, according to a study of 2,400 financial professionals by the Financial Planning Association Research & Practice Institute.
The study found that half of financial advisors don't have a written business plan and 46 percent don't have a retirement plan for themselves, yet 40 percent are planning to retire within the next 14 years. Only one-quarter of advisors have a succession plan in place for their business.
The problem could just be lack of time, the report said. The study said that although advisors recognize that time management is among the most important business attributes they can possess, they struggle to manage their time effectively.
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"In any business, your chief priority is to serve your clients and customers. Unfortunately, that often means sacrificing your own well-being," said Lauren Schadle, FPA executive director and CEO.
She added that it is encouraging that the study revealed that younger advisors, those under age 40, are more likely to have a written business plan than older advisors. Larger firms also are more likely to have a plan in place.
Many advisors are making the transition to becoming wealth managers. Wealth managers are those who specialize in comprehensive wealth management and transfer issues, including stock-option planning, executive compensation, complex trust and estate planning and charitable giving.
Of those surveyed for this study, 76 percent of money managers said they plan on changing how they position their business with clients within the next five years, with 44 percent of those transitioning to wealth managers.
Seventy-two percent of investment planners said they also will change, with 46 percent of them changing to wealth managers. Fifty-three percent of financial planners indicate they will change. Of those who plan on changing, 62 percent will transition to wealth managers. Only 30 percent of wealth managers are planning to change.
The study also found that financial advisors struggle to define who they serve. Only 25 percent of those surveyed had a formal definition of who their ideal client would be and 38 percent who have defined their ideal clients say that 75 percent or more of their current clients fit that description.
Advisors are more likely to set a minimum amount they will work with rather than a definition of their ideal client.
The Financial Planning Association is a professional organization for certified financial planner professionals, educators and financial service professionals. The FPA Research and Practice Institute is a program of the Financial Planning Association that conducts original research on business topics, including operations, personnel, human resources, marketing and technology.
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