Advice force ageing - is it a problem?

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[UPDATED] Independent financial advisers may on average be older than participants other industries but it isn’t necessarily a problem, one industry commentator says.

Monday, January 20th 2014, 6:00AM 1 Comment

by Susan Edmunds

Research from the United States has shown than 43% of financial advisers there are at or approaching retirement.

"The average age of financial advisers is 50.9 and 43% are over the age of 55," said Kenton Shirk, associate director at Cerulli Research. "Nearly one-third of advisers fall into the 55 to 64 age range."

He said independent channels were most at risk of losing their relationships with clients as advisers left the industry.

Cerulli is encouraging advice firms to hire juniors and train them in a specific area.

Consultant and commentator Russell Hutchinson said he had done work on the average age of this country’s advisers several times over the past 20 years. At that time, the average age of advisers had been 51. “It’s probably true that the average age is higher than the population and higher than the age of clients but I’m not sure that it’s ageing.”

He said it was likely that the shift to regulation had given some the impetus to retire.

How high an average age was would depend on who was included in the sample. Third-party financial advisers would usually have a higher average age than bank staff, because people generally decided to go out on their own later in life.

But he said it wasn’t necessarily an issue that anyone needed to worry about. Investment advisers would, on average, be older than those involved with risk or mortgages because their clients were much older.

Hutchinson said few people had much money to invest until they were at least 45 and major operations such as banks often reported a median age of investment clients of 65. “Does it matter if AFAs are 55? Probably not.”

Hutchinson said advisers were likely to carry on working past 65. “With the nature of the job, it’s not heavy lifting. They could continue until they’re 70. I’ve been caught out thinking loads are going to retire but it’s not that hard a job, if you can do it part-time and ease off, why not?”

Mike Moore, whose marketing business helps advisers to sell their practices, said the definition of advisers had been extended from just self-employed people who help clients decide what to do with their money.  "That group has had virtually no new entrants and now probably have an average age of 55-plus."

He said there were hundreds of younger people working in institutions such as banks who described themselves as advisers but were not involved in product selection.

"There a signs of a resurgence within the self-employed group, this will tend to arrest the average age, and perhaps turn back the clock."

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