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Ultimately, clients benefit most when advisors can leverage resources provided by dealers and associations to plan and implement a seamless transition to a well-qualified successor.EmirMemedovski/iStockPhoto / Getty Images

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The average financial advisor in Canada is reported to be more than 50 years old, so retirement is in sight for many. Yet, those advisors who retired say dealers and associations could up their game when it comes to helping navigate the complexities of retiring.

“[Dealers] are very good at recruiting new advisors, but they don’t think much, or haven’t so far, about retiring advisors … and there’s a whole bunch of us who are retiring in the next five years,” says Michael Berton, a certified financial planner (CFP) who retired from his Vancouver-based practice in November last year.

A simple tool like a retirement checklist, for example, could have helped him avoid at least one costly mistake. It’s often recommended that advisors maintain their errors and omissions (E&O) insurance for seven years after retiring – but Mr. Berton missed a pivotal paragraph at the bottom of a long e-mail he received in early December. It told him his dealer had cancelled his policy on his retirement date and offered the chance to purchase seven years of protection at a discount in a single lump sum. The offer was good for 30 days.

After the hustle and bustle of the holiday season, Mr. Berton checked into the status of his E&O policy and was shocked to find out he was no longer insured. He quickly arranged to buy two months of protection while he negotiated with the insurance provider for an extension on its offer.

“I did eventually get what I should have had, [but] it took a whole pile of e-mails and letters and I had to get some sort of proof from my dealer that nobody was currently suing me,” Mr. Berton says. “It’s messy.”

A retirement checklist that itemizes the myriad details retiring advisors have to attend to could help ensure a smooth transition with nothing missed.

“That ultimately makes the dealer’s, insurer’s, client’s, and certainly, the advisor’s life easier,” he says.

Mr. Berton adds that retiring advisors need clear information about what they can and can’t do after they step away from full-time work. Not all advisors want to stop cold, and it may be possible to continue practising on a limited basis – for example, helping with analysis work behind the scenes. Associations need to make sure their members understand what’s allowed.

Figuring out the process ‘informally’

Sherry Cavallin, another CFP in Vancouver, had planned to retire in 2020 but didn’t want to desert her clients and practice when the pandemic hit. Instead, she retired in December 2021.

“There’s not a ton of support,” she says, echoing Mr. Berton. She would have appreciated “more proactive contact in terms of, ‘Have you done this, have you done that, have you thought of this, have you thought of that?’ … Put yourself in the shoes of that advisor.”

Ms. Cavallin likes the idea of a dealer-created retirement checklist that includes all the steps involved in identifying a successor, negotiating a deal to transfer the practice, and managing the transition. She figured out a lot of what she had to do informally, in part through conversations with another advisor in her office who was retiring around the same time.

Although every retirement is unique, she says there’s no reason advisors should have to keep reinventing the wheel.

For example, Ms. Cavallin and her successor drafted their own contract, with legal advice, but dealers have an opportunity to provide templates for succession agreements. They can also educate advisors about the options for structuring a deal and share typical multiples paid for a book of business.

“You need someone to help you [through the retirement process] because nobody does it twice,” says Ron Harvey, who sold his Ottawa-based business in December 2020. He’s currently in a two-year transition period during which he continues to sit in on client meetings and also steps in when, for example, his successor is on vacation and a client needs to make a transaction.

Mr. Harvey says dealer support is critical. For example, his dealer offered helpful webinars featuring already-retired advisors, provided an initial draft of the contract that sold his book, and even interviewed him after the fact to find out what could be improved. Professional associations have a role to play, too.

Some, such as FP Canada, already have a special tier of membership for retired professionals, but they’re also in an ideal position to provide useful information about retirement to members, says Mr. Harvey, who sits on the FP Canada board.

Ultimately, it’s clients who benefit when advisors can leverage resources provided by dealers and associations to plan and implement a seamless transition to a well-qualified successor. That enables clients to continue along the path towards their goal without interruption and is the core objective advisors should keep in mind as they plot a course into retirement, Mr. Harvey says.

“Advisors want to make sure they get good value for their book of business, but most important is ensuring that clients are well served,” he says. “That’s the legacy part.”

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