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How to change financial professionals when yours retires

Shelly  Gigante

Posted on March 07, 2023

Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Finding a new financial professional
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Explain how to minimize any anxiety you may feel about working with a new financial professional. 

Offer tips for finding a new financial professional. 

Suggest specific questions to ask when interviewing a new financial professional to be sure your vision and values align.
 
   

Your financial professional spends years, often decades, helping you navigate a path to a comfortable retirement, reviewing and revising your plan to help you stay on course. It may not surprise you to learn, then, that the person you depend on for your financial security very likely has retirement goals of their own.

If you work with a financial professional who is your age or older, chances are good that you may need to replace them as they exit the workforce.

You will not be alone.

According to Cerulli Associates, 37percent of financial professionals in the job today expect to retire over the next 10 years, putting a significant percentage of industry assets into flux. According to the report, roughly 25 percent of financial professionals across all channels do not have a succession plan. Many expect someone in their practice to succeed them.1

“As we grow older, we must learn to adjust and adapt to many aspects of our lives including our long-term professional relationships,” said Harris Fishman, chairman of Coastal Wealth in Ft. Lauderdale, FL. “For most of us, life expectancy is getting longer. In fact, if we are married and approaching retirement, there is a good possibility that at least one spouse will live for 30 years in retirement. This makes it highly unlikely that your trusted financial professional, who worked with you through the ups and downs of your working years when you were accumulating money, will be the same professional working with you through the distribution years.”

It isn’t difficult to find a qualified financial professional, of course, but it can be unsettling to entrust someone new with your life savings. After all, the relationship between a client and their financial professional is highly personal and rooted in trust. (Related: How financial professionals become family)

“When it comes to money and financial security, the adaptation to change can be daunting,” said Fishman. “When we first start working with a financial professional, it takes time to develop trust, confidence, and rapport. Opening up to someone about your hopes and dreams, as well as your anxiety and fears, is not easy and the willingness and ability to do so does not happen overnight.”

Changing financial professionals

That said, there are ways to minimize any anxiety you may feel about finding, and working with, a new financial professional. Planning ahead is half the battle.

If your financial professional is nearing retirement age and has not yet shared his or her plans for next steps, ask:

  • Do they have a target date in mind?
  • Will they transition slowly into retirement?
  • Retain a small number of clients?
  • Bring a younger partner on as they transition out of the workforce?

Many financial professionals work as part of a team that consists of a cross section of ages and levels of experience to create continuity for clients. Those who work solo may instead bring on a younger partner and begin grooming them early on to take over their accounts by including them in client meetings. (Related: What is holistic financial planning and how can it help you?)

Getting to know your financial professional’s successor, however, is not always possible. In some cases, you may simply receive a letter one day announcing that your financial professional has retired and introducing you to the person who has taken over their book of business.

“If your financial professional is nearing retirement and not part of a team, the next best solution is to seek a referral from him or her before they leave their practice,” said Fishman.

You might also consider asking for recommendations from friends and family. Or, try using online search tools to locate professionals who work with a financial services firm you trust, or one with specific expertise. MassMutual offers a search tool to help connect you with professionals near you.

For example, if you are nearing retirement or already in it, you may prefer working with a professional who specializes in tax-friendly withdrawal strategies and converting savings to income. (Related: The ideal retirement portfolio withdrawal rate)

Interview for fit

Choosing a financial professional is a big decision and one that must be based on fit. Do not feel obligated to continue working with your financial professional’s successor. And if you ever feel pressured, move on.

You should interview several candidates to be sure you feel comfortable with their investment philosophy. They should demonstrate that they understand your unique goals and objectives and be able to communicate their overall money management strategy clearly. (Related: Who is a financial advisor… and who isn’t?)

During the interview, Fishman suggests asking the following questions:

  • How long have you been in practice?
  • What services do you provide?
  • What are your qualifications and credentials?
  • How are you compensated?
  • How much will I be charged?
  • What is your savings and investment philosophy?
  • What do you believe is missing from my current financial plan?
  • Are there any questions I haven’t asked that I should?

You should also ask what type of clients they typically work with, how often you should expect to hear from them, and, as far as the portfolio management portion of the job is concerned, into which financial professional camp they fall. in other words, are they a broker or an investment adviser representative? (Learn more: Two types of financial professional: Which is right for you?)

To protect yourself, you should also ask for (and check) their references and use the online Broker Check tool from the Financial Industry Regulatory Authority, which reveals how long they have been in business, which firms they have worked with, and whether they have any customer complaints or disclosures.

Moving forward

Once you decide on a new financial professional, don’t merely maintain the status quo. Sit down together and review your money management and investment strategy to be sure it still aligns with your current needs, time horizon for retirement, appetite for risk, and financial goals. The process will inevitably spark important dialogue about your values and vision, which will help establish rapport. (Related: Your first meeting with a financial professional)

This is also an opportune time to review your estate planning documents and insurance coverage to be sure that your assets will be distributed according to your wishes and that your family is protected. (Learn more: Wills and the basics of estate planning)

Whole life insurance, for example, can build cash value during your lifetime and provide a tax-free death benefit to your beneficiaries. The proceeds can be used to help cover your final expenses and pay for your estate taxes, which eases the financial burden for your heirs.

Those still working may also wish to explore disability income insurance to protect their income, which for most people is their greatest asset, if they are unable to work due to injury or illness.

Similarly, long-term care insurance can potentially help protect your nest egg, for yourself and your heirs, if your physical or cognitive health declines as you age. Such policies may provide coverage for costly nursing home or assisted living facilities, adult day care services, and in-home care, which is typically not covered by Medicare. All policies differ, however. It is important to speak with a financial professional to determine whether some kind of long-term care coverage may make sense for you.

When your long-time financial professional retires, it can be unnerving to place your trust in someone new. By asking the right questions, doing careful research, and taking the time to interview candidates for fit, however, you can feel confident that your financial future will remain in good hands.

Discover more from MassMutual…

How financial professionals become family

How to prepare for your first meeting with a financial professional

Need financial advice? Contact us

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1 Cerulli Associates, “40% of Advisor Assets Will Transition in 10 Years, According to Cerulli,” June 13, 2022.

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The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel.Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.