Advisors spend lots of time addressing their clients’ concerns about markets, interest rates and their retirement plans. But a recent conversation with a client identified an important concern that is typically ignored: What happens when an advisor approaches retirement.
A tough decision
The conversation took place during an entrepreneur’s group that I’ve belonged to for several years. Meeting for half a day each month, this group has become a terrific resource for helping the 10 participants grapple with important personal and business issues.
Over lunch after a recent meeting, one of the members– let’s call him Michael– described his decision to consolidate his investments with one advisor:
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Dan Richards
ClientInsights-President
6 Adelaide Street E, Suite 400
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“I’ve been working with two brokers for a while now and have generally been happy. They’re both good guys with lots of experience and I like them both. An issue arose last fall, however, when I asked my accountant about his bill for the first half of 2014. My accountant explained that dealing with two sets of investment statements had increased the complexity and cost of preparing my taxes.
He pointed out that because my investments were spread across two brokers, I had missed some opportunities to reduce taxes. There also seemed to be some duplication investments. He told me that if I wanted to reduce my accounting bill and maximize after-tax returns, I should pick one guy that I really trusted and give him all of my money to manage.
Given that I was reasonably happy with both brokers, my decision came down to their ages. I’m in my 50s. One of my brokers was in his late 40s and the other in his 60s. I needed a broker who would be around for at least another 10 years. I had already noticed that the older broker was slowing down and taking more vacation. A couple of times when I called he wasn’t around, and I had to wait for him to get back.
When I called to give this broker the news, it came as a complete shock to him. He said that he wanted to come in and talk about it. When we met few days later, I explained the context for my decision and that I wanted to work with someone I was confident would be available for many years. In response, he told me that he had been meaning to introduce me to a younger guy on his team who was going to gradually take over his business.
I had seen this younger man’s name in my broker’s newsletter. But I had never met him, he never sat in on any meetings and I knew nothing about these plans. Maybe if my broker had sat in on one or two of our meetings it would have made a difference, but by the time we spoke I had already called the other broker I was working with. Later that week he bought me lunch to thank me and talk about next steps and I simply didn’t feel that I could go back on my decision.”
