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Retirement expert: 'Don't panic' if your financial advisor retires — it's an opportunity

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Aspiriant CEO Rob Francais joins Yahoo Finance to discuss what people should do when their financial advisors retire.

Video Transcript

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AKIKO FUJITA: We have been hearing a lot about the great resignation over the last several months, with the pandemic pushing more and more Americans to leave their jobs. One of those groups, financial and investment advisors. But how do you as a client prepare for that change? Let's bring in Rob Francais, he's Aspiriant CEO, joining us from LA today. Rob, you know, this is something that I had not thought about because you just keep hearing about so many people quitting their jobs. The repercussions on the other side, how many advisors have actually quit during this period, do you have a number?

ROB FRANCAIS: You know, I don't. But first, thank you for having me, Akiko. Glad to be here. I don't have a number but I did read recently that of the deals this year, advisors retiring and selling their organizations, that's almost doubled in the last few years in terms of the number of transactions. And most of these are the large firms. So in some ways, there's the retirement aspect of it but what happens when retirement occurs, you know, oftentimes people are selling their organizations.

AKIKO FUJITA: So as a client, how do you prepare for that change or shift once your advisor is no longer there?

ROB FRANCAIS: Yeah. It's a really good question and I think before sort of jumping to that meeting where the investor's finding out that their advisor is retiring, I think it's important to understand how the great resignation is impacting our industry because it's not just the investors or the client's advisor that you need to worry about, you need to worry about the founder of the firm that maybe your advisor works for, their retirement.

And so just a little background. So in our industry, the most affected groups are the founders and the retirees. And we are seeing them accelerate their retirement timelines and sell their firms in masses. As I said, sales have almost doubled just in the last few years of organizations. And most importantly, rather than selling their firms to the next generation of advisors and remaining 100% employee-owned, which is really important from an alignment of interest perspective, a lot of these advisors inside of their acceleration are selling their firms to private equity firms and big banks.

And this shift in thinking is a big surprise because the industry was founded on independence, delivering advice independent of financial products, and then commitment to independent ownership. So being 100% employee-owned and not having that middleman, that outside party be a shareholder of the organization. So in many ways, the move toward selling to private equity groups and the big banks is a complete industry reversal.

So these founders are the same ones who left the large banks and public firms decades ago to become independent. And so the advice is that investors should get ahead of this issue by asking their advisors about their advisor's firm succession plan, and even if their advisor is nowhere near retirement, they should be focused on what is the plan for the organization. So that they can even long before they're in that meeting, begin to ask questions about this.

AKIKO FUJITA: Rob, what about those that are close to retirement? They're sort of dealing with the double whammy here. Number one, they don't have the usual investment advisor they've turned to. And then also number two, they've been looking at some of the volatility in the market saying, well, what should I do with my money right now?

ROB FRANCAIS: Well, first of all, in terms of-- are you talking about advisors retiring or people themselves retiring?

AKIKO FUJITA: The client retiring. If they're close to retirement, they don't have the usual advisor they can turn to. What do they do?

ROB FRANCAIS: Well, first of all, they do have the advisor. So you know, if you're close to retirement and your advisor's retiring or you're worried about that, first of all, I would say don't panic. This is-- when your advisor retires or even if they've announced that, it's a great opportunity for you to reflect on your own needs and purpose in life going forward and reevaluate the advisor relationship. So what worked well, what didn't, how they want to be served in the future. So there's a lot of things that have changed in our industry. And so you know, I think that's really, really important to the advisor and sort of get present on that.

AKIKO FUJITA: Rob, that's some good advice there, and certainly something for a lot of people to be thinking about. Rob Francais, Aspiriant CEO, good to talk to you today.