While this is not necessarily a problem by itself, the US doesn’t have an equivalent number of younger, experienced advisors to succeed the growing cohort of those edging closer to retirement, Scott Curtis of Raymond James told Family Wealth Report.

For example, the wealth management industry will need to cumulatively add 237,000 new advisors over the next decade to meet projected market demand, Pershing Advisor Solutions said in a recent study.

Pershing’s study - entitled Advisor of the Future II: Building a Business to Last - said firms are “hard-pressed to develop a new generation of advisors.” Two-thirds of independent firms don’t have an adequate succession plan in place and 31 per cent don’t offer career paths of any type, it said.

Meanwhile, the impact of having a significant number of older advisors is amplified by the fact that those over the age of 60 tend to manage a majority of firms’ client assets. Citing figures from Cerulli, advisors over the age of 60 control $2.3 trillion of assets, Accenture said in its 2013 report, Advisor Succession Planning.

Curtis, president of Raymond James Financial Services, said his firm keeps a tab on how many of its advisors are approaching retirement, as well as having a dedicated team to help advisors with succession planning and practice acquisitions.

“Unfortunately, there are today probably a majority of advisors who haven’t taken the steps to establish some sort of succession plan – whether it’s a catastrophic plan in case something unanticipated occurs or just a transition plan,” Curtis said.

He continued: “It sounds on the surface fairly easy if it’s viewed simply as a transaction, but there has to be chemistry between the successor and the person who has built the practice. There has to be a consistent view on managing the client assets and working with clients. Pairing people is where the challenge occurs; it’s not so much the economics of the deal.”

When asked by this publication why he thinks so few advisors have a succession plan in place, Curtis likened it to clients with children who haven’t established a will.

“Everyone knows it’s the right thing to do,” he said. “Establishing a succession document requires close to the same careful thought and consideration as drawing up a will because you are, in essence, putting down in a legal document what is going to happen to your practice and your clients in any unanticipated event that might prevent you from being able to communicate and manage your business.”