RPT - INSIGHT-Baby Boomer brokers face shrinking market to sell firms

Wed May 27, 2015 7:00am EDT
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By Elizabeth Dilts

NEW YORK May 27 (Reuters) - Steven Dudash, like most brokers, spends a lot of time making it easier for his clients to retire. This summer, though, his plan is to make it easier for older brokers to retire.

After starting IHT Wealth Management in Chicago in June with six brokers, Dudash says he will buy four businesses from retiring brokers in coming months. The acquisitions will boost the assets his firm looks after to more than $800 million.

The 38-year-old Dudash, and brokers around his age, have a lot of businesses to choose from. Of the 300,000 brokers now working in the United States, nearly 35 percent are over 55. Between those Baby Boomers, and others looking to retire in coming years, some 40 percent of brokers will try to sell their businesses before 2022, according to research firm Cerulli Associates.

"(Buying) retiring advisors will be a huge part of the business moving forward," said Dudash, who now has 19 brokers at IHT and said he gets three calls a week from older advisers seeking to discuss selling their businesses.

Buyers close to Dudash's age have been in business long enough to be able to afford to buy a competitor, and they are young enough to wring substantial income in years to come from the businesses they are buying.

For brokers born during the Baby Boom -- from the mid 1940's through the early 1960's -- finding someone like Dudash to buy their business is an increasingly urgent matter. Just 26 percent of brokers are in the younger half of Generation X.

With so many older brokers looking to sell to so few younger ones, wealth management will likely end up being a much more concentrated industry in the future, with a smaller number of mega-brokers handling large numbers of assets, industry experts said.   Continued...