Advice firms must start to plan their succession to stop the industry hurtling towards a capacity crunch.
A survey from St. James's Place has shown the vast majority of advisers, 87 per cent of the 200 firms polled, did not have an exit plan in place.
Speaking on the FTAdviser In Focus podcast, Eddie Grant, director of technical connections at SJP, said it was high time advice firms lined up their successors, as without doing so the industry was rapidly approaching crunch time.
The Retail Distribution Review, which celebrates its 10th anniversary this December, has seen vast numbers of advisers exit over new qualification requirements and later the persistently high cost of doing business.
But while some of the bank advisers initially switched over to independent advice, there has been too little effort since to replenish the ageing adviser population.
Amy Austin, news editor at FTAdviser, said FCA data showed 74 per cent of individuals authorised to provide retail investment advice in the UK were over the age of 40 and only 8 per cent were under the age of 30.
What's more, only about 400 advisers are under the age of 25, compared with 4,800 who are over the age of 60 and approaching retirement.
"It showed me there really aren't enough young advisers coming up to take over from older advisers," she said.
Grant agreed. He said: "A lot of companies are not actually dealing with the issue. If you look at the history, traditionally insurance companies created the older adviser.
"Then the next wave, the RDR wave, was effectively the advisers coming from the banks coming over the the non-banks sector.
"Now there is a real need for advisory firms to pick up the mantle and start to create their own pipeline of individual advisers.
"That's really, really important and historically they haven't done that, they haven't invested in the next generation, they've always taken from somewhere else."
Rachael Fennessey, founder of recruitment agency Aspire Executive Search, said: "Before RDR we as a business used to place lots of trainee advisers...into the banks, and with RDR that was one of the breeding grounds that was removed.
"We had the loss of the life companies prior to that and then the banks went," she said.
She added there was only a handful of advisory firms that had been investing significantly into training advisers over the past few years.
Fennessy added: "There's a need here that isn't being met for the trainee adviser role.
"There need to be more businesses investing into the trainee adviser role and models to organically grow with exit strategies.
"They need to be looking at bringing people in at a more junior level who can work with an experienced adviser who is nearing retirement, so that they are there knowing the client base and ready to take it on when the adviser chooses to take their retirement."
