As financial advisors age, few have considered who is going to take over their books of business when they retire, says a new report by Accenture.

The shift in business from retiring advisors to a younger generation of advisors over the next decade will require advisory firms to address the retirement issue or risk losing clients, according to Accenture’s study, Advisor Succession Planning: Managing the Retirement of Baby Boomer Advisors.

Over the next decade, 12,000 to 16,000 of the nation's 315,000 advisors and brokers will retire each year, which means the financial industry will need up to 160,000 new advisors in the next 10 years to maintain the current headcount, according to Accenture. The pending retirement boom is due to the rising average age of advisors, Accenture says. The average U.S. advisor is about 50 years old, and advisors over 60 years of age control $2.3 trillion in assets, according to the firm.

Firms will also have to deal with recruiting younger advisors because only 5 percent of advisors are under 30 years of age.

In spite of the anticipated increase in retirements, only 29 percent of advisors have a succession plan, and therein lies the problem, Accenture says.

“Firms are not going to be in a position to buy the book of business from the number of advisors who will be retiring,” says Kendra Thompson, an executive at Accenture Wealth and Asset Management Services and author of the study, which was released Tuesday. Accenture is a financial industry consulting, technology and outsourcing firm based in New York City.

“An open dialogue needs to be started ahead of time to determine the best way to retain the clients when an advisor moves or retires,” she says.

Advisors generally have three options when they are ready to retire: sell their book of business to an outside party, merge with a complementary practice or groom team members to take over. In each case, the firm could lose clients if they are unhappy with the change, Accenture says.

“To retain client assets and protect firm profitability, it is critical that firms address this demographic shift and put plans in place to effectively manage advisor succession,” the report says.

Firms can begin to address advisor succession challenges by having candid discussions with advisors nearing retirement age about their options for their book of clients. The firm should present the advisors with retirement options that meet their goals while still being beneficial to the firm.

The firm also should help advisors navigate the choices and assist with implementing the most suitable options, Accenture says.

If the clients are working with a team of advisors at a firm and if the firm has a strong brand presence, the client is more likely to stay with the firm after the primary advisor retires, the study says.

“All firms will have to make some level of investment in addressing advisor succession,” the report advises.