Financial planners lagging behind on Succession Planning

According to Money Management, nearly one quarter of financial advisers industry wide in the United States plan to retire or depart the industry within the next decade, but only one-in-three practice owners have a succession plan in place, a US study reveals.

State Street Global Advisors’ ‘The Adviser Retirement Wave’ report, also found advisers who planned to retire within two years had the same low levels of succession planning as those who were a decade away from retiring.

“Advisers who fail to implement a succession plan risk losing both existing and potential clients due to concerns that the adviser may sell or retire in the near future with no obvious successor line up,” the report said.

“But with a succession plan in place, advisers can demonstrate to clients that they have made plans to help them successfully transition their affairs when they ultimately exit the business.”

Around 70,000 advisers controlling more than $2 trillion in assets under management said they were likely to retire over the coming decade in the US, but only 66 per cent had only a partially completed plan.

Advisers had three succession planning options: find an internal successor, merge with another firm, or sell their businesses.

But the report warned it would take a minimum of five years to find and train an in internal successor, while in cases of a sale, it would take at least 18-24 months to find an external buyer, negotiate the deal, and close the deal.

Finding a merging partner with similar investment philosophies and service methods was a challenge, and if advisers do not find a partner with the right cultural fit, the firm risked both employee and client attrition following the merger, the report warned.

Dr Craig West

Founder & Chairman | Succession Plus

Dr Craig West is a strategic accountant who has over 20 years of experience advising business owners.

With a background as an accountant in practice and two master’s degrees, Craig formed a strong view that the majority of business owners (and often their advisers) were unprepared and unaware of the steps required to prepare for exit. He then designed and documented a unique 21-Step Business Succession and Exit Planning process to assist owners and their advisers in navigating this process.

Craig now acts as a strategic business and financial mentor for mid-market business owners. Craig has written four critically acclaimed books educating business owners on employee incentives, succession planning, asset protection, and exit strategies. Additionally, he has completed doctoral research on Employee Share Ownership Plans (ESOPs) for succession.

Craig is a Member of the Forbes Business Council where he leverages his extensive experience to contribute valuable insights on helping business leaders navigate the complexities of growing and exiting their businesses.

In April 2024, the Exit Planning Institute admitted Craig to the International Exit Planning Circle of Excellence.