If you’re one of the 44,000 financial advisors in the U.S. that have 10 years or less until retirement, chances are you don’t currently have a succession plan. This means you’re potentially leaving a lot of money on the table.

One of the primary issues that complicates succession planning for financial advisors is the linkage between personal relationships and client retention. Transferring client loyalty from one advisor to another is a sensitive challenge and critical in establishing business value over time. Client loyalty is the most critical component of succession planning for financial advisory firms.

Succession Connection has put together a list of five reasons why you may be postponing your succession plan. Data for this article was gathered from a Mass Mutual Financial Group survey.


Most of us don’t have any experience with it! The financial advising industry has matured rapidly over the last 10+ years. Resources to help advisors deal with questions about succession planning are now readily available. There’s more interest from new advisors in joining and eventually buying an established firm. There are also financial advising firms that are looking to grow their businesses through acquisition. Along with business brokers, there are online succession-matching services that help financial advisor buyers and sellers connect with each other. There are plenty of resources out there that are ready to understand your goals and provide answers to your questions.


In his book 7 Habits of Highly Effective People, author Steven Covey says “Begin the task or project with a clear vision of your desired direction and destination.” You’ve worked hard to build your business and you enjoy working with clients, but your work is probably not your desired destination. Some larger financial advisory firms get offers at 3 times gross revenues for their businesses. Smaller firms usually receive offers at 2-2 ½ times gross revenues. So, a business generating $300,000 in gross annual revenues could be worth as much as $750,000. Those proceeds from a business sale, invested at just 3% annual return, generate an extra $22,500 in annual income. So, succession planning is worth investing some effort! If you have a financial advisor firm with over 50 clients, you are not too small to need a succession plan.


Now is the best time to make the time. If you want to get top dollar for your business, you’ll need to think strategically. Have a business appraiser analyze your business and give you some ideas about increasing its value. It may take a few years to fix certain aspects of your business – like:

  • improving your office technology to support better record-keeping and client reporting
  • hiring additional advisors to create a larger team for your client base
  • dedicating more time to growing your business

Invest the time to start improving your business today – it will pay off when you decide to sell.


While there are certainly scenarios where financial advisor succession planning can be costly, it doesn’t have to be. You probably already have a simple succession plan in your head. Will you sell to an outside buyer? Finding a buyer may be easier than you think. Online services like Succession Connection match buyers and sellers and help negotiate terms. You may need a transaction attorney and tax expertise to structure the terms of the deal. Or, perhaps you plan to sell the business to your internal staff or family members. If you have created an internal team, as part of your strategy, you may already have a buyer who is anxious to negotiate a buy-out agreement over a period of time. What ends up being too costly and complicated is deciding to do nothing and leaving your family to deal with a sale.


You love being a financial advisor and you love working with your client. You feel like you’re contributing to their happiness and success. But at some point in your career, you’ll decide to hire a colleague and take some time off. There’s no reason to retire completely until you’re ready. But when that time comes, you’ll be happy you’re prepared and have a plan to exit gracefully. You’ll be leaving your clients in good hands and taking the money off the table to enjoy your retirement.

Of all the financial advisors that are nearing retirement in the next ten years, 26% are handing off their practice to a colleague or partner, 14% are passing off to a family or junior colleague, 12% are referring clients elsewhere and 9% are selling.

Keep one thought in mind as you review options for your succession planning: “Your business is worth a lot more to a buyer, if you are not needed to run it.” If you’ve ignored the need to address succession questions, then your business might be worth almost nothing without you. So, start planning early and set yourself up for a comfortable retirement.