Over the coming decade, 37 percent of financial advisors, representing $10.4 trillion of the industry’s assets, plan to retire. ¹ Yet nearly 40 percent of advisors say they have no succession plan—including a quarter of those over 60 and roughly a fifth of those planning to retire in the next six years.¹

Without successful succession planning in place, there will be a significant amount of money in flux in the coming years. This will impact not only the lives of many clients but also your own success as a financial professional. No matter where you are in your career, embracing succession planning to reduce the risks to your practice and your clients should be a key priority.

The Risk for Financial Professionals and Their Clients

A lack of succession planning represents a major risk to professionals and clients alike. For clients, there is a high potential for relationship disruption. Clients will not be getting the trusted guidance they need as they age if their financial planner retires without a succession plan. They may need to change advisors at a point in their lives when looking for someone new isn’t feasible.

For financial professionals, not having a solid succession plan could hinder the growth of their business. Prospective clients are looking for a reliable and stable team that can provide consistent, comprehensive support for them and their families over the years. By establishing a clear succession plan, you not only secure the future of your practice but also assure your clients of uninterrupted and reliable financial guidance, reinforcing their trust in your services.

Furthermore, it can be easier for big players to take advantage of practices that haven’t planned properly by attracting clients and acquiring books of business at reduced rates. Financial planners who are nearing retirement without a solid plan in place may find their retirement goals and legacy compromised as a result. By proactively strategizing and implementing a robust succession plan, you maintain control over your business’s future and safeguard your own.

Continuity of Care: A New Value Proposition

We’re starting to see continuity of care become more present in the value propositions of firms that have a robust succession plan in place. As a key selling point, they can tout their plans for succession as a strength when it comes to prospecting, converting new clients, and maintaining the wealth transfer within their firms.

In today’s landscape, prospective clients are actively seeking assurance of continuity of care. If you don’t have a clear plan in place, you’re going to run into a headwind when it’s time to convert these prospects into clients. By offering and highlighting continuity of care across generations as part of your value proposition, you can not only attract new clients but also cultivate lasting relationships built on trust and reliability.

How to Get Started with Succession Planning

The idea of succession planning can be overwhelming for many financial planners. It’s easy to bury your head in the sand and pretend that succession planning isn’t necessary, but having a plan in place is crucial for you, your business, and your clients. If you aren’t sure where to begin, start by creating your vision for the future. To kickstart this process, consider two fundamental questions:

1. What will your life look like once you have transitioned your business?

Advisors, like their clients, often wonder what they will do with themselves when they retire. Consider the questions you ask your clients about their ideal retirement with your own retirement in mind.

2. Ideally, what would you like that transition to look like?

When you answer this question, think about the characteristics of your perfect successor, what you want the client experience to be, and the timeline that aligns with your retirement goals.

By committing your thoughts to paper, you’ll have a starting point for a succession plan that meets the needs of you and your clients.

The Best Time to Start Succession Planning is Now

Whether you’re launching your financial advisory practice or entering the latter stages of your career, it’s never too early to start working on your succession plan. With a robust succession plan in place, you can empower yourself to navigate changes confidently and proactively, setting the stage for a successful and sustainable future for your practice.

For practical advice on how to navigate from succession planning to succession, watch my on-demand webinar, The Six Pitfalls of Succession Planning: How to Leverage Flow Theory to Prepare for a Successful Transition.

Source:

1. Cerulli Associates, June 2022.

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