Four Misconceptions about Succession Planning

Independent financial advisors face many challenges on a day-to-day basis.  At the typical firm the advisor is forced to think about marketing and client service, investments, administration and compliance. There are so many tasks, in fact, that succession planning probably doesn’t even make the list for many.  There are staggering statistics that suggest this needs to change. According to an SEI survey, 70 percent of advisors don’t have a succession plan.  By succession plan, I mean a formal, written document – not a hint or an idea that someone may buy my practice down the road.

I have always been curious why an industry that prides itself on planning for the future for clients does such a poor job of planning for itself?  I guess some advisors put off planning because of their emotional ties to their firm.  Imagining retirement is laden with so much emotion and so many unknowns, it’s an easy subject to postpone or avoid altogether.  Others intend to work indefinitely, and won’t map out a plan for succession or continuity.  However, FP Transitions notes that 99 percent of today’s independent financial practices won’t survive their founder’s retirement.   After building a business for 10 years, 20 years or longer, is that the type of legacy that advisors want to leave?


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