Succession Planning for Financial Advisors: Building an Enduring Business, + Website

Chapter 1 The Succession Conundrum

Practices Built to Die

As an industry, we have a problem to solve: 99 percent of today’s independent financial services and advisory practices will not survive their founder’s retirement or the end of the founder’s individual career. When the advisor leaves, for whatever reason, it’s over. And that has to change.

In many professions and in most businesses, this is not a problem. You don’t need a multigenerational dentist or dental firm, for instance. Who cares if your neighborhood hamburger stand has a succession plan? But in this industry, it is different. Wealth doesn’t have a lifetime. Even so, clients have a clear expectation of advice tailored to the length of their lives, not to the length of their advisor’s career. Clients do have a choice—they can choose between a career-length practice (or possibly even shorter upon the death or disability of a single owner) and the multigenerational wirehouse (think Bank of America/Merrill Lynch, Wells Fargo, UBS). The independent industry seized the momentum from the wirehouses (at least in terms of popularity) over the course of the recession, but may well cede it back in years to come unless this problem is resolved.

So, specifically, who are we talking about—to whom does this “99 percent” statement apply? The list certainly includes independent registered representatives and advisors, whether under an independent broker-dealer or custodian or insurance company. The list includes stand-alone Registered ...