The need for advisors to tackle succession planning decisions now has garnered increasing attention and discussion in recent years. Yet, even as advisors tend to recognize the importance of taking action to prepare, many still have not gotten started.

“I’m encouraged about how many advisors are engaged in the conversation of what they need to do,” says Kelli Cruz, managing director of Pepin Consulting. “But getting started is probably the biggest hurdle [advisors] will face.” 

Whether it’s because advisors have trouble envisioning their own retirement, or because they are too busy drawing in new business, only 11% have completed a succession plan, according to a survey released Wednesday by Signator Investors, the newly rebranded independent broker-dealer of John Hancock Financial Network. (The firm announced Wednesday that its broker-dealer will now be marketed to advisors under the registered broker-dealer name, Signator Investors, in a move to distinguish broker-dealer services from product manufacture, Brian Heapps, chairman of Signator Investors said.)

Thirty-three percent of respondents said they have started, but not completed a plan, 44% said they’ve thought about starting to make a plan, and 12% said they hadn’t even started thinking about it. “Succession planning is still stuck in the same rut. The industry is stuck in the mud when it comes to succession planning,” says Heapps. “The DNA of a successful advisor is to continually grow their business, and so they often don’t have the time, or they procrastinate in dealing with succession.”


Not knowing how they want to retire from the practice is one reason many advisors have been negligent when it comes to succession planning. According to the survey, only 20% of advisors are very certain about what they will do with their practice when they retire. “It’s hard for anyone who enjoys what they’re doing to think about what they’re going to do when they retire,” says Cruz. “This is an industry where grey hair is a good thing. It shows experience and confidence. And because advisors love what they do, it becomes a very personal business that goes deeper than just a simple business relationship.”

Highlighting the focus on relationships in the advisory business, many advisors plan to stay involved and retire gradually. Fifty-two percent of those surveyed said they planned to reduce their practice activities before retiring and almost all advisors say they intend to continue working with top clients. Forty-two percent already have plans in place to keep working with key clients and another 45% say they intend to create such plans.

Of course, when it comes to running your own practice, it can be difficult to relinquish the reins. Most advisors either have a protégé now (30%) or plan to hire one in the future (67%). Nearly all advisors, 9 out of 10, say that sharing a philosophy and working with that protégé for a number of years are key considerations in hiring someone.


For advisors thinking about succession planning, there are major concerns to address. According to the study, the top concerns include:

  • Obtaining cash for their business reported (80%)
  • Maintaining relationships with key clients (70%)
  • Financing transition (69%)
  • Annuitizing their business (69%)
  • Bringing along a younger rep (66%)
  • Maintaining a high level of client services (56%)

Though most advisors don’t have a plan, two out of three advisors expressed interest in receiving assistance with succession planning, according to the survey. “There’s definitely an opportunity for distributors to help these advisors,” says Heapps. “Overall, I think the industry has been active in discussing this issue and developing programs for advisors to help them with succession planning, but clearly the need to do more continues.”

In considering succession options, advisors will need to know the approximate value of their practice as a starting point for negotiations, says Heapps. Though there are numerous resources available to find out what a practice is worth, according to the study, 44% of advisors say they don’t have a good estimate of their practice’s value.

On the other hand, Cruz cautions against thinking too much on valuation. While the industry tend to focuses heavily on the valuation of a business, they miss the critical issue that needs to be addressed – creating transferable value, Cruz says.  “It takes a firm between 5 and 7 years to be ready for succession,” she says. “Advisors should start now. They need to stop talking and thinking about it, and just make it happen.”


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