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Preparing your financial advice firm for the future
Why is succession planning for financial advisers so important?
Whether you’re a national firm or a local partnership, making a succession plan is crucial for securing a healthy financial future for you, your clients, and your employees. Plus, having a plan gives your business the ability to adapt to unexpected changes, from an early retirement to a merger or sale. It also means nothing will get overlooked during the transfer.
Succession planning is something to consider long before you leave your business or retire. That way, your successor can get fully immersed in the firm and build trust with clients.
Without a succession plan in place, your clients could face unnecessary disruption. Staff, business partners, prospects and family could also be affected, as could your business’s reputation.
Not thinking of leaving yet?
Circumstances can change, quickly. So developing a plan could be extremely beneficial.
of advice firms were approached by firms interested in buying their business, in just one month*
of advice firms expect to grow via acquisition over the next 3-5 years, with 10% expected to sell†
of financial planners and advisers plan to retire in the next five years, and 35% before age 50‡
of firms have six or fewer advisers§
of smaller firms intend to acquire and 22% intend to be acquired¶
of sole traders plan to sell their business in the next 3-5 years
How to navigate the next step
Consider your options
- Selling to someone within the company often allows for a smooth transition.
- Selling or merging with another firm can be attractive, especially if they have a similar cultural and business fit.
- Selling to an external company with the capital and experience to hit the ground running could keep the business operating smoothly.
- Retaining ownership interest can reassure clients and staff that you’re there to support them.
Maximise your financial firm’s value
- Review and maintain the strengths of your business ahead of any acquisition, and work on improving any weaknesses.
Look for the right successor
- Your successor should be the right fit for employees and clients – they’re the bedrock of your business.
- Ask yourself what kind of personality traits will work best with clients and your team – from ambitious to conscientious.
Plan ahead of time
- Make sure your successor understands the business and their responsibilities before they have to step up.
- If there are any siloed parts of your business, making sure they’re minimised will make transferring work and information easier.
- Get all your business accounts in order.
Consider your clients carefully
- Be as open and honest as you can to maintain trust in the company.
- Put a client plan in place, and share it with your successor, relevant colleagues and clients.
- It could be a good opportunity to introduce all parties, making everyone feel at ease.
- An FAQ document can be useful.
- Remember your responsibilities to vulnerable clients in line with Consumer Duty.
- If there are any changes, keep everyone informed.
Make sure you’re compliant
- The 2017 FCA ‘Supervision Review Report: Acquiring Clients From Other Firms’ has useful insights into how you can improve your succession planning process.
- Any information you give clients should be fair, clear and not misleading – in line with your Consumer Duty responsibilities.
Have a plan B
- There are a number of potential variables and issues that could arise.
- Being prepared for any eventuality will minimise damage if something does go wrong.
Points to remember
Planning ahead for when you leave the business is important for you, your family, colleagues, and clients. To get ahead, think about what you’d like the future to look like and consider each avenue carefully.
Our goal is to help firms like yours build strong, profitable and sustainable businesses, while supporting you through any challenges that may arise. That’s why we’ve curated our Profitable Practices series.
For more help and support, take a look at the rest of the series and discover other areas that could help you drive greater profitability for your practice:
Source :
* NextWealth, FABB Report 2023
† FAS IFA DNA 2024
‡ Investec Wealth & Investment 2024
§ FCA data for 2021
¶ Owen James research 2024