How Older Advisors Can Plan to Retire

Author: Brian Neil, Practice Management Consultant

As you near retirement age, what steps have you taken to prepare? Do you have a detailed succession plan in place if you become disabled or die unexpectedly?

Advisors spend most of their careers helping clients prepare for retirement or the unexpected, but often don’t spend enough time planning for their own future. In fact, 73 percent of advisors lack a formal succession plan, according to a 2018 Financial Planning Association (FPA) study.

If you want to leave a legacy for your family, having a formal succession plan in place is a must when you retire. The easier you make it for another advisor to step in and run your practice without you, the greater the transferable value for your practice you can expect to gain. Advisory business, along with multiple streams of recurring revenue will also boost a higher valuation for your book of business.

The sooner you get started on a succession plan the better. This process takes time and at minimum, you should aim to have your succession plan in place about five to 10 years before you plan to retire.

Getting Started: Decide on a Succession Plan

As you consider developing a succession plan, you should think about how your plan will benefit and impact your clients, staff, other advisors in your firm, and your family. A well-thought-out succession plan can reassure your clients that they can rely on your successor to continue delivering exceptional service and advice – when you retire or if you suddenly need to leave the practice due to health or other issues. The following are the most common types of plans advisors consider:

Internal Succession from One Advisor to Another: Many advisors will choose a family member, partner, or younger advisor to succeed them in the business. This plan allows the advisor to make sure that their intended successor is suited for the continuity of the business, while also allowing clients to get to know and trust them. Most advisors seek out a successor with a similar planning process and investment philosophy to ensure a smooth transition. This approach also allows a gradual transition of responsibilities to the successor, allowing the retiring advisor to work fewer hours over time. This allows the retiring advisor to stay involved.

Merge with Another Firm: Another strategy is for an advisor to merge with a larger practice to help spur growth, gain economies of scale, offload compliance and day-to-day operations, increase bandwidth and technology capabilities, and – eventually – allow an individual advisor or the senior advisor of a practice to retire. Similar to an internal succession, this allows for a merger with another firm, to take a more gradual approach to transitioning so your staff, other advisors, and – in particular – clients can become more comfortable with the people, culture, and practices of the new firm while still actively involved in the business. There are firms that specialize in Supporting this kind of transition

Outright Sale of the Business: for advisors that don’t have a likely successor or prefer a faster sale, another option to consider is the sale of the business to an external buyer. While this plan requires less planning than the other options, it still requires meaningful succession planning. Some key points to consider are: correctly valuing, the business carefully choosing a buyer who will serve the best interests of your clients and staff, and sharing key day to day operating procedures, and carefully negotiating the details of the transfer. The advisor will likely assist with client introductions and meetings prior to the final sale, as well as sharing information on the day-to-day operations of the practice to ensure clients feel comfortable and secure with the new advisor or firm. A potential drawback is that this type of sale is a less gradual process. The retiring advisor will not stay involved in the business once the sale is complete to help ensure ongoing success.

Make a Plan to Prevent High Client Attrition

A critical component for your practice is retaining your clients, particularly your highest value relationships. A detailed succession plan includes strategies for ensuring client retention, including:

Client relationships are at the core of any business. Create processes and workflows in your practice that can be repeated and document them. This will make it easier for the successor advisor to pick up the day-to-day operations of the practice and keep things running smoothly for clients.

Make sure the client experience is “top of mind” for the successor advisor. Choose a successor who approaches clients with a similar strategy or begin early on to find a junior advisor who you can mentor and teach your business philosophy, too. Either way, it is important that the successor will run your practice in a similar manner, so clients feel comfortable and secure with the new Advisor.

Keep detailed documentation on client conversations and investment strategies in a customer relationship management system or CRM. This will make it easier for the successor advisor to understand how to best serve clients’ needs. This is also a best practice for other situations such as when an advisor must leave the practice unexpectedly due to health or other issues.

Allow for an adequate transition period. It can take at least a year for a successor to get comfortable and to make sure there is continuity of service. A gradual transition can make it easier on your clients and staff and help ensure high client retention.

Getting Started

For more information about succession planning strategies and resources, contact your dedicated Financial Planning Consultant: Brian Neil,

To learn more about Momentum Independent Network, contact Wealth Management at or 833-4HILLTOP.

The paper/commentary was prepared by Momentum Independent Network (MIN). Momentum Independent Network Inc. is a registered broker-dealer and registered investment advisor that does not provide tax or legal advice. MIN and Hilltop Securities are wholly owned subsidiaries of Hilltop Holdings Inc. (NYSE: HTH) located at 717 N. Harwood St. Suite 3400, Dallas, TX 75201 (214) 859-1800, 833-4HILLTOP. Member FINRA/SIPC

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