Strategies for Finding a Successor

As you begin thinking about retiring from your financial practice and all the steps required to make that happen, recruiting a successor should be at the top of your to-do list. Succession planning has gained a following as a necessary tool for an advisory firm’s long-term success, and for good reason. According to a 2014 study by Cerulli, the average age of financial advisors is 50.9 years old, and 43 percent are over the age of 55. If you fall into those age categories, now is the time to look for a successor.

But, how do you find a qualified successor who fits the ideals of your firm, gels with your clients, and leads your firm successfully into the future?
strategies for successor

Searching for a successor

There are several ways to find an advisory firm’s successor; we’ll focus on two here. Some advisors look within their firm, while others plan to sell to an outside financial advisor, or merge with another financial organization. No matter which approach is used, it will require careful planning and consideration to define the traits and skills that are important in a successor.

Promoting successors internally

One widely-used approach is finding a successor within the existing advisory firm. To help ensure a successful outcome, the firm needs to invest in hiring young advisors and offer training and opportunities for growth. According to “The 2015 FA Insight Study of Advisory Firms: People and Pay,” the biggest distinguishing factor that shows firms are prepared for succession is the way that they recruit, position, and develop their people. The report goes on to say that firms that are prepared with succession plans show a greater tendency to maintain organizational structures that support internal career paths.

Selling a financial planning practice

Another way to find a successor is to look outside of the practice for a buyer, but according to an article in FA Magazine, “IBDs Face Big Advisor Succession Challenge,” it’s rare that an external sale will be successful for the independent financial advisor because it can be difficult finding someone who is the right fit, and agreeing on the price and terms can be challenging.

For the advisors who want to sell, 3xEquity’s Instant Offer program can provide offers from qualified BDs & even match them with opportunities that can lead to succession planning & mergers, and 3xEquity’s Deal Terms Tool helps buyers and sellers easily adjust the terms of a deal to get an instant estimate.

Some advisors will consider merging their practice with another firm that shares similar values and a similar culture. A merger may be a good alternative when retaining clients is a factor. The two merged firms may be able to offer opportunities for the successors’ clients to continue receiving a high-level of expertise and service.

Planning ahead for succession

If you want to look internally for a successor, know that it takes time to identify potential successors and to evaluate top-notch talent who are capable and ready to lead your business into the future. When the succession planning process is started early, even five to ten years before retirement, finding a successor who is a good fit for the practice is inevitable. You have the time to invest in young or inexperienced staff who then have an excellent opportunity for becoming a qualified successor.

If you want to sell or merge your practice, starting early is equally important. It takes time to find the right match, and new buyers and practices may become available during your planning, making it more likely you can find the perfect fit for your practice.

Regardless of your particular succession plan, planning for your retirement is a necessary step for your firm’s long-term success, and you should start looking for your successor now.

Share this article

Author picture

Curious about switching broker dealers? Secure your 2 best offers all while remaining 100% anonymous.

Ready to start? Click here.

Leave a Reply

Secure Multiple Offers All While Remaining 100% Anonymous


© 2022 3xEquity, LLC. All rights reserved

Transition packages from top regional and national broker-dealers like LPL, Ameriprise, Wells Fargo, RBC, Cetera, Dynasty, UBS, and more.