Succession Planning for Advisors: Why It Matters More Than Ever
Introduction
Succession planning has become one of the most pressing issues in wealth management. The average advisor today is in their mid-50s, and research shows that more than a third of all financial advisors are expected to retire in the next 10 years (Cerulli/55ip).
Without a plan, advisors risk leaving value on the table, losing client trust, and watching years of work unravel. With a plan, they can preserve value, protect clients, and secure their legacy.
Why Succession Matters Now
Demographics: Advisor age skews older — the average is 55 according to FINRA’s 2025 Industry Snapshot.
Client expectations: High-net-worth clients increasingly demand continuity.
Industry consolidation: Private equity and RIA aggregators are actively buying firms, fueling record M&A activity.
Advisor Demographics & Industry Data
By 2033, roughly 37% of advisors plan to retire, controlling nearly 40% of client assets (InvestmentNews).
Despite this, surveys show fewer than half of advisors have a formal succession plan in place.
This “succession gap” is one of the industry’s biggest challenges over the next decade.
Common Succession Options
Internal Succession
Sell or transition to a next-gen partner or team member.
Preserves client continuity and culture.
External Sale
Sell to an RIA, consolidator, or strategic buyer.
Can bring higher multiples, but client experience depends on buyer fit.
Merger/Acquisition
Combine with another practice for scale.
Creates growth opportunities while solving succession.
Wind-Down
Least desirable; client assets walk, and enterprise value is lost.
Valuation Multiples in Succession
Fee-based firms: Often valued at 2.0–3.5x recurring revenue.
Commission-heavy firms: Closer to 1.0–1.5x recurring revenue.
Multiples rise with: younger client base, higher % of recurring revenue, strong growth, and team infrastructure.
(For context: See ThinkAdvisor’s coverage of DeVoe Deal Book 2024).
How Clients Factor In
Clients want to know their wealth will be cared for after their advisor retires.
A clear plan reassures them and strengthens loyalty.
Poor planning creates attrition risk.
Communicating succession early can mean the difference between 70% retention and 95% retention.
Why Independence Creates More Options
W2 Advisors: Don’t own their book. Firms typically reassign clients when an advisor retires. No equity, no sale proceeds.
Independent Advisors: Own their practice. They can sell externally, merge, or create an internal succession — often capturing 2–3x annual revenue in enterprise value.
Conclusion
Succession planning isn’t optional anymore — it’s essential. Advisors who fail to plan risk losing client trust and leaving wealth behind. Those who prepare create continuity for clients, stability for their team, and a financial exit that rewards their life’s work.
Next Step: If you don’t have a written succession plan, start now. The best time to plan is long before you need it.
