Advisers still have a really big succession problem

73% don't have a written plan in place, FPA study finds

Apr 25, 2018 @ 12:30 pm

By InvestmentNews

Financial advisers continue to find succession planning difficult, with 73% not having a written plan in place, according to a new study by the Financial Planning Association and Janus Henderson Investors.

The results, little changed from a similar study conducted in 2015, also found that 60% of advisers who are within five years of retirement lack a succession plan, as do 87% of advisers at firms with less than $50 million in assets under management.

The study, "The Succession Challenge 2018: Why Financial Advisers are Failing to Plan for the Inevitable," found that while 95% of financial advisers admit there is some level of risk in not having a plan, they face several challenges in putting one together. First, only 11% of all advisers said they have clear plans for their own retirement, and 51% say the biggest challenge is finding the right successor or partner.

Most advisers (67%) worry that their business will not be as successful if they are not there, have a hard time thinking about moving on from the business (63%), and are not sure they are personally ready (61%).

"It's clear from the research that while we know we need to take the steps necessary to develop a plan, some of us struggle with how to approach it or have significant personal obstacles that might impact our ability to get the planning done," said 2018 FPA President Frank Paré.

While most advisers have no succession plan, 61% have a goal for the value of their business, and a majority (60%) feel they are on track to meet that goal.

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