“If you don’t know where you are going, you’ll end up somewhere else.”
– Yogi Berra
The financial advisory industry is at a pivotal moment. Whether you’re an advisor early in your career or a seasoned professional, one question deserves immediate attention: What will happen to my firm in the future, and what can I do today to secure that future for my clients, team, and family?
With over 35% of financial advisors planning to retire within the next five years and another 33% within the following decade, the urgency for actionable succession plans has never been higher. Yet, the majority of advisors lack a clear path forward, putting their firm’s legacy–and their clients’ trust–at risk.
For smaller advisory firms, this creates an unmatched opportunity to join forces with established RIAs, benefiting both advisors and their clients while securing a prosperous future for all stakeholders. Below, we discuss seven commonly asked questions about how best to think about this “once in a lifetime opportunity.”
Even if you’re in your 30s or 40s, planning for your firm’s future is crucial. Building a high-value practice takes years of strategic effort, operational excellence, and investment in people and processes. The earlier you begin aligning your goals with the realities of succession planning, the more options you’ll have.
For younger advisors, aligning with an RIA through a minority stake sale (10-25%) or a full acquisition can accelerate growth while providing financial stability. RIAs offer resources and scale that can help you build an enduring practice without the administrative and operational burdens that often stifle expansion.
For advisors in their 50s or 60s, the need for action is even more immediate. With the average advisor age at 57 and successful succession plans requiring 3–5 years of preparation, now is the time to start planning a seamless transition. Partnering with an RIA ensures that you maximize your firm’s value while securing its legacy.
For years, many advisors chose to "die at their desks" because selling their firms yielded suboptimal returns. Today, the landscape has changed dramatically. You can continue to work in your practice after you become wholly owned; it’s just now a lot of the headache of ownership is gone and you have diversified what is likely to be your largest asset.
Acquisition multiples have risen to 4-7x revenue, with deal structures offering a mix of upfront payments, retention bonuses, and earn-outs. These terms allow you to transition at your own pace while securing significant financial rewards.
Consider these real-world examples:
● A $1.6M revenue firm secured a $12.1M all-in offer, including a $4M upfront payment, a $250,000 annual salary, and $8M in bonuses and earn-outs over five years.
● A $3.3M revenue firm received a $29M offer, with $20M upfront, $250,000 annual salary, $8M in bonuses, and a five-year pension plan tied to gross revenue generated post-retirement.
These structures reflect a shared commitment to growth and client continuity, ensuring sellers, buyers, and clients all benefit. For advisors, this is not just a financial transaction – it’s an opportunity to amplify the impact of their life’s work. But to be clear, these deal structures are so comprehensive and generous, they all but replace an advisor’s current and potential future income when one considers all aspects of the deal structure.
Rather than hanging on to the last second (and driving down the value of your firm in the meantime), consider how a partnership with an RIA can provide both financial stability and the freedom to enjoy the next phase of your life (whether that is continued working or retirement).
It’s natural to question the wisdom of selling when your firm is growing, profitable, and highly valued by clients. Why disrupt a business you’ve worked so hard to build? The answer lies in today’s deal structures.
Modern acquisitions are designed to reward advisors for future growth. RIAs often include performance-based incentives in their agreements, ensuring you benefit from your continued efforts post-acquisition. Not incidentally, multiples are at all-time highs, providing a significant opportunity for the advisor selling his practice.
Additionally, the support and resources provided by an RIA can enhance your growth trajectory. By offloading operational tasks, accessing advanced technology, and leveraging the RIA’s scale, you can focus on what you do best – serving your clients and growing your business. And enjoying the peace of mind that goes with outsourcing low-value responsibilities while ensuring that your biggest asset is protected and monetized.
Many founders hope to transition ownership to G2 advisors, believing this route ensures continuity and client satisfaction. However, financing and operational challenges often complicate this plan.
Younger advisors may hesitate to take on the financial burden of purchasing a firm, especially larger practices commanding higher valuations. Moreover, they may lack the experience or desire to handle the complexities of ownership.
By partnering with an RIA, you can eliminate these barriers. RIAs provide G2 advisors with better compensation, career development opportunities, and operational support, while ensuring a seamless client experience. In many cases, G2 advisors welcome the stability and growth potential an RIA brings to the table.
For younger advisors, aligning with an RIA can fast-track growth by leveraging the RIA’s resources, technology, and expertise. This allows advisors to focus on client relationships and business development while offloading operational and administrative burdens.
For seasoned professionals, aligning with an RIA ensures a seamless transition while maximizing the value of their firm. With modern acquisition terms offering upfront payments, retention bonuses, and earn-outs, advisors can secure financial independence while maintaining involvement in their practice’s success.
From a client perspective, partnering with an RIA ensures continuity of service, enhanced resources, and access to a broader range of expertise. This not only strengthens client trust but also positions the practice for future growth and success.
For RIAs, the opportunity to consolidate smaller firms is now. The industry’s shifting demographics, coupled with increased access to private equity capital, have created a perfect storm for acquisitions. By acting today, RIAs can capitalize on this momentum, expand their market share, and solidify their position as industry leaders.
The message is clear: waiting is not an option. The time to act is now. Whether you’re building your legacy or looking for the next chapter, this is the moment to take the next step in diversifying your wealth and securing the future of your practice.
Debra Taylor is the managing partner and chief tax strategist of Carson Group and Carson Wealth location in Franklin Lakes, a full-service wealth management firm located in New Jersey.
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