It likely came as no surprise that 94 percent of advisors haven’t completely solidified their succession transition plan, according to Kestra Holdings’ Bridging the Gap report. Various members of the industry have been blowing the whistle on this issue for a few years now. But really, this is more like a dog whistle than anything else.
Succession planning isn’t something that’s black and white; advisors don’t either retire or not. There are many shades of gray in there that include maintaining a lifestyle practice for as long as desired.
Advisors and some industry members have been peddling the doomsday, “have a succession plan or else” language for a few different reasons. One of them could be that they want to fuel more mergers and acquisitions, which have run at historic highs over the last several years. Advisors should be wary of messages about succession planning from firms or professionals who could stand to benefit from increased deal activity.
Another reason is that in financial advice things, can often seem black and white. Of course you should invest in a 401(k). Annuities are bad. Those aren’t absolutes, although they have taken on that flavor.
In the same manner, it is not an absolute for an advisor to have to sell their practice or transition it to a junior advisor. Just as a do-it-yourself homeowner figures out which renovation projects to tackle in what order with their own tools and when to hire a contractor, advisors should assess which parts of their practice they genuinely enjoy and which tasks they’d be better off delegating.
To do this, advisors could focus their book of business, if they haven’t done so already, to include only those clients they most enjoy or otherwise want to continue serving. Then, rather than sell their whole practice to an aggregator, the advisor can find a like-minded ensemble practice, fractional service providers, or an open-architecture registered investment advisor (RIA) to partner with for support.
There, they can receive compliance, marketing and other assistance, outsourcing the parts of their practice that they don’t enjoy in favor of a steady revenue stream and having the work-life balance that they would like to achieve. Advisors can not only practice in place but also practice in peace, where they can run their business as they like without having to adapt to new tools, etc.
In partnership with Nitrogen, Devoe & Company issued the 2025 Firm Growth Study which showed that most advisors are 10 or more years away from retirement; 35% of those anticipate that increasing their organic growth rate will have the most sizable impact on their future valuation.
That may be true, but advisors also don’t need to grind themselves into the ground to make top dollar when they officially want to sell. Instead, they can ignore the dog whistle, maintain a healthy business for as long as they want and then either find a successor within their RIA, select a successor elsewhere (there are a few social and technological solutions to help there), or sell the still-valuable firm.
Andrew Evans is the founder and CEO of Melbourne, Florida-based RIA Rossby Financial.
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