Financial advisers aren't getting any better at finalizing their succession plans, but there are some signs that a growing number are at least starting the process.
In a survey of 502 RIAs conducted by TD Ameritrade Holding Corp., only 40% of the respondents said they have a finished succession plan. That's about the same percentage as in 2010.
This year, an additional 22% said they are developing one, which is way up from only 4% who said so last year. Maybe it has to do with the fact that 50% of those surveyed would like to retire within 15 years.
Still, putting together a solid succession plan isn't easy. Ask Becky Baldus, a Knoxville, Tenn.-based financial planner, who is looking for someone to succeed her eventually.
She hasn't had much success yet.
For smaller practices such as Ms. Baldus', which manages $30 million in assets, written plans are a rarity, according to another survey of 166 advisers conducted online in September by Ms. Baldus' own broker-dealer, Securities Service Network Inc.
Only about 12% of practices that bring in less than $100,000 in gross annual revenue have a written retirement plan, according to those surveyed. Even at $1 million in revenue and up, only 44% said they had a written plan in place.
RELATED ITEM Why employees leave advisory firms »
A big reason according to both surveys is the lack of an heir — or heir apparent.
“If my son had chosen to go into this business, I would have gone with him,” she said.
RELATED ITEM What top RIA execs make »
Ms. Baldus used to have a succession plan with a fellow planner that used the same broker-dealer. Then, she changed broker-dealers again, while her potential successor did not. Thus, that deal was no longer workable, said Ms. Baldus. She doesn't want her clients to have to change broker-dealers when she leaves the business.
“My concern is not to maximize the value of my practice, it is to find someone capable of stepping right in,” she said. “You want someone younger than you, with an established business, who you are confident in. Finding that someone is not easy.”
