How To Plan For Your Succession As A Financial Advisor

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As a financial advisor, you’re in the business of planning for your client’s future, but are you planning for your own? 

Here at Consolidated Planning, we lead with a planning philosophy that puts the client first, challenges conventional wisdom, and contrasts with the transactional nature of the industry.  

This philosophy of planning extends to the trajectory of our financial advisors career as well, helping to provide a clear road map from day one as a new advisor through the process of exiting their practice. 

If your goal is to build a thriving practice, understanding the role of a thoughtful succession plan might be right for you to explore.

What Is Succession Planning? 

Succession planning is the process of exiting your practice, often time your life work, on your own terms. Your own terms include, selling to who you want, for the amount of money you want, and within the time period you want. 

Your decision to implement a succession plan is done under the understanding that you will exit your business for one of three reasons. 

  • Everything goes well, is ideal and you retire on your terms 
  • Everything doesn’t go as planned and you unexpectedly pass away 
  • You have a change in health and are unable to do the job for whatever reason 

Practice what you preach and protect your asset that is your practice in a few simple steps before it’s too late. 

4 Steps To Your Succession Plan As A Financial Advisor 

The path to your custom succession plan will take into account the value of your business, the people around you, the structure of your practice, and of course, choosing a succession program right for you. 

Step #1 Evaluation 

Your largest asset is likely the practice you own. Evaluating and understanding what your practice is truly worth today is in your best interest. 

Just as homeowners hop onto Zillow to see the estimated value of their home occasionally, knowing the value of your practice arms you with necessary knowledge for selling it. 

So, what determines the worth of your practice? 

  • Anticipated future revenue 
  • Average age of your clients 
  • Average account size
  • Average revenue per household 

A third party valuation firm will conduct a comprehensive valuation, and provide clarity on how to increase the value of your firm.  

For instance, revenue from advisory business is often more valuable than mutual fund revenue.  And having advisors on your team that are junior to you, often enhances value versus you being the only advisor with all relationships dependent on you. 

Step #2 Deal And Practice Structure 

While structuring your deal is a highly customized solution based on your market valuation and your desires and goals, they are two standard structures. 

  1. Performance Based Promissory Note: You receive the sale value at closing, and there may be an earn out or residual income based on the nuance of what you desire. 
  2. Revenue Sharing Agreement: This option runs the risk of an up or down market between the buyer and the seller, creating a safe and fair agreement with respect to market fluctuations.

With either option, many financial advisors usually include a down payment component, which can be anywhere from 0-30% of the total purchase price, on average. This is not a requirement and down payments can differ. 

As a financial advisor considering your succession plan, you are likely one of three kinds of advisor structure: 

  1. Solo advisor that has a team of administrative team members 
  2. Lead advisor that has junior advisors, and has administrative team members 
  3. Two or more lead advisors, where each advisor has a complimentary unique ability to the other, and has administrative team members

Each of these different structures creates its own opportunities and challenges – both for the buyer and the seller. How can you best position your practice and its structure for maximum value and business continuity? 


By finding the right people to fit into your practice, the better the outlook for your practice once you exit. 

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Step #3 People 

There is an African Proverb that goes, “If you want to go fast, go alone, if you want to go far, go together.” The people you choose to surround yourself and your practice with are a huge factor in your success today but also in the future

The thing is, finding the right team of people to ultimately succeed you is a daunting task. This decision needs to take into account all stakeholders within your practice – current clients, staff, and any FR’s, since they will remain in your practice once you are no longer involved. 

We all know that one person doesn’t know how to do it all and they shouldn’t have to. For this reason you will need several individuals with complementary skill sets to handle the administrative side of your business and the practice growth and service side. 

Administrative: This person is responsible for keeping service levels where they need to be for existing clients and incoming clients. These tasks include:

  • Scheduling 
  • Client follow up 
  • Administrative matters 
  • Onboarding new clients 

Practice Growth and Service: This person is an advisor and that advisor is usually you and handles all things related to the well-being and growth of your practice. Matters related to growth include:

  • Finding clients 
  • Marketing efforts 
  • Executing the client experience 
  • Client retention 
  • Strategic planning 
  • Decision making 

With every task and interaction that goes into the success of your practice, you will need a many-to-one mindset. 

The exiting senior advisor has big shoes to fill. They have tenure, client relationships, have been through more downturns, and have more experience ‘running things’. 

Therefore, for every one tenured advisor exiting, it likely takes at least two junior advisors, but ideally three, to replace them.  Remember, not all junior advisors end up being what is needed to replace you – and all that you do.  You simply can’t rely on only one junior advisor replacing one exiting advisor. 

The good news is – nothing is hard with enough time. To solve the people part of your succession plan, it’s recommended to start the process 3-5 years before you plan to exit. And the team at Consolidated Planning can help with this. 

As a financial advisor at Consolidated Planning, you will work with The Marketing Administration and Practice Management Support (MAPS) team to help find advisors within the marketplace that are the best fit for you and your clients. Through various exercises you can hone in on the types of people you want succeeding you and carrying the torch forward. 

Step #4 Succession 

Depending on the terms of your succession, you will have planned for it as best as you can. 

  • If you retire on your own terms you can take your time finding the best successor and slowly plan to slowly transition your clients to your successor and their team. 
  • If you unexpectedly pass away your clients won’t have to wonder what will happen to their financial plans. 
  • If you have a change in health and are unable to do the job for whatever reason, you won’t be chaotically rushing through the process of finding someone to purchase your practice. 

Do You Need To Start Thinking About Succession Planning For Your Practice? 

Think about how much time and energy you’ve poured into your practice thus far. Wouldn’t you hate for all of that to be for nothing? 

While your succession plan will be highly customized to what your practice looks like and what your goals are, what’s important is that you plan for your succession. 

Having a succession plan in place ensures that not only your family will be taken care of once you exit your practice, but also your clients.  

It’s never too soon to start considering how you can build an optimal practice for your future succession. Reach out to our recruiters to start the conversation about support in your succession planning. 

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2023-151277 Exp. 2/2025

Published:  March 2, 2023