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As a growing portion of the advisor workforce reaches retirement age, professionals will need to establish a plan — either training up the next generation to take over their business or positioning the company to attract the right buyers.
“More advisors are talking about succession planning,” Anh Tran, Managing Partner at SageMint Wealth, said. “I think it’s becoming a much hotter topic. Many advisors think they will work forever, but that’s not a plan.”
The industry is set to face a wave of retirements in the next decade, with more than one-third of advisors expected to retire in the timeframe, data projections by Cerulli show. Of those advisors planning to retire, 15% expect to sell their practice externally. Estimates are even higher for retiring advisors at independent RIAs, where 33% of this retiring cohort expects to sell, according to the July report.
Tran notes the myriad of factors advisors should consider before retiring.
“When do you want to retire, and what does that look like? What does that exit plan look like? Are you looking to sell to another firm? Do you want to exit immediately?” Tran said.
“I’ve experienced this first-hand because I acquired a business from advisors that were in the (industry) for 30 years. I would say advisors are thinking about this more than they were around 20 years ago,” Tran added.
“I do know quite a few advisors that are going the route of training a next gen advisor who will eventually take over one day. Another (thing to consider) would be finding someone to acquire your practice and identifying who that buyer might be,” she continued.
“Make sure it’s the right fit. The core values have to be aligned, the way you service clients has to be aligned, the business models have to be aligned. Some firms are very transactional or brokerage-based and there could be an issue (transitioning) over to a planning practice,” Tran said as an example.
“For instance, (at my firm) we are very comprehensive and do tax planning, estate planning and retirement planning. I also think there are ways to create more value in your business before trying to sell. Consider, what can you do to add more value to your business so you get as high a valuation as possible,” she added. It’s a process Tran believes advisors should be thinking about around 10 years before an actual transaction takes place.
10% of Practices to Transition
In 2025 approximately 10% of advisors expect to transition their practice, either by consolidation or “individual decisions to move firms,” the Cerulli report found. “These transitions are expected to continue at a high pace in the coming years, primarily driven by M&A activity and a wave of retiring advisors,” the report said.
Cerulli’s report revealed that, amid firm transitions, advisors can face asset losses: “[A]dvisors who switch between broker/dealer firms typically lose about 22% of their assets. Those moving from a (broker/dealer) firm to an independent firm lose around 18%, while advisors transitioning from one independent firm to another lose about 11% of their assets,” the report said.
Tran notes that advisors planning a retirement that will encompass M&A need to leverage outside help — which she did when acquiring her own advisory business.
“100 percent, they should try to get help. I know a lot of advisors think they can do everything, and they cannot. I’m a licensed CFP and an attorney, and I used help,” Tran said.
“I’m now part of LPL Financial, and they have in-house teams that will help with transactions such as mergers and acquisitions,” she said. But if advisors don’t have in-house resources, they’ll need external advice to help with legal paperwork, valuations and other aspects of the transition, she added.
“There are very few people I know that go through this type of transition without getting help from some sort of resource,” Tran said.
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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The views presented here do not necessarily represent those of Advisor Perspectives.
