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Financial planners lagging behind on Succession Planning

Succession and Exit

Financial planners lagging behind on Succession Planning

By , February 18, 2016

According to Money Management, nearly one quarter of financial advisers industry wide in the United States plan to retire or depart the industry within the next decade, but only one-in-three practice owners have a succession plan in place, a US study reveals.

State Street Global Advisors’ ‘The Adviser Retirement Wave’ report, also found advisers who planned to retire within two years had the same low levels of succession planning as those who were a decade away from retiring.

“Advisers who fail to implement a succession plan risk losing both existing and potential clients due to concerns that the adviser may sell or retire in the near future with no obvious successor line up,” the report said.

“But with a succession plan in place, advisers can demonstrate to clients that they have made plans to help them successfully transition their affairs when they ultimately exit the business.”

Around 70,000 advisers controlling more than $2 trillion in assets under management said they were likely to retire over the coming decade in the US, but only 66 per cent had only a partially completed plan.

Advisers had three succession planning options: find an internal successor, merge with another firm, or sell their businesses.

But the report warned it would take a minimum of five years to find and train an in internal successor, while in cases of a sale, it would take at least 18-24 months to find an external buyer, negotiate the deal, and close the deal.

Finding a merging partner with similar investment philosophies and service methods was a challenge, and if advisers do not find a partner with the right cultural fit, the firm risked both employee and client attrition following the merger, the report warned.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.