It’s Time RIAs Got Serious About Succession Planning

According to Gary Stern at RIAIntel, Registered Investment Advisors (RIAs) spend their careers helping clients to achieve and maintain strong financial health. Yet many RIAs give little thought to protecting their own financial health through the creation and implementation of succession plans.

A range of factors is at play:

  • Many advisors are working well past retirement age — even into their 70s — and have no plans to retire
  • Other advisors feel that the informal succession plans they’ve created will suffice
  • Some advisors have given little thought to their own mortality, choosing to bury their heads in the proverbial sand

But when advisors become incapacitated suddenly, or pass away, a whole host of issues arrises. Clients wonder how to access their assets and financial plans — and find a new advisor whom they can trust. The advisor’s own financial future — and the future of his family and loved ones — is in jeopardy, too.

Since many advisors are at or above 52 years of age, and 40% of advisors are expected to retire within the next 10 years, experts recommend that advisors take steps sooner — not later — to protect their books’ values. “A seller’s market will turn into a buyer’s market,” cautions Marina Shtyrkov, a Boston-based research analyst at Cerulli. And that potential glut of financial practices saturating the market as more analysts retire will shrink the value.

One way to preserve a book’s value, protect valuable client assets and the analyst’s own best financial interests is for those analysts without a concrete succession plan to take steps to create one — admittedly a challenge for those solo practitioners outside larger cities or working in remote zip codes. But while a challenge, it just makes good financial sense to make the time to create and put that plan in place.

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