Succession Planning: A Critical Step to Take

Succession PlanningFor a relatively young profession, independent financial planning has a disproportionately high number of older practitioners. In fact, studies show that the average age of the more than 100,000 independent financial advisors is over 50!*

So it’s troubling to discover that the men and women whose business is helping clients develop a financial plan that will ensure present well-being and a secure retirement, are among the least prepared for their own financial futures─not to mention those of their firms.

If we’re talking to you, don’t be surprised. This oversight puts you among the majority of your peers. A recent survey of independent advisors found only 28.7 percent of respondents had created or were currently thinking through a succession plan.**

Unfortunately, it doesn’t take a CFP to calculate the risks such short-sidedness carries for your clients, your family, your employees and yourself. Despite the aging of the independent financial advisor community, most still fail to focus proactively on succession.

Younger practitioners are equally at fault. You undoubtedly advise young adult clients to plan for the future. But according to the survey, less than 25 percent of advisors with more than 15 years to retirement have a well-defined—or ready to be implemented—succession plan. And there are equally striking statistics detailing the gap between planning and execution.

Remember, too, that FINRA only allows commissions and advisory fees to pass through to a non-registered spouse in the event of death or disability if a written agreement was in place while the rep was still alive (and registered).

Planning for clients is one challenge. Succession planning is a different kind of hurdle. Your major options are an internal succession, sale to like-minded advisor or sale to a financial institution or aggregator. To maximize your net worth, protect your business, and insure your family’s financial security, Summit has developed a two-step succession process. The first step is Summit’s Continuing Commission Agreement which provides continuous compensation upon retirement, disability or death. The second step is working with our team to develop a comprehensive valuation and succession program. The choice is yours, but no matter which option you elect, Summit Brokerage can help you plan and execute this critical final step.

For more information on Summit Brokerage Services, an independent broker-dealer, visit or contact us at (800) 354-5528.

*Cerulli Quantitative Update 2010

**Source: Moss Adams /Investment News
2010 Financial Performance Study of Advisory Firms

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