Independent RIAs nearing retirement have grown more active in developing a formal succession plan that includes the naming of a successor, according to a survey by TD Ameritrade Institutional.

Sixty-two percent of advisors said they have or are in the process of developing a succession plan, up from 43% in 2010, according to the survey. Advisors indicate that satisfying client expectations (66%) is the top reason for crafting a succession plan, followed by supporting the long-term viability of the firm (51%) and providing a smooth transition into retirement (49%).

Advisors without plan cited the difficulties in identifying an internal successor (53%) and lack of time to develop a plan (21%) as among the reasons why.

"With the average age of survey respondents being 54 years, there is clearly an immediate need for formal succession planning," said George Tamer, director of strategic relationships for TD Ameritrade Institutional. "We're encouraged by the survey results, which show advisors are taking steps to create formal succession plans. They are concerned about who is going to care of the businesses they've built and the clients who depend on them."

The survey was conducted by Maritz Inc. on behalf of TD Ameritrade Institutional with 502 RIAs participating in a telephone survey from August 15 to 26.

Finding an internal successor was the preferred exit strategy for half of the respondents, followed by selling the practice (11%) or merging with another firm (8%). Nearly a third of advisors with succession plans have not yet decided which succession option they will implement.

Eighty-five percent of RIAs said their retirement timelines are on track, while 13% said they will work longer than expected. Only 2% said they will retire early.

"Turning the reins over to the next generation is critical to the long term viability of a firm,'' said Tamer. "A firm with an aging client base may suffer from a lower valuation and should consider attracting younger advisors and younger investors to establish a lasting legacy."

Fifty percent of the advisors said they have current employees in mind as succesors, while 42% said they will recruit from another advisory firm.

-Jim McConville