Demand is skyrocketing for strategies for older advisors to sell their firms, according to firms offering succession planning.

Pensionmark, a financial advisory network that specializes in retirement plans, is one of the latest to develop a plan for owners of small firms to slowly leave the business.

Pensionmark Retirement Group created its Practice Acquisition Group for advisors who are interested in selling all or part of their business or in creating a formal intention to sell with a predetermined target date and price. Pensionmark buys smaller firms or sets up an agreement so the firm owner can gradually sell the firm.

“In over 25 years in this industry, I have never seen such an interest by advisors to implement transition strategies, which was the driving force behind creating this solution,” Troy Hammond, Pensionmark’s president and CEO, says of the Practice Acquisition Group.

The Practice Acquisition Group also helps advisors with partial buyout strategies, says Pensionmark, which is based in Santa Barbara, Calif.

“We are finding more and more advisors who are getting ready to retire and who need a plan,” says Michael Woods, managing director of Pensionmark. “What the advisors usually do is say they want to retire in two or three years and they want to make sure someone is taking care of their clients. Pensionmark wanted to actively reach out to advisors to let them know this is an option.”

The one- and two-person shops have the hardest time transitioning, says Jeremy Kisner, senior wealth advisor at Surevest Wealth Management in Phoenix, Ariz., which is also reaching out to acquire small firms, while letting the owners continue to work as long as they want.

Kisner says selling a small firm outright is often not the best option because buyers are difficult to find and the firm frequently does not bring top dollar when the owner wants to sell.

Surevest has created a revenue-sharing partnership that allows small firms to join Surevest but retain their independence. The smaller firm pays 50 to 75 basis points to use Surevest’s technology, compliance and marketing capabilities. Partnerships with two small companies have been completed so far.

The average advisory firm owner is 58 years old and a majority do not have plans for their own retirement, according to several studies that have been conducted recently. Because of this lack of planning, 99 percent of independent financial services and advisory practices go out of business when the founder retires, says FP Transitions, a Oswego, Ore.-based firm that specializes in valuation and transition planning for advisory firms.

Succession planning needs to be viewed as a growth period for a firm, not as a retirement strategy for the owner, says a recent study by FP Transitions and SEI, a financial services company based in Oaks, Pa. Last month, SEI announced its Business Pathfinder Program, in partnership with FP Transitions and The Bancorp.

The fact that advisors do not have an exit strategy means they “are missing out on reaping the full rewards of the value they have spent years building in their firms,” says David Grau Sr., president and founder of FP Transitions, and author of Succession Planning for Financial Advisors.

Selling a firm for the highest value usually requires structuring a sale over a period of time so that  the owner, staff and clients benefit, says Brad Bueermann, CEO of FP Transitions.

“Advisors work 20 or 30 years to build a business; they do not want it to die,” says John Anderson, managing director of practice management solutions for SEI. They also have clients who are the same age who are planning to live for another 20 or 30 years and the clients want to know who is going to manage their money. “We have to get advisors into a business mindset rather than a financial advisor mindset,” he said.

The lack of transition planning at advisory firms is a problem for the entire financial planning industry, says David DeVoe, founder of DeVoe & Company in San Francisco, which helps wealth management firms optimize their business decisions.

“It is better to put a plan for continuity and succession in place, whether you are 75 or 31,” DeVoe says. “More clients are asking what happens to them if something happens to you. It shows the clients you are thinking of them if you have done the planning.”