Advisors succeed in creating wonderful plans for their clients, but are failing to plan for themselves—and that could cost them when it comes time to sell or transition their practice, according to a new Fidelity study.

According to research from Boston-based Fidelity Clearing and Custody Solutions, few RIAs are able to calculate the value of their business.

“There’s an opportunity for advisors to look at their businesses more like investors looking at a company or fund,” says David Canter, Fidelity’s executive vice president of practice management and consulting. “They should look at their business with the objectivity of a venture capital or private equity firm and beyond a multiple of earnings.”

Furthermore, the Fidelity RIA Benchmarking Study found that many advisors don’t prioritize increasing their firm’s value, which may lead to lower-than-anticipated prices when they eventually sell, merge or transition the business to successors.

“RIAs should be asking themselves what their unfair advantage is,” Canter says. “Growth is hard, it takes focus and effort. A lot of the firms out there are growth voyeurs. They like to talk about growth, but at the end of the day they don’t take action.”

While 72 percent of high-performing RIAs have a strategic plan, only 44 percent of the study’s total respondents had such a plan.

“These firms have been actively planning for their future,” Canter says.

According to Fidelity’s research, 38 percent of firms report having a strong grasp on what drives firm value. Among “high performing firms” who outperform their peers in areas of growth, productivity and profitability, 48 percent report having an advanced understanding of the factors that drive value.

“Don’t wait until it’s too late: Engage a third party now and get an honest valuation,” Canter says. “Third-party valuations are preferred. Internal metrics are more susceptible to inaccuracies and biases.”

The high-performing firms were also more likely than their peers—75 percent versus 61 percent—to have an agreed-upon mechanism for determining value.

“Each of them have found an advantage and are no longer thinking of value in terms of a multiple of EBITA,” Canter says. “They’re also conducting demography analyses as part of their valuation process.”

Fidelity argues that firm value is derived from eight factors: Size, revenue growth and structure, organization, leadership, capabilities, client experience, cost structure and client demographics.

“We believe that demographics are starting to catch up to RIAs and more firms are going to start planning,” Canter says. “They’re going to be buyers, sellers or those who decide that their business will endure and have next generation and ownership.”

Canter says that RIAs aren’t developing next generation talent—while 59 percent of high-performing firms reported having next generation advisors as equity partners or owners, just 21 percent of respondents overall said the same.

“If there’s no way to help these next generation advisors buy into the firm and then to become liquidity sources for you, you’re going to be faced with being a seller or the business won’t survive,” Canter says. “You have to think of leadership as an intergenerational issue.”

At the same time, firms are dealing with an aging client base, Canter says. “RIAs have to understand that they have concentration risk. They need to think about how they can engage with younger clients, starting with the children and the grandchildren of their existing clients so they can build a pipeline. What’s getting them their revenue today won’t get them their revenues tomorrow.”

RIAs might have to alter the way they do business to attract enough next generation money to soften the impact of impending retirements, changing their service model and offering.

“They won’t be able to continue servicing aging clients with large accounts, and therefore they won’t be able to assess a fee for managing assets,” Canter says. “Successful advisors are targeting clients with minimums below what they usually require. To secure their future, they’re filling their client pipelines with high-earning investors who, with the help of their advice, will become those larger accounts.”

In general, RIA benchmarking study respondents still charge their clients an asset-based fee, Canter says, but new assets from existing clients are no longer the major drivers of revenue growth, accounting for nearly 6 percent growth in RIAs and almost 8 percent growth for high-performing RIAs between 2011 and 2014.

Instead, assets from new clients were the leading cause of growth for RIAs between 2011 and 2014, accounting for nearly 10 percent growth overall and 11 percent growth for high-performing firms. Market performance was the second-leading driver of growth, accounting for more than 7 percent growth for RIAs in general and almost 9 percent growth for high-performing firms.

Withdrawals from existing clients, on the other hand, became a noticeable sandbag on growth in the same three-year period, accounting for a 4 percent reduction in assets for high-performing firms and an almost 5 percent reduction for RIAs in general.

“The source of consolidation with existing clients has been exhausted and there hasn’t been much in terms of new asset flows,” Canter says. “By moving into new markets and new market segments, advisors are finding more success. They should absolutely consider serving younger clients with lower minimums, and if they have younger advisors in the firm, allowing those clients to be training ground. It won’t work for everyone, though. It has to be done in line with the firm’s strategy because there are a host of other issues that can come into play, like brand.”

Canter says that firms should also consider diversifying the services they offer to clients, and make sure that their clients are aware of opportunities for advice. The benchmarking study found that clients are accessing RIAs to take advantage of their investment management, retirement planning and tax planning expertise, but that advisors’ skills in estate/trust planning, risk/insurance planning, lifestyle management and philanthropic planning were underused by clients.

“I think that RIAs need to be better at understanding their abilities as a firm and communicating those to their clients,” Canter says. “They should also consider satisfaction surveys and ask for feedback from their clients. It could be that advisors are learning these skills, but might not understand what direction client needs are taking.”

The 2015 Fidelity RIA Benchmarking study was conducted between April 21 and June 15, with 441 firms participating.