Prompted by the graying of the financial advisory industry, plenty of ink has been spilt in recent years over the topic of succession planning. Yet despite all the attention, independent advisors are still not taking the issue as seriously as they need to. According to industry research from Cerulli Associates, nearly 100,000 advisors will retire within the next ten years, yet the FPA Research and Practice Institute notes that only 25 percent of that group has succession plans in place.

Why such abysmal preparedness? There are a few theories.

Many advisors, whether young or old, think succession planning is pointless because they plan to stay in business for years, if not decades, to come. Others find that putting together a succession plan is simply too tedious and time consuming. They would rather focus their energies on meeting with clients and growing their business.

And then there’s the psychological factor. As entrepreneurs with a passion for their business, many independent financial advisors find it too difficult to think about relinquishing what they have built.

But whatever the reason, these independent financial advisors are doing both themselves and their clients a great disservice by not taking this industry-wide problem with a greater sense of urgency.

To get started on the path to creating—or perhaps refining—your own succession plan, consider the following six questions.

1. What Are Your Goals?

Every advisor has different goals and expectations for retirement. Think about what your ideal exit from the business would look like. Do you want to sell your business outright or groom your successor gradually? Likewise, do you want to fully retire or does working part time seem appealing? Obviously, there are other important questions to mull, but once you get more comfortable discussing your exit strategy, it will be easier to put together a succession plan that reflects what you are trying to accomplish in retirement.

2. What Type Of Deal Structure Are You Comfortable With? 

Client retention is perhaps the most important consideration when deciding what type of succession will work best for your business, and grooming a junior advisor typically yields the best retention results. Clients are more familiar with such professionals, making the transition more natural and seamless.

There are, however, other options. Selling to a like-minded colleague is common, but those transactions sometimes involve parties of a similar age, meaning the buyer’s own retirement could effectively shadow the seller’s. “Sell and stay” is another strategy. In such an arrangement, the selling advisor maintains a role in the business for a few years to help with client retention efforts, while receiving a salary or a share of revenue.

3. What’s Your Timing?

While most advisors associate transitions with planned exits, succession plans also serve to protect against an unexpected death or disability. Otherwise, your business could end up being sold for a fraction of its worth.

For planned exits, you will need to include a realistic sense of timing. Many advisors believe the process of successfully implementing their succession plan is one that can be accomplished in a few short weeks or months. But the process frequently is much more drawn out than that, oftentimes stretching out over a period of many years, which demands a sense of urgency for getting started today.

4. What Can You Do Today To Maximize Your Firm’s Value?

Determining what your practice is worth is as much an art as a science. While quantitative metrics—such as revenue and assets under management—are naturally part of any appraisal, other, harder-to-measure variables, should also be considered. Examples include whether your firm serves a highly sought-after niche market or the quality of your customer relationship management (CRM) systems. Advisors need to know what clients and technologies are helping them drive the most revenue.

5. How Will You Tell Clients?

There is no hard-and-fast rule for sharing your succession plans with clients. Many advisors choose to send a letter. Others prefer to communicate in a more intimate, face-to-face setting. Whatever approach you choose, it’s important to keep things at a high level, avoiding too many details while stressing that there is a plan in place to both help protect their interests and ensure their account’s continuity.

6. What Will Implementation Look Like?

During the implementation phase of a succession plan, problems can arise between the buyer and seller when expectations don’t match reality. For instance, it can become problematic when sellers choose not to attend meetings. Similarly, departing advisors may feel they are being sidelined too quickly. Detail what the first six months of the transition should look like in an addendum to the purchase agreement, clearly outlining the roles and responsibilities of both parties.

Succession planning can seem like a bewildering, never-ending task. But it is something that every independent advisor, if they haven’t already done so, needs to get started today. It’s the best way to protect your clients, secure a comfortable retirement and provide for your beneficiaries.

Melissa Mrazek is vice president of practice management at National Planning Holdings, Inc., the nation’s fourth largest network of independent broker-dealers.