Financial advisory firm owners can increase the value of their firms before selling them, according to a study by NFP Advisor Services Group.

"It is no secret that succession planning is an important aspect of the wealth management industry, particularly at a time when one in 10 financial advisors is over 60 years old," said James Poer, NFP Advisor Services Group president. Advisors should take steps to maximize the value of their firms before transitioning to a new owner, according to the study.

Most advisors (70%) believe a successful transition will take five years or less. However, mergers and acquisitions consultants advise starting preparation for a transition 10 years before the transition, mostly to maximize the value of the firm.

Advisors who have more than three years to plan for succession should think in terms of managing expenses and maximizing profitability to increase the firm's value, as well as considering revenue and assets under management, according to the study.

For instance, if a firm has old technology or a weak operating model, the firm can change its operating infrastructure or outsource the technology. At the same time, if a firm has an aging client base, it can try to recruit younger clients.

Advisors with less than three years to a transition should focus on mitigating risk, such as assuring employee retention after a transition, according to the study. The firm also should have a valuation.

Retaining clients is one of the most important factors to look at both before and after a transition, according to the study. The goal should be to retain 90% or more of clients by giving them continuity in investment management, account access, reporting, product selection and communications.

Only one-third of firm owners have a succession plan in place, according to the NFP study, which was conducted by Aite Group. Of the two thirds that do not have a plan in place, more than half (54%) do not know what their practice is worth.

A succession within the next 10 years is expected by 40% of the firm owners, according to the study.

"Advisors that plan ahead and focus on enhancing the value of their practice today-with an emphasis on driving revenue up and keeping costs down-will be best positioned to optimize the trade-off between risk and return to achieve the best possible outcome when they are ready to enact the succession process," Poer said.