Cetera is developing specific transition models advisors can use, “and advisors will be able to finance [a succession] through us,” says Larry Roth, chief executive of Cetera Financial Group. “We’re spending a lot of time on this,” he adds.  “There’s a huge opportunity there.”

LPL Financial is “actively involved in identifying potential buyers, valuing practices, and when the time comes to retire and monetize it, we are increasingly financing that acquisition,” says Bill Morrissey, managing director of independent advisor services at LPL.

H.D. Vest, which caters to tax preparers, has built an in-house succession team that did about 50 practice transitions last year, although some of those were emergency situations where an advisor died or was incapacitated, Ochs says.

Cambridge Investment Research has hired a recruiter and an acquisition specialist, and has a funding solution called Continuity Partners Group, a separate partnership of mostly Cambridge-affiliated advisors that extends loans for buyouts.  “More and more, our advisors are coming to us for help in finding a successor,” says Amy Webber, Cambridge president.

Goad thinks firms should forget about grooming new entrants as successors (it’s too hit-or-miss) and recruit younger but experienced advisors to take over. He expects to see recruitment efforts change as a result, moving away from the “revolving door” approach and focus more on next-generation recruits who can buy into a larger and older practice, using the value of the book they bring over along with some cash.

Another tactic that National Financial has seen work well, according to Mirchandani, is to recruit people who have financial experience in adjacent industries, like banking or accounting. But finding good candidates is still a challenge. Many young people associate Wall Street with dicey characters they’ve seen in the movies like The Wolf Of Wall Street, and they don’t often see attractive career tracks at small independent firms.

“You have to find people with the interest, and there are not enough,” Curtis says.
 

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