Competition in the financial advisory industry is becoming more extreme, profit margins are being squeezed and clients—especially the wealthy—are becoming increasingly circumspect, critical and demanding.

One of the most powerful drivers of change in this area is the desire among well-established and thriving practitioners to develop succession plans. Smart financial advisors are taking steps to ensure the long-term welfare of their clients and monetize their life’s work.

An increasingly common way many financial advisors are choosing to address their succession and monetization concerns is by selling their practices. It has become a seller’s market as strong economic conditions have prompted more buyers to emerge than ever before.

Historically, most transactions occurred as brokerage firms, private banks and wealth management firms recruited advisory teams from one another. Consolidators are also playing a bigger role than ever before. Financial advisors are talking to other advisors about joining forces through team lift-outs and acquisitions. Professional services providers, such as accountants, are expanding their footprint to engage with wealthier clients and generate new sources of revenue.

It is important to note that career succession is not the only thing fueling the increased interest in selling among financial advisors. In addition to providing a new home for employees and clients and getting an attractive payout, the sale of a practice can also be a financial and strategic way for advisory practices to meaningfully grow, with opportunities for greater control and a means to positively and cost-effectively increase assets under management.

Having critically evaluated many transactions involving the sale of an advisory practice, it is clear that a substantial number of sellers are shortchanging themselves. It is a classic case of the cobbler’s children with no shoes. While a good number of successful financial advisors have considerable experience helping their clients manage and sell companies in the most tax-efficient way possible, they often do not take the time to apply their skills and expertise to their own situations.

There are, of course, many cases where financial advisors do a brilliant job with the transition of their practices and manage to garner maximum enterprise value for their businesses, maximum personal wealth for themselves and their families, and maximum short- and long-term benefits for their clients. But the empirical evidence indicates that most financial advisors are not leveraging the proven wealth planning strategies and techniques that can be deployed in advance of a sale to streamline operations, boost sales price, mitigate taxes and, ultimately, position themselves and their practices for the best possible outcomes.

An even bigger failing uncovered in the research is that a great many financial advisors are doing a less than stellar job negotiating the deal. This is especially the case when it comes to financial advisors who are primarily negotiating the deals themselves. Skilled bargaining can increase the sale price between 15 percent and 20 percent. More importantly, it usually results in better terms from compensation to operating arrangements.

It is a strong seller’s market for financial advisors. The more astute financial advisors selling the practices are going to be able to profit extremely well while ensuring their clients are well taken care of.

Russ Alan Prince, president of R.A. Prince & Associates, is a consultant to family offices, the ultra-wealthy and select professionals.