“The advisory practice is like the owner’s baby: They created it, they nurtured it, and over time they grew it,” said Oligino. “They don’t want to bring someone into the firm and hand it over unless there’s an alignment of values.”
Advisors must address four difficult issues in order to put an adequate succession plan in place: prioritize succession planning over other business issues; put in place a team that can sustain the firm; dedicate time and work to continual succession planning; and identify and develop a suitable successor, according to the report.
Another problem faced by baby boomer advisors is that there are not sufficient numbers of younger advisors to replace the waves of advisors expected to retire over the next several years, the authors of the report said.
“Even if the pool of talent coming into the industry is expanded, how many will have the capacity and aspiration and drive to want to become an owner versus being someone who just enjoys financial planning?” asked Oligino.
The survey, in addition to followup interviews and focus groups, was conducted in December.