Advisors At Risk: What new study reveals about the succession planning crisis

Succession planning is more than an administrative checkbox for retiring advisors—it’s about securing a legacy, preserving client relationships, and empowering the next generation. Yet, according to a new industry study by Kestra Holdings, most first-generation (G1) advisors are unprepared to make the handoff, and next-gen (G2) advisors are growing frustrated enough to leave.

The confidence gap

Kestra’s report surveyed 269 financial advisors—180 G1s and 89 G2s—across independent broker-dealers and RIAs. The study found most advisors are confident, but not ready. While 69% of G1s say they’re confident about their succession plan, 94% are missing one or more key pieces of that plan.

Even among those who say they “have a succession plan,” less than 25% have established timelines for leadership transition, equity transfer, or client handoffs. Only 6% have a fully documented plan that includes all six key elements of succession.

For younger advisors, this lack of clarity isn’t just frustrating—it’s a dealbreaker:

• 44% of G2s don’t believe their G1s are prepared to retire.
• One in four would consider leaving if there’s no equity path.
• One in three would walk away without a clear transition timeline.

G2s who feel involved in succession planning and are given leadership opportunities are more than twice as likely to commit long-term to their current practice. But when they’re left in the dark, they begin shopping for a future elsewhere.

What G1s want vs. what G2s need

G1s say their top priority is ensuring clients continue to receive high-quality care. They also want to protect their firm’s legacy, retain staff, and achieve a fair practice valuation.

G2s, meanwhile, are motivated by opportunity—ownership, autonomy, and long-term growth. They’re not looking for a paycheck—they’re looking for a future. But they’re often boxed into typical advisor tasks like planning and portfolio management while being shut out of higher-level firm strategy.

“Sometimes you need to leave to be taken seriously,” one G2 advisor told researchers.

Emotional roadblocks for G1s

Why are G1s struggling to act, despite good intentions?

The study identifies three big hurdles:

1. Letting Go: Over half of G1s say it’s hard to cede control of their business.
2. Client Anxiety: Many worry that clients won’t be as well-served without them.
3. Loss of Identity: A third don’t know what they’ll do after retirement.

The 'pillars' of a better succession plan

Kestra outlines four key strategies for bridging the gap between generations:

1. Transparency

Clear communication builds trust. G2s want insight into retirement timelines, compensation, and equity. G1s should share the firm’s strategic direction and involve G2s in decision-making now.

2. Training

Leadership isn’t inherited—it’s learned. G2s crave development in firm strategy, operations, and financials. Yet many say they’re stuck doing “employee-level” work. Structured mentorship and external coaching can help fill the gap.

3. Tangibility

Handshake deals don’t cut it anymore. Written plans with timelines, valuation metrics, and clear milestones provide confidence and accountability on both sides.

4. Tailoring

No two transitions are alike. Good succession planning is flexible and reflects the culture, goals, and team structure of the individual practice. Whether it’s gradual ownership transfer or continued G1 involvement, the key is mutual agreement.

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Succession timing underestimated

Study data shows that most G1s underestimate how long it takes. Once they start, many discover they’re behind schedule.

G1s say planning should begin at least 7 years before retirement.

Delays don’t just risk talent loss—they hurt practice value and can damage client trust. For advisors looking to exit at peak valuation and ensure continuity for clients and staff, the time to act is now.

Takeaways for financial advisors

The study offers advice to firm owners and successors alike:

• G1s: Don’t confuse confidence with readiness. A well-documented, transparent plan isn’t a bonus—it’s essential.
• G2s: Speak up. Ask for clarity, and show initiative. Leadership is earned, but opportunity must be offered.
• Both: Succession is not a transaction—it’s a relationship that hinges on communication, trust, and shared vision.