Why advisors can’t afford to delay succession planning

A recent survey by research company Cerulli found that more than one-third of advisors expect to retire within the next decade, yet many still don’t have a clear succession plan in place.

At first glance, that may seem counterintuitive. After all, we spend our careers helping clients prepare for the unexpected — managing risk, safeguarding their wealth and ensuring their families are protected. But when it comes to securing our own continuity, it’s surprisingly easy for planning to fall to the bottom of the list.

Succession planning is most effective when it begins early. By putting a strategy in place well before a transition is on the horizon, advisors protect the business throughout their career and gain greater control over how their legacy takes shape. With thoughtful planning, they can build a stable, enduring future — one that supports clients, empowers staff and provides long-term security for their families.

The wake-up call I didn’t expect

Three years ago, I had a serious and unexpected health scare. I was forced to confront a difficult truth in those weeks leading up to a life-changing surgery: I was not prepared. I realized I didn’t have clear answers to fundamental questions about the future of my practice: What is the value of my company? If I had to step aside suddenly, what would happen to my family? What would happen to my staff, my clients and the business we’ve all worked so hard to build?

The last thing any advisor wants is to be forced to sell their practice or scramble for a buyer when they’re out of options. This reactive, crisis-driven transition creates stress and uncertainty across all areas of the business. Without a clear continuity plan, the people who rely on your business are pulled into uncertainty too and are suddenly worried about their jobs, their financial well-being and what the future holds. Confronting those same anxieties firsthand became the moment I realized I couldn’t keep putting this off. It was the catalyst that pushed me to finally build a real succession plan.

Know what your business is worth

The first practical step in any succession plan is determining the value of the business. Until you understand what your firm is worth, it’s difficult to ensure it will stand the test of time once you’re no longer at the helm. This process is best guided by an independent expert who can assess financial health, operational structure and long-term sustainability — creating a strong foundation for informed, forward-looking decisions. 

Once you understand your business’s worth, consider how to protect that value over time. This could be through purchasing life insurance policies designed to help fund buyouts or provide the liquidity to protect your family or partners. It also may include key person coverage for yourself or other leaders to support continuity if someone critical is lost.

One overlooked tool for succession planning is a business overhead policy. In the event of disability, these policies can cover fixed expenses for six, 12 or 18 months. Many advisors assume that renewals or assets under management will carry the business, but having an overhead policy strengthens the firm’s overall financial position. A potential buyer will view a practice far more favorably if core expenses are secured for a period of time.

When it comes to timing, the truth is you should start planning as early as possible — ideally the moment your practice begins to generate real value. Early planning isn’t just strategic; it’s cost-effective. If your succession or continuity strategy involves insurance, starting sooner can mean significantly lower premiums, making early action a smart financial move as well as a protective one.

Build a real continuity blueprint

After completing a valuation of my business, I prepared detailed responses to the critical questions that would arise in the event the surgery didn’t go well, recovery was prolonged or the post-surgery prognosis was worse than expected. 

However, these questions can apply at any point in the planning timeline:

• Who will speak to clients, and what will they say?

• What do we communicate to staff, and in what order? 

• Who has the authority to make decisions on hiring, firing and capital purchases?

• Who is ultimately responsible for “running the ship”?

I identified a small internal leadership group and defined their roles clearly. I also appointed someone I trust to take the company to market if needed. They would also be tasked to secure bids and negotiate with external buyers. Finally, I named a separate advocate specifically to represent my wife and my family’s interests.

These decisions were not rooted in pessimism but in practicality. They ensured that in the event of the worst-case scenario, my family, staff, and clients would be protected and the business would be positioned to capture its full value.

Take time to choose the right successor

One of the biggest questions in succession planning is whether your successor will be internal or external. Both paths can work, but each requires thoughtful preparation. If you’re looking internally, ask: Are they capable of taking over? Do they have (or can they access) the capital required? Do they share the firm’s values and vision for clients?

I’ve met many advisors who say, “I’m not worried; my daughter [or son] will take over when it’s time.” That may be a wonderful goal, but it still requires a plan. Are they being actively prepared to lead the practice? Do they have the training, experience and confidence they’ll need if succession is triggered sooner than expected?

If you’re planning to sell externally, thinking carefully about the alignment is even more important. Ask questions such as: 

• Should the potential buyer be a peer who offers the same services and has similar systems and processes? 

• Is it a firm with complementary services that would benefit from access to your clients or corporate relationships? 

• Will they retain your staff and honor the client relationships you’ve built?

These are not decisions to rush. Give yourself enough runway to identify the right successor, test the fit and, if needed, adjust course before you step away.

Reassure the people who matter most

Clients and staff ultimately want stability. They want to know that no matter what happens, there is a plan. As part of my own planning and transition, I’ve considered writing letters that would be shared with clients and staff with messages that say in effect, “We’ve prepared for this. Your needs will continue to be met, and here’s how.”

Beyond that, I believe in candid, ongoing conversations. Annual reviews and client meetings are natural opportunities to reinforce that there is a plan in place and that clients will be in good hands for the long term. The same is true for staff. The more they understand the plan, the more secure and committed they’ll feel.

None of us are invincible, and none of us will be in the office forever. Succession planning isn’t a morbid exercise; it’s an act of leadership. Don’t wait for a health scare to start evaluating your business. Begin while you’re healthy and excited about the future. That’s when you’ll do your best to think and create a succession plan that truly reflects the value of your life’s work.