RIAs are thinking more about the future of their practice, according to a TD Ameritrade telephone survey of 500 registered investment advisors in August. The percentage of advisors who said they didn’t have a succession plan dropped to 38 percent, from 56 percent a year earlier. Twenty-two percent said they were developing a succession strategy, up from a mere 4 percent a year earlier.
The number that said they actually have a plan didn’t move much—40 percent, up from 39 percent a year earlier.
What caused FAs to move succession planning up the to-do list? Apparently, their own clients. The top reason given for having a plan was to satisfy client expectations that they have a plan; 66 percent of advisors cited this, up from 52 percent a year earlier. Other reasons included supporting the long-term viability of the firm, providing a smooth transition to retirement, and providing continuity for employees.
Finding the right successor is the knottiest problem for advisors weighing succession. More than half the RIAs polled said that not being able to identify a successor was their top reason for not having a plan. Thirty-four percent said succession planning wasn’t important at this stage of their business; 21 percent said they didn’t have to time to work up a plan.