Advisers should take a more strategic approach to their future, says ValidPath, after its research revealed that less than a third consider succession planning as vital.
The findings showed that although three quarters (77%) of advisers believe having a succession plan is important, only 31% consider it vital and nearly a quarter (23%) do not see it as a priority for their business.
The research also found that only one in 10 (9%) advisers treat succession planning as a central part of their business strategy, with this figure increasing to 25% among those looking to retire within five years.
Amongst those looking to retire within 10 years, more than a third (36%) said they have given little or no thought to their succession plans.
Angus MacNee, CEO of ValidPath, said the findings highlight the gap between advisers recognising the importance of planning their exit and taking meaningful action.
He said: “The good news is that most IFAs understand why succession planning is important but only 9% currently treat it as a central part of their strategy. This obviously means the overwhelming majority are not being strategic with their approach to creating and realising value or indeed executing a plan to optimise their business potential.”
MacNee said advisers need to ensure the business is “in shape” in terms of processes, profitability, management information, servicing and growth.
He added: “Just as advisers work with clients to build financial plans for the future, they must take the same structured approach to their own future and plan their value creation and exit strategy. By planning early, IFAs can maximise their business value, ensure a seamless transition for clients and staff and achieve the best financial outcome for themselves and their business.”
ValidPath said advisers planning their exit are primarily focussed on ensuring a smooth transition for their clients, securing the financial outcome they need from the process and maintaining their firm’s independence. However, a number of concerns were raised by advisers, including finding the right successor, ensuring continuity for their clients and accessing the necessary support to navigate the complexities of the exit process.
Main image: andrew-seaman-J65VbXRtgrU-unsplash
