Succession Planning: What RIAs Need to Know

As part of our mission to help advisors succeed, we partnered with Institutional Investor to conduct a research study to explore RIAs’ succession planning practices and concerns. 162 RIAs were surveyed in conjunction with a series of interviews with RIAs and valuation consultants to gather additional insight into the survey findings. The results of our survey indicate that the RIA industry looks to be at a major inflection point. A significant number of RIA firms are contemplating a change in ownership over the next five years.

However, the survey also finds that many firms are woefully underprepared when it comes to planning for the transfer of stewardship of their firms.

Succession Planning is a Critical Component of Success

Veteran consultants believe that succession planning should begin at the founding of a firm, can take 3-5 years to solidify, and should be updated continually. A lack of readiness can undermine a would-be seller in numerous ways.

Sellers who haven’t emphasized succession planning are coming to the negotiating table unprepared. In doing so, they are at risk of suboptimal outcomes for their firm as well as for the future of their clients and employees. And, they may struggle to secure the best terms and receive full valuation on an otherwise attractive firm.

This raises the question: What do RIA leaders need to do now to ensure the survival of their legacies?

Keys to Successful Succession Planning

This white paper outlines insights on optimizing negotiating power for firms in transition, including:

• The most important contributing factors to a firm’s valuation
• What’s whetting buyers’ appetites
• The importance of culture and how to assess cultural fit
• Expert insights on deal breakers for prospective buyers

We hope this research is helpful to you as you plan for the future of your firm.