Financial Advisor Succession Planning: A “Golden Parachute” for Your Career

Advisory practices around the U.S. are facing a new and urgent priority: succession planning. With many of the youngest baby boomers approaching their 60s, it’s alarming to learn that only a quarter of all advisors have a formal succession plan in place. Without a strategy, advisors risk leaving their legacy—and their clients—to chance.

A well-executed succession plan is more than just an exit strategy; it’s a "golden parachute" that protects the relationships you’ve spent decades building, while ensuring you receive maximum value for your practice.

Why a Succession Plan Is Non-Negotiable

• Protect Your Legacy: Without a plan, you risk a chaotic transition that could alienate clients and erode the value of your life's work.
• Retain Client Relationships: A smooth, gradual transition builds client trust and ensures continuity, preventing your clients from seeking services elsewhere.
• Maximize Your Financial Return: A planned exit, whether through an internal or external sale, allows you to maximize your practice's valuation and secure your financial future.

Recently, an Upper-Midwestern advisor reached out to AdvisorLaw to help create a structured and self-funded succession plan, or what he likes to call a “personalized golden parachute.” AdvisorLaw was able to help our client leave his practice on his own terms, while simultaneously protecting the relationships that he had cultivated over the duration of his career.   

We were able to help him sell his book to a younger member of his team. This internal sale was structured with favorable tax implications, allowing our client to walk away with several high-six-figure payments, in addition to future payments. The client agreed to stay on as a consultant to ensure a smooth, gradual transition, providing his clients with peace of mind.

This case study is a prime example of how a well-structured plan can benefit both the selling advisor and their clients.

A financial advisor succession plan is a strategic roadmap that outlines how ownership of your practice and client relationships will be transferred. A comprehensive plan should cover both a planned retirement and an unexpected exit due to death or disability.

You should begin your succession plan at least 5-10 years before your target retirement date. This allows ample time to prepare your practice, get a professional valuation, and ensure a smooth, client-focused transition.

An internal succession involves transitioning your practice to a partner or a junior advisor already within your firm. An external succession is an outright sale to a third-party buyer. The best choice depends on your goals, but internal sales often offer more client continuity, while external sales can provide a higher immediate financial return.