Nearly three-quarters of advisors have no succession plan

By Alain Thériault | March 17 2014 07:45PM

An industry veteran reports that only one quarter of securities and mutual fund advisors have a succession plan—the cornerstone of the sale of a book of business.Having spent four decades in securities, Brian Curry, founding president of the consulting firm Curry-Henry Group, has noticed that 65% to 75% of securities and mutual fund advisors do not have a succession plan.

He sees the situation as dramatic given the aging population. “The average age in some of the major firms in this business is 57 or 58 and the succession plans are not there. There is one reason why: very few new people, broker or agents, are coming into the marketplace.

Interestingly, new brokers all seem to want to buy a book of business. “It’s not like the old days where you would pick up the phone and start building a business. It takes a long time to build a decent clientele that way. It may take five years. Not many people can afford that time factor these days.”

The time factor is crucial when a young person makes this career choice. “If you’ve been working for a salary for a large bank for three years and you decide to start another carrier for the bank-owned brokerage house, they’ll put you through a training course and they will pay you a salary for up to 18 months plus a little payout. But at the end of the 18-month period, if you didn’t accumulate X million dollars of assets, you’re out the door. That’s not enough time support,” Mr. Curry argues.

Published in July 2012, the most recent BMO survey on succession plans in businesses was done by Leger Marketing. Covering most Canadian SMEs, its findings are hardly encouraging. More than half of respondents (58%) lack a succession plan. One of the main reasons for inertia: 36% claim it is too early to think about it.