Investment Planning Counsel (IPC) released a study May 19 that looks into how prepared financial advisors are for succession.
Conducted in partnership with Environics Research Group, the study found that more than two-thirds of advisors are at a point in their careers where succession planning is either important, or becoming important.
Of the advisors surveyed, 69 per cent said they are nearing retirement or have started to formulate a succession plan of some kind. But only 11 per cent have a formalized succession plan, with 75 per cent of advisors saying they have only a rough idea or no plan at all.
The survey also showed that advisors continue to prioritize growth over succession planning, especially in the wake of COVID-19. Eighty-three per cent consider growing their business a priority at this time and 96 per cent feel 'having a positive impact on their client's financial success' is one of the most important reasons for growth.
"The risks of not having a plan are significant for advisors, their families and their clients," said John Novachis, Executive Vice President at Investment Planning Counsel. "They range from not having someone to carry on the business in the event of a sudden illness or loss of life, to the loss of confidence among clients, to jeopardizing an advisor's own retirement plans," he said.
Novachis added that IPC began increasing its focus on advisor succession planning a few years ago. "We believe advisors have choices in how they succeed: to groom a junior successor, sell to a peer, or sell to a strategic buyer like IPC. We will work with advisors to determine their best choice, then help map and formalize their plan."
