The Intermediary – April 2025 - Flipbook - Page 72
B RO K E R B U S I N E S S
Opinion
Succession
planning can
reshape advice
I
t is widely acknowledged –
and evident in the statistics
– that the independent
financial adviser (IFA)
population is ageing. With
fewer young advisers entering
the profession – and most firms not
preparing for succession as early as
they should be – the industry is at a
crossroads.
Fewer than one in four IFAs are
under 40, decreasing by over 6% in the
past three years, while one in five IFAs
are now over 60, up from one in seven
over the same period.
The largest proportion – almost
a third – fall into the 50 to 59 age
bracket, meaning a significant wave of
retirements is on the horizon.
Last on the list
Our research also found that
more than 95% of IFAs put ‘ensuring
a seamless transition for their
clients’ as a top priority when they
do exit their business. Unlike large
financial institutions, IFAs operate on
personal relationships, trust and deep
client knowledge built over years –
sometimes decades.
Many clients choose their adviser
not because of a firm’s brand, but
because of the individual they work
with, and this makes succession
planning within the financial advice
industry even more important than in
other sectors.
Indeed, without a structured
transition plan that aligns with
the values of the adviser, it might
be a requirement for clients to
be shoehorned into a restricted
proposition to underwrite the
capital event, and this may not be
in the best interests of the client or
adviser. It follows what we have seen
over the years: in the absence of a
robust succession plan or alternative
succession options, many IFAs have
needed to sell to a consolidator to
achieve their exit.
While consolidation can offer a
clear exit route, it’s not always the best
option for clients or staff, or indeed for
ensuring clients continue to receive
independent financial advice.
Why? Because many large
consolidators, whatever they may
Despite this, succession planning
remains an aerthought for many.
At ValidPath, we recently surveyed
a sample of IFAs to highlight the
thinking among IFA firms.
More than a third (36%) of IFAs
planning to retire in under 10 years
admit they have given ‘lile’ or ‘no’
thought to their succession plans.
This lack of planning creates both
risks and opportunities.
Without a clear succession strategy,
retiring IFAs may not achieve the
transition and exit they desire, clients
and staff could face disruption,
and the financial advice landscape
may shi further towards
Age range
consolidation.
Under 25
However, for those who are
more proactive in their approach 25-29
to succession and business
30-39
planning, there’s an opportunity
40-49
to maximise business value,
50-59
ensure a seamless transition for
clients and staff, and achieve
Over 60
the best financial outcome for
Total
stakeholders and their business.
72
The Intermediary | April 2025
ANGUS MACNEE
is managing director
at ValidPath
Aug-22
Feb-24
say, will be incentivised – as will the
selling advisers – to transition clients
into their restricted proposition to
maximise the value of their business
model. This approach, and the concept
of needing to transition clients away
from their current solution, can be
deeply unseling for advisers that
have spent their careers building a
client-centric business.
Plan for the future
It is for this reason that we encourage
IFA firms to start planning sooner
rather than later. Working with
a network like ours can offer the
support they need along the way.
Succession is not an ‘endgame’, it is
something that should be at the core
of any IFA’s business plan to maximise
value and the chances of achieving
both business and personal objectives.
Just as advisers work with clients
to build financial plans for the
future, advisers should take the same
structured approach to planning their
own future.
By having a clear plan and executing
that as part of ‘business-as-usual’, IFAs
can maximise their business value,
ensure they stay true to their values
and achieve the best financial outcome
for themselves and their business. ●
% of all advisers 2022
% of all advisers 2024
% change
426
174
1.4%
0.6%
59%
1,989
1,641
6.4%
5.3%
17%
5,668
5,758
18.2%
18.5%
-2%
8,200
7,622
26.3%
24.4%
7%
10,037
9,777
32.2%
31.4%
3%
4,824
6,210
15.5%
19.9%
-29%
31144
31182
Source: FCA FOI request
