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Succession Planning Still Major Issue For Advisors, Opportunity For Distributors According To Signator Investors, Inc. Equity And Succession Planning Survey Of Advisors

BOSTON, July 17, 2013 /PRNewswire/ -- Despite succession planning being a major topic facing the graying financial advisor market, a new survey conducted by Mathew Greenwald and Associates for Signator Investors, Inc. shows few financial professionals are fully prepared for succession. A strong majority also say the industry does not do a good job helping with succession planning even though nearly three-quarters are more apt to consider a broker-dealer with a succession planning platform.

"Overall, I think the industry has been active in discussing this issue and developing programs for advisors to help them with succession planning, but clearly the need to do more continues," said Brian Heapps, president of John Hancock Financial Network, parent of broker-dealer Signator Investors, Inc. "Personally I can see that advisors might consider a succession event to be too far into the future to consider. However, it's never too early to work on the critical first steps of obtaining a solid valuation for a practice and then considering how best to increase the value and build equity."

Preparation for Succession Although many advisors have a plan to make sure their practice can continue if they are unable to work (56%), few have a completed succession plan or have an excellent estimate of their firm's value.

  • Only 11 percent have completed a succession plan. About a third have started but not completed a plan (34%), while 44 percent said they've thought about making a plan but not started one; an additional 12 percent haven't even started thinking about creating a succession plan. 
  • Only one in ten has an excellent estimate of the value of their practice (10%), though 33 percent have what they consider to be a good estimate. More than four in ten say they have some sense of the value of their practice, but not a good estimate (44%), and an additional 12 percent say they do not have any idea how much their practice is worth. 

Why not prepared While strong majorities believe the industry does not do a good job of helping representatives plan for succession (81%), most admit that they, too, are a roadblock in planning for their succession: 55 percent agree that they are too busy with their practice to think about succession planning, and 53 percent agree that they have procrastinated too much when it comes to this issue. 

Interestingly, the different channels of advisors surveyed – independent broker dealers, independent advisors/planners, and career agents – show few differences with regard to their views toward and preparation for succession. 

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