The wealth management industry faces a monumental shift as a projected $84 trillion in assets in the U.S. is expected to pass to heirs in the next two decades.¹ The driving force behind the transfer is the aging Baby Boomer population – the wealthiest generation yet, accounting for nearly 52% of the country’s total wealth.²

As this shift approaches, another transformation is set to unfold as advisors, who also happen to be mostly aging Boomers, prepare to retire. Wealth advisors aged 55 and older account for 42% of advisors in the U.S. and currently manage 57% of all assets.³ And nearly 40% of them are planning to retire in the next decade.⁴

So, how are advisors preparing for a smooth transition when they retire? You may be discouraged to learn that 44% of all advisors do not have a succession plan in place. What’s more, 26% of advisors who expect to retire within the next decade are still unsure of their succession plans.⁵

A five-step process for a successful transition

Selling a practice isn’t just about finding a buyer; it’s about ensuring continuity for your team and current clients, but also – especially given the magnitude of the coming wealth transfer – supporting future generations of investors who are increasingly underserved.

Before I move on, I want to acknowledge that this is a daunting task on many levels. The emotions and logistics involved in succession planning are a big reason why so many advisors don’t have a plan in place. But in my experience as a coach and consultant to advisory firms, I’ve found that having a well-defined process to follow can greatly reduce the level of stress involved in this type of transition.

The succession-planning process I’ve developed consists of five steps, each of which is aimed at helping you maximize value, ensure your clients will be well taken care of, and ensure a smooth exit as you transition into your next phase of life.

Step 1: Define your ideal succession plan

Clarifying your goals by envisioning what your future practice should look like will help you identify the right successor and structure the best deal. Here are some questions you’ll need to consider:

– Do I want a full exit, or will I stay on in a transition role?

– What new services or options do my clients need in their next advisory team?

– What type of firm will best serve my clients after I’m gone?

Step 2: Maximize firm valuation

Your practice’s value is driven by more than just AUM and revenue. To attract the best buyers and maximize your sale price, you will want to focus on:

– Client demographics and retention: A younger, engaged client base increases long-term value.

– Recurring revenue and profitability: Most buyers prefer a predictable fee-based model over commission-heavy structures.

– Operational efficiency and technology: A streamlined firm with strong processes and tech integration is more attractive.

Step 3: Identify the right buyer

With an estimated 110,000 advisors – 38% of the current total – retiring over the next 10 years, competition for acquiring firms is increasing. To find the right successor:

– Spend time with several teams to understand the client experience they provide.

– Make sure there is both a cultural and strategic alignment with your team and clients.

– Ask questions about how the team will transition the relationships with focus and clarity so they are well taken care of after your retirement.

Step 4: Prepare your clients and team for transition

Your clients and your employees are the foundation of your practice. Here are the steps you can take to help ensure their confidence throughout the transition:

– Communicate early with key clients to assure them of continuity and service quality.

– Be proactive in learning the strengths of the team that is interested in acquiring your practice and how they are prioritizing their own development to support your clients.

– Ensure the acquirer has a transition roadmap, including joint client meetings, branding updates, and service alignment.

– Acknowledge team members’ varying reactions to change, initiating open conversations where everyone can share their perspective and working together to co-create a path forward.

Step 5: Execute a smooth exit

Once the deal is signed, the real work of transitioning your clients and responsibilities begins. The good news is, if you’ve invested adequate time and thoughtfulness into executing the previous four steps, you should feel prepared and confident when the time comes to this final crucial step.

Here are some best practices to ensure that the transition phase leading up to your exit is productive and comfortable for everyone involved:

– Establish clear measurements of success on what the transition should accomplish during the time you are on board.

– Hold joint meetings consistently with clients and team members to reinforce trust in the new advisor team.

– Commit to staying involved for as long as needed so your clients feel comfortable moving forward and can go on to build long-lasting relationships with the new team.

Selling your practice is more than a financial transaction – it’s about preserving your life’s work and ensuring your clients’ financial well-being for years to come. By proactively preparing, defining your goals, and selecting the right successor, you can transition with confidence, knowing your legacy is in capable hands.

If you’re ready to start planning your succession, feel free to reach out to the Practice Management Team at Janus Henderson. We can guide you through the action steps in our “Honoring the Legacy” program and help ensure you make a successful transition to the next phase of your life.