Succession planning takes a backseat
Very few financial planning principals are prepared for their exit from the industry, with only 10 per cent having a fully documented succession plan in place, according to research by NAB and MLC.
The survey conducted by Business Health also found that financial planning principals were delaying their exit from the industry, with only 30 per cent of business owners planning to do so within the next five years.
MLC Adviser Business Centre national manager Bob Neil said the findings were surprising considering the popular belief that most financial planning principals were intending to exit early.
“These findings contradict much of the market commentary we have been hearing for the last few years. The survey indicates that financial planning business owners are continuing to push back their exit plans rather than trying to get out early.”
Neil said MLC had been encouraging businesses to take a longer-term approach to their exit and was surprised to find so few business owners had a fully documented succession plan in place.
“Businesses either don’t consider it important to have a succession plan or more likely, they are unsure how to develop one and put it into action,” he said.
According to Neil, another surprising finding was that almost 80 per cent of respondents said their exit timeframes have not changed in the last 12 months despite the recent market volatility.
“These findings highlight some disparity between the plans of current business principals and the aspirations of many younger advisers.
“The failure of business owners to effectively plan their succession creates some significant challenges for the industry. It’s likely that many potential successors will be forced out of equity participation due to their inability to raise the required finance.”
Recommended for you
The RBA has handed down its much-anticipated rate decision, following widespread expectations of a close call.
Two national advice businesses have merged to form a leading holistic advice business with $2.5 billion in funds under management.
Insignia Financial has completed its transition of a range of administration and technology functions to SS&C Technologies as it seeks to be a leading wealth manager by 2030.
ASIC has permanently banned a financial adviser after he allegedly concealed information from clients and misused client funds, among other breaches.
