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
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.
