Tetra Images | Tetra images | Getty Images
In a time of record mergers-and-acquisitions activity for financial advisory firms, designing and implementing a succession plan has become a critical element for success.
This volume and breadth of M&A activity has increased the pressure on, and options for, firm owners.
The median registered investment advisor firm valuation jumped more than 20% from 2019 to 2020, according to the 2021 RIA Deal Room. This attracted the attention of numerous well-capitalized partners, as well as growth-oriented RIA platforms and investors that are seeking to buy or partner with advisory practices.
This offers firms an unprecedented assortment of economic models, degrees of control and exit-timing scenarios.
For firm owners, this is good news. Not only have the choices for exiting the business increased, but so has the support for independent firms looking to develop and implement a succession solution.
More from Personal Finance:
How much house can you afford? What to know before you buy
6 reasons why Americans aren’t returning to work
Why this is a difficult market for first-time homebuyers
While succession planning is important for the firm and its long-term viability, it’s just as critical for the firm’s clients and any investors. To that point, clients should care if their advisor has a plan in place, because it impacts who will handle their money if the firm owner leaves, retires, or passes away.
While advisors are more likely to…
