In the latest installment of Financial Planning's series on building a successful RIA, Chief Correspondent Tobias Salinger highlights a reality many advisory firm owners eventually face: the handoff of a book of business is both the most valuable and the most delicate part of any succession plan. Advisors can protect client continuity and preserve firm value, but only if they prepare early and lead clients through the transition with intention.
Industry coaches Melissa Caro of My Retirement Network and Todd Doherty of Advisor Legacy stress that advisors should begin planning roughly five years before retirement. This timeline allows the successor to gain client familiarity and gives clients the comfort they need to stay with the firm. Caro observes that many advisors underestimate how deeply clients associate advice with a specific individual rather than the broader firm. A sudden announcement that a new advisor will take over often shocks clients and jeopardizes retention.
Financial Planning reports that advisors can engage outside consultants, develop multiple successor options, and segment clients so that those with the most complex or substantial assets receive early notice. Many rising advisors have never owned a business before, so gradual tranche-based equity purchases help them adapt while demonstrating commitment.
According to Financial Planning, the stakes are high. A significant share of the industry's assets sits with advisors nearing retirement, and research shows that over 80 percent of high-net-worth heirs plan to switch firms when they inherit family wealth. At the same time, next-generation advisors express concerns about succession readiness at their firms. A recent Kestra Holdings survey shows that only 30 percent of successors who perceive owners as unprepared plan to stay long-term, as reported by Financial Planning. By contrast, nearly 75 percent express commitment when they believe firm leadership is planning. Client continuity sits at the center of this "succession misalignment."
Financial Planning also reports that transitioning clients becomes even more complex in external sales, where earnouts or retention-based provisions often tie the purchase price to client carryover. Dom Henderson of DJH Capital Management emphasizes that retiring advisors should expect to remain involved for a defined transition period to ensure clients do not leave immediately after closing. Successors must gradually take on day-to-day interactions so clients grow comfortable meeting with them independently.
While some attrition is inevitable, Caro notes that most clients prefer staying put when transitions are handled well. Leaving requires effort—finding a new advisor, completing paperwork, and rebuilding trust. Financial Planning adds that retention remains strong when the process feels thoughtful. Unexpected disruptions, such as an advisor's sudden death or disability, pose greater risks. Custodial repapering, in particular, may push attrition as high as 15 percent. Under normal circumstances, however, Doherty estimates that well-executed succession plans keep attrition below 5 percent, and often at zero.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
