Most IFA firm owners know they need a succession plan. Very few have one.
Research published last year found that the majority of advisers believe five years is enough time to plan an exit. Most also admit they have not started. It is a gap that is easy to understand. Running a client-facing business leaves little room for thinking about what happens when you step back from it, and the default is always to deal with it later.
The problem is that later has a way of arriving sooner than expected, and the options available to you tend to narrow the longer you wait.
The Regulator Is Paying Attention
Succession planning has shifted from being a sensible business practice to a regulatory expectation. The FCA now frames adviser firm continuity as a Consumer Duty issue. If a principal retires suddenly, loses capacity, or dies without a plan in place, the clients left without support represent a foreseeable harm, and the FCA is clear that foreseeable harm is something firms are expected to prevent.
For sole practitioners in particular, the question of what happens to clients when the principal steps away is one that supervisors are now willing to ask for in writing. Having no answer is no longer a neutral position.
The Market Will Not Stay as It Is
The Market Will Not Stay as It Is
Conditions in the IFA acquisition market are currently favourable for sellers. Buyer appetite is strong, consolidators are well capitalised, and there is genuine competition for quality firms. That has supported valuations across much of the market.
Markets shift. Interest rates, regulatory change, and the pace of consolidation itself all affect what buyers are willing to pay and on what terms. Firm owners who wait until they are ready to leave tend to take whatever the market offers at that point rather than benefiting from a period when conditions are in their favour.
Planning ahead gives you choices. Leaving it late usually means fewer of them.
Internal Succession Is Harder Than It Looks
Many firm owners assume that when the time comes, there will be someone internally to take over. That may be true, but the conditions for it to work well require more preparation than most people realise.
A junior adviser needs time to build client relationships, develop the commercial awareness to run a firm, and in many cases secure financing for a buyout. None of that happens quickly. If the intention is to hand the firm to the next generation, the earlier that process starts, the more likely it is to work on terms that suit both parties.
Firms that wait until the principal is ready to leave often find that the internal candidate is not yet ready, or that the relationship and financial structures needed to make it work are simply not in place.
What a Good Plan Actually Looks Like
A workable succession plan does not need to be complicated. At its core, it addresses three questions: what happens to clients, what happens to staff, and what financial outcome does the owner need from the process.
The answers will look different for every firm. Some owners want a clean exit over a short period. Others want to remain involved in some capacity for years, stepping back gradually while ensuring continuity for the clients they have spent decades looking after. There are structures that accommodate both, and most things in between.
The important thing is to start the conversation early enough to have real options, rather than being forced into whatever is available at the point when staying on is no longer possible.
At Superbia Group, we work with IFA firm owners at all stages of thinking about their future. Some are actively looking to transact. Others simply want to understand what their options look like so they can make better decisions over the next few years. Either way, the conversation is confidential and there is no obligation attached.