Evolution of Succession Planning: How Advisors Are Preparing for the Future
Succession planning is evolving as organizations recognize the need for proactive leadership transitions and talent development. Companies are moving away from reactive strategies and instead adopting ongoing planning to ensure leadership continuity and minimize disruptions.
New findings from SEI®’s business audit tool—based on insights from over 200 financial advisory firms—highlight that 40% of respondents are preparing for a significant business transition in the next 18 months, including firm sales, M&A activity, and key partnership restructurings.
At the center of this shift is a renewed focus on succession and continuity planning, which emerged as a top concern across the advisor base. As advisory firms grapple with aging founder demographics and increasing enterprise value, the need for structured, long-term exit strategies has become imperative.
“Specifically, when it comes to transitions, business continuity and succession, as well as considerations for buying a firm, are what’s driving much of the desire to transition,” Shauna Mace, head of practice management at SEI told Connect. “When it comes to buying, acquisition readiness comes to mind: Are they ready to compete in a very hot, sellers’ market?”
SEI’s platform supports these efforts by diagnosing business health, identifying gaps in operational infrastructure, and uncovering growth opportunities. The tool helps advisors prioritize foundational efforts such as leadership development, business continuity strategies, and acquisition readiness.
Other key findings from the audit include: 92% of advisors say business growth and scalability are their highest priorities; 80% identified business planning, including defining firm vision and improving management structures, as critical for long-term success; 51% prioritized operational efficiency, targeting stronger infrastructure to support scale; and 43% are investing in people and culture, recognizing that talent retention and leadership development are integral to succession readiness.
“The reason business planning is coming up so much is that many advisors aren’t setting goals and developing plans to achieve their goals,” Mace added. “We hope this helps remind them to get back to basics and do the formal business planning to help gain clarity and focus their time and efforts to engage and empower their teams to help them grow and scale in the right ways.”
The growing emphasis on succession is also being fueled by shifting demographics. With many founders nearing retirement and firm valuations reaching new highs, advisors are reevaluating how to protect client relationships, sustain brand equity, and ensure their firm’s legacy.
“Firms looking to scale and grow tell us they are likely at or nearing capacity and need to figure out how to gain it and keep getting bigger. When looking at specific business metrics, such as profitability and productivity, we can help quantify why they feel pain and help them understand how they may need to evolve to transform in the future,” said Mace.
“Another signal is the age and depth of the firm’s leadership. What success looks like for them long term, and where they are in age and size of firm, can signal if and how they may need a way to transform their business.”
As the wealth management industry undergoes generational shifts and consolidation pressures, advisors who proactively plan for succession are more likely to protect their legacy, maximize firm value, and ensure long-term success for their teams and clients.
Mace emphasized that scaling successfully hinges on three core pillars: talent, technology, and operations. “If firms invest in, build, and manage these areas well, they will set themselves up for long-term success and enhance their enterprise value.”
She also pointed to the role of next-generation leaders in shaping the path forward. “We see a big opportunity with next-generation talent and leadership to help drive the process. Who (or what) led a firm to where they are today likely won’t land them where they want (or need) to go in the future. New ideas, a willingness to experiment, and commitment to building, managing, and enhancing a solid infrastructure will enhance many areas of the business, including their ability to grow, build enterprise value, execute succession, and deliver an optimal client experience.”
As consolidation pressures intensify across the wealth management industry, SEI’s research suggests that firms who treat succession as a growth strategy—not a future problem—are best positioned to thrive.