Why advisors should bring along associates for succession planning

As retirement approaches for many financial professionals, succession planning becomes critical—not just for the advisor, but for their clients as well.

Canadian studies show that more than half of financial advisors are over age 55. The need for a clear exit strategy is pressing. While selling a practice to an outside buyer is an option, transitioning the business to a younger, internal successor often offers a range of clear benefits.

Bringing associates into the fold isn’t only a smart succession strategy for the long term, it can also bring immediate advantages and long-term gains for all parties.

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Give your clients peace of mind

Integrating a younger advisor into your practice provides clients with a sense of continuity and security. This is particularly important for sole proprietorships where the advisor is the only point of contact.

With a successor in place, clients can rest assured that their financial advisory relationship will continue, even after the original advisor retires.

Expand your client base

Advisors and their clients are typically close in age. In serving them, advisors often don’t focus enough on attracting a younger client base. Some advisors wait too long to address this, only to find that older clients begin depleting their assets in retirement. That can decrease the value of the practice.

A younger advisor can help attract a new generation of clients, ensuring the practice continues to grow and increase in value – and ultimately delivering higher returns for the exiting advisor.

Build long-term relationships

Attracting younger clients can include connecting with the next generation of a current client’s family. As wealth passes down through generations, the advisor-client relationship can continue seamlessly, maintaining value and deepening trust. This ensures that relationships and assets stay within the practice, safeguarding its long-term viability.

Gain fresh perspectives

Collaboration between seasoned and younger advisors can introduce new ideas. This can inject fresh energy into the practice, reinvigorate the veteran advisor, and open up innovative ways to work and serve clients.

While these four advantages are compelling, what steps should advisors take to ensure an effective and profitable transition?

That takes time. In setting the foundation for success, think about compatibility and the ability to build meaningful relationships with clients—qualities that go beyond just financials. Consider too the factors that entice advisors. Here are three things to keep in mind.

Advisors want the chance to grow

Grooming a successor requires careful attention. You need someone who aligns with your practice’s culture and can form strong client relationships. Providing mentorship is crucial.

Our industry often focuses on sales management, but true development involves coaching and guidance. Investing in mentorship programs can greatly benefit both the younger advisor and the practice as a whole.

To draw in the next generation of advisors, compensation structures must be appealing too. Sterling Mutuals offers a flat-fee model that allows advisors to control their expenses while exponentially benefiting from growth. Sterling’s advisors receive 100% of their commission, thereby receiving the maximum upside from the business they build.

This structure, combined with solid mentorship, ensures that your practice remains attractive to younger advisors looking for a path to partnership and succession.

Technology plays a role

Technology is an essential enabler for the success of any practice. At Sterling, we offer a suite of proprietary technology solutions—from workflow management to client service platforms—that help streamline operations.

These tools not only save time but allow advisors to focus more on what matters most: their clients. The right technology can make your practice more efficient and appealing to potential successors.

Succession planning is a journey, not an event

Succession planning doesn’t happen overnight. It’s a process that requires foresight, careful planning, and a commitment to the future. Just as advisors expertly guide their clients through retirement planning, they must do the same for their own transitions and proactively prepare for what’s next.

Advocating for younger advisors and helping them succeed isn’t just good for them; it’s good for your clients, your practice, and the health of our entire industry. By aligning yourself with the next generation, you’ll help ensure a smooth transition and set up your practice for continued success long after you’ve retired.

This three-part series offers insights into what advisors can do to position themselves for success. Learn more about how Sterling Mutuals can help you meet your clients’ needs and plan for the future.