The adviser shortage is a succession problem
Firms talk about recruitment. The harder number is how many principals have no plan for the day they stop.
Recruitment gets the attention because it is the visible half. The invisible half is a large number of small firms whose entire client proposition is one person, with nothing written down about what happens when that person stops.
The uncomfortable part is that the two are the same problem. A firm that cannot recruit cannot build an internal successor, and a firm without a successor eventually becomes a distressed sale — which is the worst outcome for the clients and the cheapest one for the buyer.
The fix is unglamorous: decide the endpoint early, then work backwards. An adviser who knows they are stopping in four years can spend those four years making the firm worth more and easier to hand over. An adviser who decides in month one of year four cannot.
The rules were written for the whole market. The cost of complying with them does not scale down.
Ten clients, forty per cent of the income, and a discount you will not see coming.
Most of the argument in an advice-firm deal is about the part you get paid later.
Thinking about your own timeline?
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