Did you know that 26% of financial advisors who will retire within the next 10 years do not have a succession plan in place?* One of the many reasons advisors tend to put off succession planning is the common misconceptions surrounding the planning itself.

The fact is, just as you put careful consideration into protecting your clients from unplanned events, putting those plans into place for your own business is crucial.

Let’s break down the top succession planning myths and identify what you need to think about for your practice.

Four Common Misconceptions About Succession Planning

  1. I’m covered—I have a will in place

    A will is considered to be a foundational document on par with your other company documents like your Limited Liability Corporation (LLC) documents. However, a will, and even a trust, do not effectively stand in for planning and distribution of your assets. Wills and trusts also do not provide any protection to the equity of your business because they do not account for operation of a current business.

  2. I’m not planning on retiring soon

    Succession planning is not about retirement—and it isn’t a one-time event. Succession planning should begin as soon as you start your business. Planning involves plotting out a timeline, identifying key successors, and more—in order to preserve and extract fair value from your business when you do decide to retire. You also need a contingency plan in case of an unplanned exit** from industry.

  3. The next generation isn’t ready

    Because succession planning is not a one-time event, you can build in “readiness” makers and prepare gradually, including incorporating any training into the succession planning process. The goal is to identify a person or another practice that will be up to speed when you need it.

  4. Succession planning covers my family and business

    Succession planning is a necessary part of owning a practice. But it does not always cover your family, your practice, or your clients in the case of an unplanned exit from industry. In these cases, it is important to have a plan in place that provides for your loved ones by preserving the equity in your business, and protects your clients by offering a seamless transition. Without it, your loved ones may be against the clock to preserve the equity in your business you’ve worked so hard to build.

Other challenges when it comes to succession planning?

Establishing a valuation for your practice and establishing a plan for beneficiaries.

One option to think about is the Assurance Plan. Available only to LPL advisors, it’s an easy-to-implement plan that can start protecting your practice, your legacy, and your clients—in just hours—for a very minimal cost.

*Cerulli Associates. The Impending Succession Cliff: Implications and Insights for Advisors
**Unplanned exit due to death or incapacity

Additional Sources
" LPL Launches Value Preservation Solution for Advisors ," Sergeant, Jacqueline, June 11, 2020
" Survey Reveals Details About Financial Advisor Succession Planning," Horan, Stephanie March 9, 2022
" Five Myths in Succession Planning. Succession Resource Group ," Grau, David Jr. June 8, 2020


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