- Fiona Ettles
- 2 days ago
- 3 min read
Updated: 17 hours ago
Why every financial planner needs to start succession planning five years out
By Fiona Ettles, Partner at FinConnect
Financial planners spend their careers helping clients prepare for retirement. But when it comes to their own exit from the business, too many leave it too late. As a result, many don’t achieve the financial outcome they were aiming for.
Just like any client’s retirement plan, the earlier you start your own, the more options (and better outcomes) you’ll have.
What is succession planning?
Succession planning is the process of identifying the critical roles within your business — and developing a clear plan for how those roles and client relationships will be transitioned. It's not just about exit. It's about protecting value, continuity, and client care.
Main succession options
There are three main ways to structure your succession:
Internal succession: Selling equity to employed advisers within your business. Best suited when you have younger team members with the capacity and appetite to step up.
External succession: A full market sale to another firm. Common for businesses without internal successors or when time is tight.
Merged approach: A middle ground where the business joins with another while the owner continues for a period before stepping back.
Each option has its own timeline, complexity, and implications - and understanding the right fit early gives you the power to shape the outcome.
What does ‘sale ready’ really mean?
Being sale ready doesn’t mean putting a ‘for sale’ sign up.
It means your business is in a position where, if an opportunity or need arose (planned or unplanned), you could engage in the process with confidence - minimising disruption and protecting value. A sale-ready business has clear data, strong systems, tidy financials, and a well-structured team.
This isn’t just good business hygiene. It reduces risk, helps you retain control, and ensures your clients and team end up in the right hands.
Why five years out?
Because most successful transitions don’t happen overnight.
A proper succession plan isn’t just about valuations and legal documents. It’s about people - and people take time.
In fact, the biggest issues we see in practice are around the people component:
Finding the right successor(s)
Building capability and trust
Aligning values and client experience
Ensuring your clients feel confident in the next phase
Starting five years out gives you time to:
Strengthen your valuation
Explore and compare options (internal vs external vs merged)
Prepare your team
Improve business profitability
Document systems and processes
Work through any Plan B (or C) if needed
What's your business worth?
Understanding how financial planning firms are transacted is key. Our Guide to Valuing Your Financial Planning Business breaks it down clearly.
Internal buyers often look at EBIT-based valuations - reflecting the real profitability and ROI for a shareholder.
External buyers may rely on recurring revenue multiples, especially when purchasing small segments or client books - but only if they can extract profit from the purchase.
A gap analysis can highlight the difference between valuation methods, giving you a clear path to uplift your value before transition.
Common mistakes we see
Leaving it too late
Not knowing the value of the business
Relying on one succession path (no Plan B)
Not preparing the team or successor
Assuming a buyer will just “show up”
The better the plan, the better the outcome. Whether you’re five or ten years away from stepping back, now’s the time to think like your clients: what’s the end goal, and how do we get there?
