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This article appears in the June 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

More advisors are crafting business succession plans and building their teams, according to Investment Executive’s 2022 Dealers’ Report Card.

More than half of advisors (52%) surveyed said they had a documented succession plan, compared with only 36% a year ago. (That figure also was up from 32% five years ago.)

At the same time, 91% of respondents who worked for firms that had succession programs said they were aware of those programs — similar to 92% a year ago, but much higher than 74% from five years ago.

As more advisors look at retiring from the business, many also are building teams: the percentage of advisors in teams across all firms increased to 38% from 28% a year ago. (In 2018, only 25% of advisors reported working on a team of registered professionals.)

However, even as more advisors were developing succession plans, the “succession program” category saw both its importance and performance ratings drop.

The succession category had an average importance rating this year of 8.5, down significantly (by half a point or more) from 9.0 in 2021 (but still up from 7.9 five years ago). Its average performance rating was 8.1, down from 8.3 a year ago but still up significantly from 7.6 in 2018.

One potential reason for the disparity between the rise in succession planning and advisors’ apparent disregard for firms’ resources is that some are looking to transfer their wealth to their families, and others are relying on their own experts rather than seeking in-house guidance.

“My son works with me, so everything is going to him. I don’t know if [my firm] offers [support], but I took care of it myself,” said an advisor with Carte Wealth Management Inc. (The dealer confirmed that it offers no formal support but does fund book transactions and connect advisors on a case-by-case basis. Carte is rated N/A in this year’s survey in this category.)

An advisor with Investia Financial Services Inc. in the Prairies also made a succession plan without their firm’s help. “I had a tax accountant and got a lawyer involved,” the advisor said. (Investia was rated second-lowest in the succession category at 7.2, down from 7.5 in 2021, although advisors did acknowledge the financing resources the firm provides.)

“I’m selling my book of business to my daughter; we have been working together for over five years now,” said an advisor in Ontario with Desjardins Financial Security Independent Network, which was rated 8.5 (its results in the category weren’t calculable a year ago).

Yet, some advisors valued book transition support from their firms, and one dealer — Investment Planning Counsel Inc. (IPC) — saw its succession program rating increase significantly.

IPC topped all firms with a rating of 8.9, up from 8.3 a year ago, followed by IG Wealth Management with a rating of 8.8, down from 9.1 last year.

Many IPC advisors noted education on the succession program was readily available, and more than one advisor touted the support they received as “the best” in the dealer space.

One IPC advisor in Atlantic Canada said IPC provided “different programs [and] meetings for generational transition.” Another, in Ontario, said the one drawback they saw was that the succession program creates competition among advisors who want to buy books, while it’s “great” for sellers.

Respondents with IG Wealth were similarly upbeat.

“[They are] guaranteed [to] pay your book out and you can work with several advisors or one,” said an IG Wealth advisor in Ontario.

Another IG Wealth advisor, in Alberta, said, “It’s easy and good. There’s a bunch of support that makes the transition [smooth] when a new advisor comes. They take the client into account.”

At IG Wealth’s regional director national conference in May, the firm said that supporting advisor teams and succession planning were a priority.

“Where a practice wants to have multiple partners, or if there are familial dynamics, we’re going to be able to help and work with those practices in a way that, historically, we [couldn’t],” said Brent Allen, head of strategy and business operations with IG Wealth.

Allen noted that previously, advisor teams were small, typically with one lead advisor, making finding a successor difficult.

But as of May, the firm announced “significant enhancements to our teaming policy,” including the addition of new licensed assistant roles. The firm also plans to recruit more teams and encourage internal team growth.

On the other end, Manulife Securities saw its performance rating for the category drop significantly to 6.8 from 8.1 — making it the lowest-rated firm in the category.

“Advisors have left the firm specifically because of this issue,” said one Manulife advisor in Ontario, while another of the dealer’s advisors, in the Prairies, said, “You’ve got to go out of your way to try and find [resources].”

Manulife began revamping its succession program in January. The dealer is helping more with business valuation, advisor matching and transition financing — efforts largely not captured in the 2022 Report Card.

“We all work in an industry where [the] average age is over 50; you have an older population who have known their clients for decades, and they want to grow with their clients,” said Richard McIntyre, who became president and CEO of Manulife Securities in March. But failing to have a succession plan can sometimes lead to “difficult discussions.”

Despite some firms’ current challenges in meeting advisors’ succession needs, their goal is to support the practice of planning ahead.

“I think [succession planning] is a really important part of our business and it’s long overdue that, as an industry, we are looking at it more,” McIntyre said.

Said Allen: “We think teaming is a great way to bring that continuity while you’re building a practice. And we think for succession planning, getting people involved at least three years in advance is key, so they can meet clients, build trust, build rapport and understand their situation.”