Financial planning principals are delaying their exit from the industry, with only 30 per cent intending to action their succession plan within the next five years, a new survey has found.
Conducted by industry researchers Business Health, the survey questioned 230 advisory businesses on behalf of National Australia Bank (NAB) Financial Planner Banking and the MLC Adviser Business Centre.
"These findings contradict much of the market commentary we have been hearing for the last few years," MLC Adviser Business Centre national manager Bob Neill said.
The survey found that only 10 per cent of businesses surveyed have a fully documented succession plan in place, a finding that surprised Neill.
Almost 80 per cent of respondents have not changed their exit strategies in the last 12 months, despite the recent market turmoil, the survey found.
"The failure of business owners to effectively plan their succession creates some significant challenges for the industry. It is likely many potential successors will be forced out of equity participation due to their inability to raise the required finance," NAB Financial Planner Banking national manager Malcolm Arnold said.
The survey also found that current business owners are not looking at selling all, or part, of their businesses anytime soon, despite many young advisers showing interesting in buying equity in existing advisory firms.
"Banks are increasingly being approached by young advisers seeking large amounts of finance over very short time frames. To increase their chances of successfully raising finance, we are urging younger advisers, with aspirations of owning equity within a practice and becoming principals, to ensure the current owners are aware of their ambitions," Arnold said.
