Over the last 15 years the amount of money advisors can get for their business has risen astronomically. An example of this rise is as recently as 10 years ago, Morgan Stanley was quoted to have increased their deal to pay an advisor up to 100% of trailing 12 month production with 75% being cash and the remainder in equity. Today, these deals at the Wirehouses can top 350% including back end bonuses. For Independent advisors, business valuation multiples have also grown from nothing, when an advisor would just retire, to up to 2-3 times revenue.
However, most advisors haven’t spent the time and taken the steps to take advantage of today’s all-time high valuations that seem to be approaching a “bubble-like” status. In fact fewer than 20% of advisors have a succession plan. Succession planning for advisors may be one of the most talked about topics at conferences, and yet the average age of advisors keeps going up and the percentage with a succession plan doesn’t change.