Cerulli: One in Four Retiring Advisors Face Succession Uncertainty

More than a quarter of advisors who plan to retire over the next decade still have unsettled succession plans, according to Boston-based Cerulli Associates. For an independent practice owner, that is not an administrative detail; it is a claim on the value of the book.

Cerulli puts the broader wave at 35% of advisors retiring in that period, and those advisors manage roughly 40% of the industry's client assets. The numbers describe a coming transfer of client relationships and enterprise value.

The firm's prescription is unglamorous: develop junior advisors early. Cerulli recommends placing new advisors on teams, laying out a career path, and giving them a portion of the client book before the lead advisor is close to the exit. Clients get time to know the person who will eventually serve them, and the practice gets an insider who can take over.

The recommendation runs straight into the industry's weak spot. Among practice management professionals Cerulli surveyed, about three-quarters called the time it takes to learn the business a major challenge, and 67% said day-to-day training takes too much time. A 2023 Cerulli report found that more than 72% of novice advisors left the industry before completing their training. Smaller RIAs lack the resources to run real programs; large-firm programs have also stumbled.

Merrill says it is trying to fix that. Executives have said that dropping the sink-or-swim model and hiring trainees with some finance background, including from its consumer bank, could let it graduate 75% of its roughly 2,400 trainees. That is one firm's bet; the industry-wide numbers remain discouraging.

For a seller, the practical consequence is pricing. A book with a named, trained successor is a going concern. A book without one is exposed to the buyer's confidence—in the clients' loyalty, in the transfer process, in the practice's durability. Cerulli analyst Olivia Morgan describes the goal as a natural retirement path where the advisor monetizes the business while transitioning it to a highly trained successor inside the practice. That is the difference between selling a firm and selling a client list.

The window is not long. With a third of the advisor population retiring in the next decade, the firms that build the junior bench now will control the supply of succession-ready talent. The rest will be negotiating from weakness at exactly the moment they most want leverage.