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Succession Planning Still Major Issue for Advisors, Opportunity for Distributors According to Signator Investors, Inc. Equity and Succession Planning Survey of Advisors

Wednesday, July 17, 2013

Succession Planning Still Major Issue for Advisors, Opportunity for Distributors According to Signator Investors, Inc. Equity and Succession Planning Survey of Advisors

10:07 EDT Wednesday, July 17, 2013

Few Have a Complete Succession Plan and Majority Lack Knowledge, Have Concerns about Succession Planning
Eighty-one Percent Say Industry Doesn't Do a Good Job Helping with Succession Planning

BOSTON, July 17, 2013 /PRNewswire/ -- Despite succession planning being a major topic facing the graying financial advisor market, a new survey conducted by Mathew Greenwald and Associates for Signator Investors, Inc. shows few financial professionals are fully prepared for succession. A strong majority also say the industry does not do a good job helping with succession planning even though nearly three-quarters are more apt to consider a broker-dealer with a succession planning platform.

"Overall, I think the industry has been active in discussing this issue and developing programs for advisors to help them with succession planning, but clearly the need to do more continues," said Brian Heapps, president of John Hancock Financial Network, parent of broker-dealer Signator Investors, Inc. "Personally I can see that advisors might consider a succession event to be too far into the future to consider. However, it's never too early to work on the critical first steps of obtaining a solid valuation for a practice and then considering how best to increase the value and build equity."

Preparation for Succession Although many advisors have a plan to make sure their practice can continue if they are unable to work (56%), few have a completed succession plan or have an excellent estimate of their firm's value.

  • Only 11 percent have completed a succession plan. About a third have started but not completed a plan (34%), while 44 percent said they've thought about making a plan but not started one; an additional 12 percent haven't even started thinking about creating a succession plan. 
  • Only one in ten has an excellent estimate of the value of their practice (10%), though 33 percent have what they consider to be a good estimate. More than four in ten say they have some sense of the value of their practice, but not a good estimate (44%), and an additional 12 percent say they do not have any idea how much their practice is worth. 

Why not prepared While strong majorities believe the industry does not do a good job of helping representatives plan for succession (81%), most admit that they, too, are a roadblock in planning for their succession: 55 percent agree that they are too busy with their practice to think about succession planning, and 53 percent agree that they have procrastinated too much when it comes to this issue. 

Interestingly, the different channels of advisors surveyed ? independent broker dealers, independent advisors/planners, and career agents ? show few differences with regard to their views toward and preparation for succession. 

It is possible some of the advisors' hesitation in planning comes from not knowing how they want to retire from their practice.

  • Only 20 percent are very certain about what they will do with their practice when they retire, though it appears few plan to retire all at once.  Many plan to reduce their practice activities before they retire (52%), and 42 percent currently have a plan in place to continue working with key clients (another 45% say they intend to create a plan to continue working with key clients). 
  • Most either have a protege now (30%) or are likely to hire one in the future (among those who do not have a protege, 67 percent plan to hire one).  Sharing a philosophy with the protégé and working with them for a number of years are key considerations in hiring someone to take over their practice (important to 96% and 94% of advisors, respectively). 

Lack of knowledge, concerns about succession planning Many advisors do not feel knowledgeable about the aspects of succession planning they consider to be most important.  This includes finding a successor, important to 85 percent of respondents, with 41 percent not feeling knowledgeable about it; obtaining a valuation of an investment business, which 83 percent feel is important, and 42 percent not knowledgeable; valuation of a fee-based business (72%, 49%); access to financing (71%, 60%); valuation of an insurance business (66%, 56%); and arranging third-party management of the transition (57%, 71%).  In addition, at least seven out of ten responding advisors consider each of those issues to be a challenge for them.

Advisors cite a number of concerns in succession planning, including obtaining cash for their business (80%), maintaining relationships with key clients (70%), financing a transition (69%), annuitizing their business (69%), and bringing along a younger rep (66%). 

Client service is also a key consideration: 56 percent list leaving clients with a lower level of service as a concern, and another 47 percent agree that they do not believe they will be able to find someone who will service their clients as well as they do. 

Most valuable forms of succession planning support When presented nine services that a succession planning platform might offer, best practices for making a practice more valuable is by far the most popular with 79 percent of advisors interested in this service, though majorities are interested in each of the other tested services as well.

Two out of three advisors would be interested in receiving assistance in structuring an acquisition on either the buy or sell side (67%), assistance in designing and implementing a transition plan (67%), receiving support with a continuity plan (67%), or third-party evaluation of their entire practice (65%). 

Slightly fewer ? roughly six in ten ? would be very or somewhat interested in ongoing valuation (63%), financial support for the transaction (62%), or finding someone to purchase their practice (59%). 

Methodology Conducted by Mathew Greenwald & Associates online, the survey represents responses from more than 500 financial professionals who were working either as a career agent, IFP/IFA, or independent broker dealer rep; planned to retire within 20 years; and had worked in the financial services industry for at least five years, owned at least half of their practice and generated at least $80,000 in gross income in the 12 months prior to the study.

About Signator Investors, Inc. Signator Investors, Inc. dual registered broker dealer of John Hancock Financial Network, offers financial professionals a wealth of resources and support for business and professional development. To help advisors best meet their clients' needs, Signator provides an open product platform including a comprehensive range of top-quality investment advisory and protection products from leading carriers.

Advisors affiliated with Signator have access to support for financial planning; an integrated technology platform; defined contribution resources; a dedicated practice management team; a marketing portal providing turn-key programs with compliance-ready, customizable templates; an annual practice advancement conference; a top producer program and an industry-leading equity and succession program.

About John Hancock Financial Network and Signator Investors, Inc. John Hancock Financial Network is a national network of independent firms with approximately 1,600 financial professionals across the U.S. A leader in the financial services industry having the stability and scale to offer an innovative business model, John Hancock Financial Network gives entrepreneurial financial professionals the power to effectively build unique businesses, based on their own vision and market opportunity.

About John Hancock Financial and Manulife Financial John Hancock Financial is a division of Manulife Financial, a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Operating as Manulife Financial in Canada and Asia, and primarily as John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were C$555 billion (US$547 billion) as at March 31, 2013. Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial can be found on the Internet at

The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers and administers a broad range of financial products, including life insurance, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at

Securities and investment advisory services offered through Signator Investors, Inc., member FINRA/SIPC, a registered investment advisor. 197 Clarendon St., Boston, MA 02116. 5145-20130712-149333


SOURCE John Hancock Financial

For further information: Melissa Berczuk, John Hancock,

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