Skip to main content

You are here

Advertisement


Growing Number of RIA Owners Looking to Exit

A new study finds that more than one in three RIA firm owners (37%) are planning to exit the business within the next decade, up from 30% in 2014.

While the survey by Fidelity Clearing & Custody Solutions finds that a majority of firms (59%) prefer an internal succession, only about a quarter (27%) have next-generation owners in place. Moreover, less 10% of equity, across all firms, is held by those next-generation owners.

Almost half (48%) of the owners planning to exit in six years or less prefer a merger or sale to any other succession option, signifying the importance of identifying future leaders early on to enable firm owners to choose the succession path they want.

As in previous years, Fidelity also identified a group of “High-Performing Firms” (HPFs) — those which outperformed others in the areas of growth, productivity and profitability. Perhaps not surprisingly, the study found that HPFs are more prepared when it comes to succession planning:

  • 75% of them have a mechanism in place to determine firm value in the event of an internal succession or ownership transition (versus 61% of all other firms).
  • 68% of them have changed their approach or readiness for succession over the last three years (compared with 52% of other firms).
  • 52% of them have succession plans ready for implementation (compared to 40% of all other firms).
  • 23% of them have hired, identified or begun developing potential successors in the past three years (compared with 15% of all other firms).
More information on the 2015 Fidelity RIA Benchmarking Study is available here.