The aging profession is expected to see many of its experienced advisers and business leaders retire in the next decade as the average adviser age hits 58, according to Adviser Ratings’ 2025 Australian Advice Landscape report.
This poses a significant challenge for the industry and particularly smaller or single-adviser firms as may not have another already within the business to act as successor when they leave.
Many are looking to sell as a result, driving up M&A and consolidation activity across the industry over the last few years.
For those who are starting to think about what their business might look like once they’re gone, AMAFA has launched the Succession Reality Check. It is a simple business continuity and succession planning self-assessment tool designed to help advisers review the resilience and long-term sustainability of their practice.
AMAFA chief executive Keith Marshall said that although advisers have built a career on helping clients plan for their future, they also need to apply this mindset to their own business.
“Many advisers spend a lot of time talking to clients about business continuity, risk management and succession planning. But it’s important they also practise what they preach and take a good look at how well their own businesses are prepared for disruption, illness, retirement or an unplanned exit,” Marshall said.
The reality check tool, he explained, is intended to prompt advisers into thinking about what they can do to ensure the longevity of the business and support clients when it comes time for them to depart.
“It offers advisers a quick, no-nonsense way to assess where they stand today and highlight areas they may need to address in order to support their clients, their staff and the value of their own business.”
While the profession faces challenges in attracting new entrants and the long lead time for those that do to become fully qualified, CFS 10X and Succession Plus’s Hidden Value Report found last year that one in three (34 per cent) of surveyed advisers intended to exit the profession in the next five years.
Despite this, almost half (47 per cent) of respondents said the business couldn’t operate effectively without the owner, meaning they could face significant challenges if the owner was unable to return to work or had to sell the business unexpectedly.
“This suggests these businesses may have weak organisational resilience and a high degree of key person/owner dependence. In terms of exit readiness, if these businesses were forced to sell unexpectedly, they would likely be offered a much lower sale price than what they believe the business to be worth,” the report said.