Why succession planning can't wait
Succession planning is not just a future consideration; it is a present-day priority. For financial advisers, especially those who trade in their personal capacity as sole proprietors, delaying the development of a clear succession plan can have far-reaching consequences that threaten the stability and long-term value of the business.
Delayed succession planning exposes financial advice practices to serious risks, including the loss of revenue continuity if an adviser exits suddenly, reduced goodwill, operational disruption, and a drop in practice valuation. These risks are heightened in practices operating under the legal entity of a sole proprietorship, where the adviser is the primary or only point of client engagement.
FAnews spoke to Sonja Steyn, Head of Strategic Wealth Management and Advice at Momentum Advice, about why succession planning cannot wait and what advisers need to consider.
Risks of delayed succession planning
“Putting off succession planning can put your entire practice at risk,” said Steyn. “If an adviser leaves suddenly, due to illness, retirement, or any unforeseen event, the business can quickly lose income and long-standing client relationships. This is particularly dangerous for practices operating as sole proprietorships, where the adviser is the business in the eyes of clients.”
Without a plan in place, operational gaps can emerge in client service, compliance, and leadership, disrupting the day-to-day running of the practice. “And when there is no clear future plan in place,” Steyn added, “the value of the business declines, making it harder to sell, transition, or preserve.”
The client impact can be just as significant. “Clients build deep trust with their advisers, and delaying succession planning can erode that trust,” she said. “When there is no clarity about who will manage their finances in the future, especially for clients nearing retirement, it creates uncertainty. That uncertainty often pushes them to move their portfolios to advisory practises with more transparent and stable succession strategies.”
In a people-based business where relationships are built over years, the absence of a succession plan can undo that trust in a matter of weeks. It is not just about protecting business value; it is about protecting the promises advisers have made to their clients.
Succession planning is no longer optional. It is a fundamental part of practice sustainability, and the sooner advisers put plans in place, the better prepared they will be to preserve both client relationships and the legacy they have built.
Mitigating challenges and ensuring compliance
“Many advisers delay succession planning because they are emotionally invested in their businesses or uncertain about who will take over,” Steyn explained. “Others may not have access to qualified successors or structured mentorship programmes. These challenges can be addressed through phased transitions, equity-sharing arrangements, or by investing in leadership development to groom future successors from within.”
Steyn also highlighted the regulatory dimension: “South Africa’s financial services regulator expects licensed practices to have formal continuity and succession plans in place, particularly for key individuals. Falling short is not just a business risk; it can lead to licence suspensions, client complaints, reputational damage, and financial penalties. Succession planning is no longer just the best practice; it is a compliance requirement.”
Strategies for a smooth and sustainable transition
“A successful transition begins with identifying a suitable successor early and gradually introducing them to clients,” said Steyn. “This process should form part of the business’s long-term strategy and include formal legal agreements. One of the biggest mistakes is treating succession as a one-off event, continuous planning is essential for a seamless leadership handover.”
She stressed the importance of developing leadership from within: “Developing and mentoring future leaders is key to preserving a practice’s culture and approach. It also reduces recruitment, and onboarding costs and helps retain young talent by offering a clear growth path into leadership roles.”
For advisers who have not yet started the process, Steyn advised beginning with a practical assessment: “Start with a readiness audit and identify potential successors. Engage legal and financial experts to formalise the plan. Just as important is early communication with clients to build trust and prepare them for change. Getting involved in mentorship and leadership programmes also lays a solid foundation for the future.”
For financial advisers committed to building resilient, future-ready businesses, succession planning is no longer optional, it is both a strategic priority and a regulatory requirement. As industry demands increase and client expectations evolve, proactive planning safeguards continuity, protects business value, and strengthens long-term client trust.
The time to act is not tomorrow - it is today.
Writer’s Thoughts
In a fast-evolving financial landscape, succession planning is a critical component for safeguarding the longevity and stability of advisory practices. Financial advisers must act now to ensure their business, client relationships, and legacy are protected - delaying this process only amplifies the risks and uncertainties that could undermine years of hard work. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected]
