Why Advisors Delay Selling Their Practice

Stories about mergers and acquisitions are dominating the headlines, paired with an equal number of headlines discussing the vast number of advisors who are rapidly reaching the average age of retirement. Demand for acquisitions has remained high for several years, and many advisors are earning high returns on their practice equity. With all of these factors in play, many advisors are still choosing to delay their exit. But why?

Most advisors nearing retirement age claim that they plan to retire in five years, though few truly mean it. The “five years” response allows advisors to see it on the horizon, while keeping their retirement far enough in the future that they don’t have to actually act on it. This is for a number of reasons.

1. Advisors are unable to let go of work goals. Many advisors are driven, successful individuals that set big goals. It’s hard to move on before those goals are met.
2. Advisors don’t see a correlation between age and retirement. Even though the average retirement age is 65, many advisors don’t see their own age as a factor in their decision to retire.
3. Advisors haven’t set alternate goals. They are more likely to retire to something versus retiring from their practice. Until they know what they are moving toward, they continue on their current path.
4. Advisors don’t feel they can trust someone else to run their practice. Advisors give so much to their clients. It’s hard to believe anyone else can take care of their clients as well as they do. Many are also concerned about a successor caring for their staff.

These are just a few of the major reasons cited by advisors. We’ve heard numerous others, many of which also stem from concerns about meeting a certain value, caring for family members who work in the practice, and lacking confidence in the process.