Tackling Succession Misalignment in Advisory Firms

A new industry study by Kestra Financial and Bluespring Wealth Partners—both part of the Kestra Holdings ecosystem—highlights a critical challenge facing financial advisory firms: the disconnect between G1 advisers, or firm owners approaching retirement, and their G2 successors.

As a financial adviser, you’ve built a career helping clients plan for financial security as they navigate life’s major transitions. But are you applying that same discipline to your own retirement and succession? After building a successful practice, you need to develop a robust succession plan—one that not only rewards your work but also ensures the legacy you’ve built continues to thrive.

While many G1s express confidence in their succession plans, only 6% of those planning to retire within the next decade have a fully documented strategy in place. Meanwhile, many G2 advisers report feeling undervalued, underprepared, and increasingly uncertain about their future with some considering leaving the firm altogether.

In an industry already facing a shortage of next-generation talent, this misalignment poses a serious risk to long-term continuity and growth. Despite often sharing the same vision, G1 and G2 advisers remain far apart in execution. Kestra’s research, Bridging the Gap: Addressing Succession Misalignment Between G1 and G2 Advisors, identifies three key barometers for evaluating the strength of a succession plan and the level of alignment between generations—critical metrics for any firm looking to secure its future leadership.

1. Desire

• 58% of G1s struggle to relinquish control.
• 76% of G1s planning to retire within 10 years have not mapped out a timeline for transitioning client relationships.

2. Preparedness

• Only 25% of G1s have a formal leadership transition plan.
• 43% fear their clients won’t be as well cared for if they step away.

3. Ability

• 53% of G1s say finding a G2 with aligned values is a significant challenge.
• 1 in 3 G2s say they would leave in the absence of a clear succession timeline.

Keys to Effective Succession

To address these challenges, the report outlines three essential pillars for succession success: transparency, training, and tangibility. Transparency calls for open, ongoing dialogue between G1 and G2 advisers to ensure alignment on long-term goals and expectations. Training provides G2s with mentorship, professional development, and practical experience needed to step confidently into leadership roles. Tangibility means having a clearly documented plan to reduce ambiguity and minimize the stress that often accompanies leadership transitions.

“Not paying attention to succession planning or delaying a transition can expose any business to both talent and client loss, and ultimately it can lead to enterprise value erosion,” said Pradeep Jayaraman, president of Bluespring. “There are multiple approaches to succession planning: naming an internal successor, bringing in an outside hire, or pursuing a merger or sale. Determining the best path all comes down to aligning the unique goals of each business owner and their potential successor to ensure a successful transition.”

The survey was conducted with both G1 and G2 advisers across a broad range of independent broker-dealers and RIAs. All participants were from firms generating $750K or more in revenue, with at least half of that revenue coming from individual retail investors.

Kestra Financial is an independent wealth management platform that empowers financial professionals and firms through personalized support, integrated business management technology, and a collaborative professional community. Bluespring Wealth Partners is dedicated to the acquisition and support of quality wealth management firms.

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