Key Takeaways
Succession planning in RIAs is fundamentally a talent retention strategy, not just a founder transition exercise.
Ambiguity around equity participation and future leadership opportunities can accelerate advisor departures by reinforcing a “portable practice” mindset.
Transparent, evolving succession frameworks help stabilize both client relationships and organizational culture.
Last week, we discussed what happens when a carefully crafted succession plan meets the realities of implementation. But what about the firms that never get that far? For many RIAs, the bigger risk isn’t that a succession plan fails, it’s that one never truly exists. And in those cases, a similar sounding word tends to emerge instead: secession.
Not the political kind, but a gradual (or sometimes abrupt) departure of key people (advisors, relationship managers, and future leaders) who ultimately decide to build their future somewhere else when they can’t see it clearly within your firm. We often work with RIAs on valuations for succession planning and on the plan itself, so we understand how important it is to get ahead of a potential exodus of critical staff members and their clients.
The Vacuum That Drives Departure
At its core, succession planning is about clarity: who leads next, who owns what, and how responsibility transitions over time. Without that clarity, a vacuum forms that can send your key personnel to the exits faster than it would for your favorite pet.
Next-generation advisors are not just looking for compensation; they’re looking for trajectory. They want to understand:
What their role will look like in five to ten years
Whether they can meaningfully participate in ownership
How client relationships will transition
Whether their increasing contributions will be recognized structurally, not just financially
When those questions go unanswered, people begin answering them for themselves. Often, the answer becomes: “I’ll need to go elsewhere to achieve that.”
The Rise of the “Portable Practice” Mindset
The RIA industry has evolved. Advisors increasingly view themselves as stewards of portable client relationships rather than employees tied indefinitely to a firm. This shift has major implications.
If a firm lacks a credible path for internal succession, high-performing advisors may begin to see themselves as entrepreneurs-in-waiting. The barriers to launching or joining another firm have never been lower, and the market actively rewards talent willing to move.
From their perspective, the decision becomes rational:
Why wait indefinitely for equity that may never materialize?
Why build enterprise value they may never share in?
Why stay in a structure where leadership transition is uncertain or opaque?
In the absence of a plan, secession becomes a strategy.
Equity Without a Roadmap Isn’t Ownership
Many founders believe they’ve addressed succession because they’ve discussed equity in general terms or even granted minority stakes. But equity without a roadmap is often insufficient.
Ownership needs context:
How will additional equity be earned or purchased?
At what valuation and under what terms?
What governance rights accompany ownership?
How does ownership translate into leadership authority?
Without clear answers, equity can feel more symbolic than substantive, and symbolic ownership rarely anchors long-term commitment.
In fact, partial measures can sometimes exacerbate the issue. Advisors who feel “close but not quite there” may become more acutely aware of the gap between their contributions and their actual stake in the firm’s future.
Client Relationships Are the Real Battleground
Succession planning is not just about equity, it’s about relationships.
Founders often underestimate how closely clients associate with individual advisors rather than the firm itself. When rising advisors play a meaningful role in client relationships but lack a visible path to leadership or ownership, the risk compounds:
Advisors feel under-recognized relative to their client impact
Clients begin to view those advisors as their primary point of trust
The firm becomes vulnerable to relationship migration if the advisor departs
In this dynamic, secession is not just about losing an employee, it’s about losing clients, revenue, and enterprise value.
The Cultural Signal of Inaction
Beyond economics, the absence of succession planning sends a powerful cultural signal.
It suggests:
Leadership transition is not a priority
Decision-making remains concentrated at the top
The firm may be more focused on preserving the status quo than evolving
Even if none of those signals are intentional, they can shape how emerging leaders interpret their future within the organization.
Contrast that with firms that actively communicate a succession vision, even if it’s still evolving. Transparency, even when imperfect, tends to build trust. Silence tends to erode it.
Why Founders Delay, and Why It Matters
If the risks are so clear, why do many founders delay succession planning?
Common reasons include:
Emotional attachment to control and identity
Uncertainty about valuation or deal structure
Concerns about fairness among next-generation leaders
The complexity of aligning multiple stakeholders
These are legitimate challenges. But delaying the process doesn’t eliminate them—it compounds them.
Over time, the cost of inaction grows:
The pool of internal successors shrinks as people leave
The firm becomes more dependent on external solutions
Negotiating leverage shifts away from the founder
Enterprise value may decline if key personnel risk increases
At some point, the choice is no longer between a perfect plan and no plan, it’s between a proactive transition and a reactive response to departures. It usually starts with a third party valuation since buyers and sellers usually can’t agree on price. This is where we get involved, and we’re happy to help.
Secession Is Rarely Sudden
One of the more dangerous misconceptions is that advisor departures happen suddenly. In reality, they are often the result of a long, quiet buildup.
The progression may look like this:
Questions about the future go unanswered
Frustration turns into disengagement
External opportunities begin to look more attractive
Conversations happen quietly outside the firm
Departure becomes inevitable
By the time a resignation is announced, the decision has often been months—or even years—in the making.
From the firm’s perspective, it can feel abrupt. From the advisor’s perspective, it can feel overdue.
Reframing Succession as Retention Strategy
Succession planning is often framed as a long-term, end-of-career issue for founders. But it is equally a near-term retention strategy for the next generation.
A well-articulated succession framework can:
Anchor key talent by aligning incentives with long-term outcomes
Provide visibility into career progression and leadership opportunities
Facilitate intentional client transition over time
Strengthen firm-wide alignment around growth and governance
In other words, succession planning doesn’t just prepare for the future—it stabilizes the present.
Practical Steps Toward Avoiding Secession
Firms don’t need a perfect, fully engineered plan on day one. But they do need momentum. Practical steps include:
1. Start the Conversation Early
Even preliminary discussions signal that leadership transition is a priority.
2. Define a Directional Framework
Outline how ownership, leadership, and client responsibilities might evolve—even if details are refined later.
3. Create Transparency Around Equity
Clarify how equity is valued, transferred, and expanded over time.
4. Align Roles with Responsibility
Ensure that increasing client and managerial responsibilities are matched with appropriate authority and incentives.
5. Revisit and Refine Regularly
Succession is not a one-time event, it’s an ongoing process that should evolve with the firm.
The Bottom Line
If you’re not actively succession planning, you are implicitly allowing for secession planning, by your people.
The market for talent is too dynamic, and the expectations of next-generation advisors are too well-defined, for ambiguity to persist indefinitely. Firms that fail to provide a credible path forward risk watching that path be built elsewhere.
Succession planning is not just about who takes over when founders step back. It’s about whether your firm retains the people who will make that transition possible in the first place.
Because if they don’t see a future inside your firm, they will create one outside of it.
About Mercer Capital
We are a valuation firm that is organized according to industry specialization. Our Investment Management Team provides valuation, transaction, litigation, and consulting services to a client base consisting of asset managers, wealth managers, independent trust companies, broker-dealers, PE firms and alternative managers, and related investment consultancies.