Research Report
Succession Misalignment Between G1 and G2 Advisors
Bridging the Gap: How advisors on both sides of a transition can overcome succession obstacles to ensure client care, secure a firm’s legacy and maximize its value.
Only 6% of Financial Advisors Nearing Retirement Have a Plan
Kestra’s recent industry study on advisor succession reveals critical gaps between G1 advisors – who are firm owners planning to retire – and G2 advisors, or potential successors. While it’s known that succession is a challenging undertaking, this research gets to the heart of what makes it so challenging and why. Ultimately, despite shared aspirations, a significant disconnect in execution exists between G1 and G2 advisors.
Top Findings
Many owners eyeing succession feel confident about their plans, but just 6 percent of those planning to retire within 10 years have a fully documented succession plan. Meanwhile, many intended successors feel undervalued, and unprepared—some even on the verge of walking away. In an industry facing a scarcity of next-generation talent, that’s a risk no firm can afford. The research identifies 3 key barometers to measure the health of a succession plan and level of alignment between a G1 and G2:
Key Elements for Succession Success
Transparency
G1s and G2s coming together to communicate and discuss long-term goals and concerns.
Training
Giving G2s the structured support and mentorship they need to succeed.
Tangibility
Having a documented leadership transition plan to reduce ambiguity and stress.
A Note On Equity...
G2s want tangible incentives. Yet, among G1s planning to retire within ten years, fewer than half (41 percent) have transferred any equity to successors. This is another critical component needed for a successful transition, and one that contributes to the flight risk of G2s.
"I see other advisors have partnership or equity within two, three years. So, it is frustrating that I’ve been with [G1] almost seven years, and nothing’s formally put in place.
- G2 Advisor
“I told them early on that I’d love to join them, but I wasn’t going to do so without some sort of equity ramp or equity option in terms of becoming an owner.”
- G2 Advisor
Hurdles to Success: What's Standing in the way?
G1 Perspective: Handing Over the Reins Isn't Easy
Challenge finding qualified successors:
G1s say by far their biggest obstacle to making progress with succession planning is finding qualified G2s who share their vision and values. And more than half of G1s plan to have at least two successors, compounding this challenge.
Why it matters:
Without a plan for transitioning leadership, advisors risk losing G2 talent and compromising client care.
"The difficulty of finding a successor that matches your style of managing your client base—I think that’s the hardest part."
- G1 Advisor
G2 Perspective: Ready to Lead But Stuck in Limbo
Lack of clarity:
Fewer than half of G2s say their G1s’ succession plan is clear and well-documented. The biggest gaps in clarity are owners’ retirement timelines, G2 compensation structure and opportunity, and plans for equity transfer. Even G2s who rate their G1s’ plans highly on clarity, would still value additional insight.
Why it matters:
A spelled-out plan correlates with G2s’ commitment to stay with their firm.
"He tells me I’m his succession plan. But there’s a lot of holes with what we have. I feel like I’m a free agent still. Sometimes you need to leave to be taken seriously."
- G2 Advisor
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Plan for Succession with Confidence
Effective succession planning solutions support both the owners transitioning their business to the next generation AND the successors preparing to take the reins. The Kestra Holdings ecosystem helps bridge that gap. As a network of companies that power the financial independence of wealth management professionals and firms, Kestra equips its advisors with expert consulting, resources, technology, and support so they can create scalable growth and provide deeper value to their end clients.
Succession planning is always going to be a process. But with additional perspective and support from partners like Kestra, the way forward can be more clearly defined for all.
To learn more about working with us, book a meeting below or contact advisors@kestraholdings.com
About the Study
This study was commissioned by Kestra Holdings and executed by 8 Acre Perspective, an independent research firm. 269 financial advisors across a broad range of independent broker-dealers and RIAs participated in an online survey in October-November 2024.
- “G1” Advisors: Practice owners who are planning to retire and sell their stake in their practice (may be either a founder or a partner/principal.) All G1 advisors in this study are planning for an internal succession—promoting one or more advisors from within the practice into leadership. The average age of G1 participants was 56 with 24 years of experience as an advisor, on average.
- “G2” Advisors: Advisors who has been identified as successors or potential successors for owners in their current practice. The average age of G2 participants was 44 with 17 years of experience as an advisor, on average.
All participants are at practices with $750K or more in revenue, at least half of which is generated from individual retail investors.
In addition, individual interviews were conducted in 2024 with 10 G1 advisors and 10 G2 advisors to explore in-depth their approach to leadership transition.
Disclosures:
Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA and SIPC. Investment advisory Services offered through Kestra Advisory Services, LLC (Kestra AS) or Kestra Private Wealth Services, LLC (Kestra PWS). Kestra Financial, Bluespring Wealth Partners, LLC, Kestra IS, Kestra AS and Kestra PWS are affiliated through common ownership by Kestra Holdings. Investor Disclosures: www.Kestrafinancial.com/disclosures