What is advisor succession?
Advisor succession is how a financial advisor's clients, revenue and, where the advisor owns it, the business itself pass to someone else when the advisor retires, dies or steps back. The main paths are an internal transition to partners, junior advisors or employees, an external sale to another advisor, RIA or consolidator, and, for employee advisors at wirehouses and regional brokerages, a firm-run sunset or retire-in-place program.
The path available depends on who owns the client relationships. An independent RIA owner owns the business and can sell equity. A wirehouse employee does not own the accounts, which are held at the firm, so the realistic choices are a firm sunset program, or leaving for independence and selling there, a decision Financial Planning has framed as staying for the sunset or leaving for a sale.
The question is pressing because of demographics. Cerulli Associates reported in its 3Q 2026 U.S. advisor edition that about 35.3% of advisors, representing 40.1% of industry assets under advisement and nearly $14.5 trillion, expect to retire within 10 years, and that 27% of those advisors were unsure of their succession plans, according to PlanAdviser. In earlier research, Cerulli put the figure at 37.4% of headcount and 41.4% of assets (105,887 advisors), with 26% unsure of their plans, InvestmentNews reported in 2025.
How does internal succession differ from an external sale?
In an internal succession, ownership moves gradually to people already inside the firm, such as next-generation advisors or partners. Mercer Capital says internal transitions are the most common type of ownership transaction for investment management firms, and that they let founders handpick successors, but they usually require seller financing or outside debt because junior staff rarely have the cash to buy a large stake at once.
In an external sale, the advisor sells the practice or firm to an outside buyer, such as a larger RIA, an aggregator or a private equity-backed consolidator. External buyers can often pay more up front, but the owner gives up control and the firm's culture and brand may change. Cerulli found in 2025 research with 55ip that 15% of advisors expecting to retire planned to sell their practices externally, a share that rose to 33% among independent RIAs, according to InvestmentNews.
Many deals blend the two, for example an external sale of a minority stake to fund the founder's partial exit while internal successors keep building equity. How a practice is priced is covered in the related guide on how RIAs are valued. This guide is general information, not legal, tax or investment advice.
What is a sunset (retire-in-place) deal?
A sunset deal, also called a retire-in-place or legacy program, is a firm-sponsored arrangement in which a retiring employee advisor hands clients to one or more successors at the same firm over a transition period, then receives payments based on the revenue those clients generate. WealthManagement.com describes the successor as responsible for paying the retiring advisor from the revenue the inherited assets produce, with the firm adding its own contribution.
Payouts are expressed as a percentage of the retiring advisor's trailing-12-month (T-12) revenue, with higher multiples for longer tenure and larger books. Recent programs advertise maximums of 300% or more for top producers, as the firm-by-firm details below show.
Critics note the trade-offs. Because the clients remain the firm's, the successor does not end up owning an asset it can sell, and the agreements carry multi-year restrictions. Financial Planning has noted that sunset payments are typically taxed as ordinary income over five to 12 years, while a sale of an independent business may qualify for capital gains treatment.
What do the wirehouse and Edward Jones programs pay?
Morgan Stanley's Former Advisor Program (FAP) has retiring advisors share in the fees and commissions their former book generates after it passes to an inheriting advisor. In 2018, WealthManagement.com reported that the firm raised the maximum payout from 250% to approximately 350% of trailing-12 revenue and added an optional Deferred Platinum Offering for its largest producers, which required a 90-day garden leave.
Merrill's retirement plan is the Client Transition Program (CTP). Payouts are calculated by multiplying an advisor's trailing-12 production by a CTP award percentage. In 2019 Merrill raised the maximum to 275% for advisors with $7.5 million or more in production and capped the inheriting advisor's recovery period at eight years, according to WealthManagement.com. AdvisorHub later reported that a revised plan, slated to take effect Jan. 1, 2025, would raise the top payout to 325% of trailing-12 revenue at the $7.5 million tier.
UBS's program is the Aspiring Legacy Financial Advisor (ALFA) program, launched in 2015 at up to 230% of production for advisors with at least five years at the firm, ThinkAdvisor reported. As of 2026, UBS says ALFA Core (up to 200%, for advisors producing at least $200,000) and ALFA Plus (for producers of at least $1 million) together can pay up to 300% of eligible production.
Wells Fargo launched a revamped succession plan called Summit in April 2019 that added a loyalty award of 25% of the retiring advisor's trailing-12 revenue, according to Financial Planning. Edward Jones says on its recruiting site that retiring advisors can receive base compensation of up to three times annual gross revenue, based on the prior three years, paid over two, three or four years. Terms at all of these firms change periodically, so advisors should rely on the current plan documents.
How are sunset payouts paid out over the years?
The retiring advisor usually works alongside successors for a transition period, introducing clients, then formally retires and receives payments over several years. The payments are typically a share of the revenue the transferred accounts keep producing, plus firm-funded components, so the retiree's total depends on how many clients stay.
The successor's economics run the other way. At Merrill, the inheriting advisor's payout on the transferred book is reduced until a set portion of the award is recovered, with the recovery period capped at eight years under the 2019 changes, WealthManagement.com reported. Because both sides are paid from the same revenue stream, accurate crediting of the inherited accounts matters, and disputes over it have reached arbitration and terminations at large firms.
Do clients have to consent, and what non-solicits apply?
Clients always choose whether to stay with a successor. For independent RIAs, Section 205(a)(2) of the Investment Advisers Act requires advisory contracts to prohibit assignment without the client's consent. ThinkAdvisor has noted that the SEC has never explicitly defined what counts as consent, so whether negative consent (silence after notice) works depends largely on the contract's wording.
Sunset programs nearly always come with non-solicitation agreements so the retiree cannot take clients elsewhere while being paid. Wells Fargo's Summit program required a non-solicit lasting the length of the payments, about 60 months, plus another 36 months, Financial Planning reported. WealthManagement.com has noted that these restrictions and lockups can limit an advisor's options for years.
Advisors weighing a sunset deal against a future move or an independent sale should read the restrictions closely and consider legal review. This is general information, not legal advice.
How are internal buyouts financed?
The most common tool is a seller note: the departing owner accepts payment over several years from the buyers, often supplemented by an earnout tied to retained revenue. Mercer Capital notes that outside debt is often used instead of seller financing in internal deals, but that lenders to RIAs typically require personal guarantees, which many borrowers resist.
Specialist lenders have built businesses around advisor deals. A 2025 report carried by Yahoo Finance named Live Oak Bank and Oak Street Funding among the largest direct lenders to advisors, and a Live Oak executive said its advisor lending that year went mainly to acquisitions, with a substantial portion for internal succession.
Some buyers use SBA 7(a) loans. Under the SBA's SOP 50 10 8, changes of ownership generally require a buyer equity injection of at least 10%, and a seller note can count toward up to half of that injection only if it is on full standby, with no principal or interest payments, for the life of the SBA loan, according to a client alert from law firm Whiteford, Taylor & Preston. The SBA has since revised its rules again, so buyers should check the version in force with a lender.