Financial Advisors Report Nearly Three Quarters of Business Owner Clients Do Not Plan to Leave Operations to Family

Edward Jones survey reveals financial advisors see more business owners selecting business partners as opposed to family members in succession planning

ST. LOUIS, July 9, 2024 — During the succession planning process, financial advisors report that business owners favor passing the business to a business partner over a family member, according to new data from financial services firm Edward Jones and Morning Consult. In fact, among financial advisors who have business owner clients, 72% say their business owner clients do not plan to leave operations to family.

The study revealed that roughly half of financial advisors (48%) are seeing business owners select a business partner as their identified successor. Regardless of who a business owner chooses as a successor, the majority of financial advisors (88%) recommend the selected business successor be involved in the business before selection.

“For owners, it can be a complex and emotional process to even consider handing off a business that they have invested energy, time and money into over the years,” said Jesse Abercrombie, Certified Exit Planner Advisor (CEPA®), financial advisor at Edward Jones. “Instead of going at it alone, business owners can and should lean on financial advisors and a team of professionals to provide trusted guidance and an outside perspective at every step of their entrepreneurial journey – including during something as sentimental as succession planning.”

Support Beyond Financial Planning

Most financial advisors define business succession planning as a way to continue business growth (69%) and many others define it as a form of business maintenance (39%). The vast majority (81%) of financial advisors agree that it is important to discuss financial planning for the transition of ownership with their business owner clients.

However, financial advisors can and are providing support for their business owner clients that goes beyond financial planning, with financial advisors saying it’s important to discuss establishing a timeline and milestones for the succession process (61%).

Financial advisors see the biggest challenges for business owners as maintaining business continuity during the transition period (57%), financial planning and ensuring adequate resources for the transition (56%) and the legal complexities and navigating regulatory requirements (54%).

Helpfully, the majority of financial advisors say that they can provide support in these areas of most concern, including supporting financial planning and ensuring adequate resources for the transition (60%), maintaining business continuity during the transition period (53%) and connecting the business with an attorney to address legal complexities and navigate regulatory requirements (51%).

Strategic Counsel Early and Often

The vast majority of financial advisors (90%) say they’ve helped their business owner clients build their succession plans in some capacity – showing that they have experience with the process.

Even with third-party support through a financial advisor, some clients could still be more prepared. While 97% of financial advisors with business owner clients say that their clients are succession planning, one-third of financial advisors (36%) say their clients could be doing more.

One-third of financial advisors (39%) believe business owners earlier on in their businesses (1-5 years) should meet with them at least once a month to plan for succession. When business owners have more experience, financial advisors acknowledge that they should meet less frequently. For example, 35% of financial advisors say that business owners with 10+ years of experience should meet once a quarter.

“Similar to how individual investors manage their personal finances, business owners should engage financial advisors early and often to ensure their succession plan is adaptable and highly strategic,” said Abercrombie. “Working with a financial advisor can help provide business owners with a framework to ensure they’re on the right path to prepare their business for the future.”

Edward Jones supports its financial advisors in receiving additional designations to better serve clients and their individual needs. Nearly 750 of the firm’s financial advisors hold a CEPA® designation, a credential that can helps financial advisors serve business owner clients during succession planning. Edward Jones also serves about 750,000 business owner clients, providing counsel for business development.

To learn more, visit: www.edwardjones.com/NextInLine.

Methodology:

This survey was conducted by global data intelligence company Morning Consult among a national sample of 200 financial advisors from May 6-10, 2024.

About Edward Jones

Edward Jones is a leading financial services firm in the U.S. and through its affiliate in Canada. The firm's nearly 19,500 financial advisors serve more than 8 million clients with a total of $2 trillion in client assets under care at the end of March 2024. Edward Jones' purpose is to partner for positive impact to improve the lives of its clients and colleagues, and together, better our communities and society. Through the dedication of the firm's approximately 54,000 associates and our branch presence in 68% of U.S. counties and most Canadian provinces and territories, the firm is committed to helping more people achieve financially what is most important to them. The Edward Jones website is at www.edwardjones.com, and its recruiting website is www.careers.edwardjones.com. Member SIPC.

About Morning Consult

Morning Consult is a global decision intelligence company changing how modern leaders make smarter, faster, better decisions. The company pairs its proprietary high-frequency data with applied artificial intelligence to better inform decisions on what people think and how they will act. Learn more at morningconsult.com.