Independent financial advice has never been more needed, and it’s never been under so much pressure. Clients want trusted guidance. Yet many advice practices are wrestling with how to stay durable in a changing environment.
Three issues come up repeatedly: succession, consolidation and margins. Unless these are addressed deliberately, they erode the value of a practice and threaten the independence that advisors are proud of.
Succession
Without a clear succession plan, a practice can lose much of its value overnight. Clients are left anxious; families face administrative chaos and years of work may not translate into the retirement capital an advisor imagined.
Succession is often treated as something to worry about “later”. It takes years to get right. It requires grooming the next generation of advisors, documenting processes and ensuring regular business valuations are done and understood.
I saw this early in Commspace. A widow approached us after her advisor husband passed away. His records were handwritten. The successor became overwhelmed and withdrew. Clients drifted and the family lost significant value. Eventually she joined a larger IFA group, but the damage was done. It was a stark reminder that “later” is too late.
A different practice we worked with showed the opposite. They built a rigorous, segmentation-driven approach to managing their client base and eventually sold through Brokerspace. That preparation secured a buyer aligned with their clients, gave them flexibility in deal structuring and ensured a smooth transition – ultimately unlocking maximum value.
Consolidation
Consolidation is reshaping the industry. Large financial planning practices, consolidators and even insurers are actively buying IFA practices. For some advisors, this is an appealing exit: a clean buyout, operational support and less compliance pressure. For others, it feels like losing their independence.
On the positive side, scale brings benefits. Bigger groups share compliance resources, afford better technology and access stronger research capabilities. They may even negotiate better deals with product providers. But there are trade-offs. Some consolidators impose restrictive revenue-sharing models or narrow product shelves. Cultural clashes are common. Before signing anything, advisors need to interrogate whether the partnership aligns with their values and client promises.
Succession can’t be ignored.
Even those who don’t sell are affected. Larger competitors with slick tech and big marketing budgets raise client expectations. Smaller practices must double down on what makes them unique: personal service, niche focus or community ties.
At Commspace, we see both sides. Some advisors leave large networks to reclaim autonomy, wanting to build their own culture and have control over product choice. Others are deeply satisfied joining a bigger group, particularly in the run-up to retirement, knowing their clients will be supported. Culture and ethos are not “soft” issues; they are the difference between thriving in a merger and regretting it.
Margins
Margins are under steady pressure. Compliance costs keep rising under FSCA oversight and the upcoming COFI Bill. Firms need to invest in tech for onboarding, secure communication and data management. That combination means costs up, fees under pressure and profitability squeezed. To survive, practices need to rethink their operating model.
Some firms have introduced client segmentation models, tailoring service levels to profitability. Others are using technology – freeing up time for client engagement. Outsourcing non-core functions such as compliance, para-planning or administration keeps overheads flexible.
Another Commspace client provides a powerful example. Over the last eight years, their firm has grown substantially, but what really stands out is how rigorously they measure profitability. They track time spent with each client, calculate revenue per client and continually refine their segmentation model. Importantly, they look beyond income, factoring in complexity, potential and fit. That discipline has allowed them to grow while staying profitable, proving that margin management is about aligning effort with value.
A call to action
Succession can’t be ignored. Consolidation must be approached with eyes open. Margin pressure needs proactive solutions. The advisors who put in the hard work now will not only protect their own legacy; they will ensure that independence remains a trusted force for generations to come.
| About Commspace Commspace was born from the real challenges independent financial advisors face in managing revenue. Founded with the goal of simplifying the complex world of commission tracking and fee management, Commspace has grown into a trusted partner for advisors across the country. The platform not only automates revenue allocation and reporting but also provides powerful business intelligence, giving advisors the clarity and confidence to grow their practices and understand the true value of their books. |
