In 2025, approximately 10% of advisors anticipate transitioning their practice, either through consolidation or individual decisions to move firms. To ensure a smooth transition for investors, it is crucial for wealth management firms to develop an infrastructure and narrative aimed at protecting assets and fostering future growth, finds research from Cerulli Associates and sponsored by 55ip, Advisors in Transition: Challenges and Best Practices.

According to Cerulli, advisors who switch between broker/dealer (B/D) firms typically lose about 22% of their assets. Those moving from a B/D firm to an independent firm lose around 18%, while advisors transitioning from one independent firm to another lose about 11% of their assets. As one advisor shares with Cerulli, "The actual transition of my practice itself was pretty painful because it was a fire drill, and [it was] hard having to meet with so many clients over such a short period of time."

Advisor transitions are expected to continue at a high pace in the coming years, primarily driven by M&A activity and a wave of retiring advisors. More than one-third of advisors, representing 41% of industry assets, are set to retire in the next decade, and 15% of retiring advisors expect to sell their practice externally; however, this figure rises to 33% for independent registered investment advisors (RIAs).

​​​​Tech-Enabled Transitions Ease Advisor Workload and Preserve Client Goals and Assets​​​

To help retain assets, a growing number of wealth management firms are adopting technology that provides transition assistance and ongoing tax management. This strategy allows for a more efficient transition to a new investment strategy and provides a streamlined approach to trading and rebalancing portfolios without placing additional demands on a Chief Investment Officer (CIO) or the advisor.

Solutions that facilitate seamless, tax-aware account transitions can also help advisors make a stronger case for their move when speaking with existing and potential clients. “We have observed across the board that wealth managers have experienced transition challenges including project planning, stakeholder management, integrations, and client communication,” said Mike Camp, Head of Client Solutions, 55ip. "Advisors can facilitate successful implementation by demystifying high-volume onboarding at scale. Intended advisor and client outcomes, with more control and less work, can be achieved with a tax-smart, technology-driven transition plan."

​​​The Appeal of Tax Alpha Increases with End-Clients

At the same time, retail investors are increasingly prioritizing tax considerations when selecting a financial advisor—more than two-thirds (69%) of retail investors believe it is important for their advisor to help reduce their tax bill. "Advisors must be more attuned to the tax implications associated with potential transitions. Tax management is emerging as an impactful concept to introduce to clients," says Andrew Blake, associate director, Cerulli Associates. “By adopting more efficient, tech-enabled solutions and emphasizing effective tax management, advisors can enhance their value proposition and better meet the needs of their clients in an increasingly tax-aware environment.”

As an increasing number of advisors reevaluate which affiliation model best aligns with their practice goals, Cerulli believes wealth management firms have a valuable opportunity to implement transition plans that facilitate seamless, tax-aware account migration. "The potential loss of clients, magnified by time spent on operational and compliance challenges, is an enormous risk during a transition. By offering dedicated support to address the various operational challenges that arise during practice transitions, firms can facilitate smoother client onboarding and accelerate profitability,” concludes Blake.