With 99% of independent financial services and advisory practices in the U.S. going out of business when their founder retires, firms must increasingly view succession planning as a growth strategy not a retirement strategy, says a report by SEI and FP Transitions.

While nearly one-third of advisors claim to have a succession plan, only 17% have a binding and actionable agreement. This data points to the need for advisors to re-assess their succession planning goals and strategies.

Read: Make succession planning a priority

By taking the time to plan for the future, advisors gain a competitive advantage in the present. It gives them a clearer picture of their firms’ overall health, prioritizes finding a new generation of talent, and sends the message to clients that the firm will be viable for years to come.

“Succession planning isn’t just about figuring out who’s going to take over when you’re gone,” says David Grau Sr., President and Founder of FP Transitions. “It’s about building a business that will support your long-term vision, and which will continue to serve clients even when you’re not around as much.”

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When asked specifically about their long-term growth, a majority of advisors fall into one of two camps: those who want to acquire other firms, and those who want to grow their firms themselves. One-third of those surveyed have never acquired another firm, but plan to. An additional one-third says they want to grow their firm by bringing in a new generation. And 57% of advisors who have been in business less than five years have never bought a business, but think they can grow by buying other firms.

Most advisors were optimistic about their businesses’ values. Some 42% of advisors think their firm is valued at one to two times the last 12 months’ revenue. An additional 43% think their firm is valued at two to four times the last 12 months’ revenue.

Read: 7 succession planning tips for biz owners

Beyond succession planning, 45% of advisors polled have a continuity plan in place in the event of an unexpected departure or leave of absence. Of those without a business continuity plan, 69% plan to implement one over the next few years.

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