Thirty-one per cent of independent financial advisers (IFAs) have said they see succession planning as "vital", research by ValidPath has found.

New research by the IFA network revealed that 23% do not view it as a priority for their business, while 9% currently treat succession planning as a central part of their business strategy.

This figure increased to 25% among IFAs looking to retire within five years.

ValidPath said that while most IFAs recognise the importance of succession planning, many are delaying it too long, potentially risking the ideal exit for themselves, their business and their clients.

The firm revealed that more than a third (36%) of IFAs planning to retire in under 10 years admit they have given "little" or "no" thought to their succession plans.

Furthermore, 57% of IFAs believe that less than five years is a sufficient timeframe to plan for their exit.

Chief executive officer at ValidPath, Angus MacNee, said: "These findings highlight the gap between recognising the importance of planning for your exit and actually taking meaningful action.

"The good news is that most IFAs understand why succession planning is important, but only 9% currently treat it as a central part of their strategy. This obviously means that the overwhelming majority of IFAs (91%) are not being strategic with their approach to creating and realising value or indeed executing a plan to optimise their business potential."

He added that to maximise value, it is important that the business is in "shape" in terms of processes, profitability, management information, servicing, growth and other factors.

He concluded: "Just as advisers work with clients to build financial plans for the future, they must take the same structured approach to their own future and plan their value creation and exit strategy.

"By planning early, IFAs can maximise their business value, ensure a seamless transition for clients and staff, and achieving the best financial outcome for themselves and their business."

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