Abstract:
The lack of succession planning by financial advisers poses a threat to the business
continuity and sustainable growth of life assurance and investment companies. This
study aims to address this problem by developing a profile of financial adviser exit
strategies and succession arrangements in a tied agency environment in relation to trust,
socio-emotional wealth and commitment to stakeholders, thereby enabling life
assurance and investment companies to more effectively manage the succession of their
tied financial advisers. A quantitative study was performed analysing 111 responses from
an online survey sent to all tied financial advisers aged 55 and over of a large South
African life assurer.
The results of the study identify that higher levels of trust, socio-emotional wealth and
commitment to clients are related to a stewardship exit strategy which includes
succession, with higher levels of trust being related to the existence of succession
arrangements. Profiles of exit strategies and succession arrangements were
established, enabling the prediction of exit strategies based on trust in non-family and
family members and the prediction of succession arrangements based on socioemotional
wealth and trust in non-family members. The study contributes to family
business and entrepreneurship theory by identifying a dichotomy of tied financial adviser
practices into those that demonstrate family business characteristics and those that do
not and by developing a model of financial adviser exit strategies and succession
arrangements. The study concludes with recommendations to management of life
assurance and investment companies for managing the succession and exit strategies
of tied financial advisers.
