Most wealth management owners in Canada don’t have a succession plan, regardless of if they want to sell this year or in the next ten. That’s a miss. Especially for those practice owners that are several years from when they envision their business exit – regardless of how far out you see your next chapter beginning, the time to start planning your succession is now, especially if you plan to sell your wealth management practice to a family member.

We’ve recently discussed exactly why it’s so important to start your exit planning early, especially if you are looking to create a family succession strategy for your wealth practice. Now, we’re exploring the specific steps you can take – today – to start planning a successful, smooth exit from your financial advisory practice. Here is a simple framework that will help you determine how to sell your wealth management practice to a family member.

3 Steps to Plan How You Can Sell Your Wealth Management Practice to a Family Member

To help financial advisors prepare for a successful family transition, we recommend a three-stage planning framework that addresses valuation, tax compliance, and business continuity. 

Stage 1: Establish Fair Market Value (FMV) 

A well-documented, third-party valuation is critical for: 

1. Determining the sale price at arm’s length, 
2. Meeting CRA requirements under Bill C-208, and 
3. Setting the foundation for financing or equity-sharing models between generations. 

For practice owners, engaging an independent valuator with experience in the wealth management industry is essential. This ensures the valuation reflects the unique dynamics of a financial advisory practice—such as the recurring nature of revenue, client retention risk, and the value of personal goodwill. 

The valuator should apply recognized valuation methodologies, such as discounted cash flow (DCF) or revenue/EBITDA multiples, and provide a report that is both defensible and understandable to all parties involved. A credible valuation supports CRA compliance and facilitates a smoother negotiation and transition process between the current and next-generation advisor. 

Stage 2: Design a Compliant Transition Plan 

Once the FMV is established, the next step is structuring the transfer. This may include: 

1. Creating a holding company owned by the next-generation advisor (e.g., the child), 

2. Executing a share purchase agreement that reflects fair value, 

3. Setting out clear terms of payment (upfront, earn-out, or vendor financing), 

4. Ensuring compliance with the 60-month holding period under Bill C-208. 

This is also the right stage to address non-financial issues: 

1. How to onboard the next-generation advisor into client relationships, 

2. How to communicate the transition to staff and clients, 

3. What governance structures (e.g., family councils or advisory boards) are needed. 

Stage 3: Execute and Monitor Your Business Succession Plan 

Implementing the succession plan for your practice is more than signing documents. It involves: 

1. Mentoring the next-generation advisor in the culture and values of the practice, 
2. Building a client retention strategy as roles shift, 
3. Monitoring CRA compliance, particularly ensuring the successor’s corporation retains control of the acquired shares for 60 months or more, 
4. Reviewing and adjusting the plan as circumstances evolve. 

As a practice owner, you should also establish checkpoints to assess the transition’s progress over time and maintain flexibility for adjustments. 

Preserve Your Legacy By Planning Your Practice Exit Early  

If you’re a financial advisor in Canada considering eventually transitioning your practice to a family member, the best time to start planning that exit is now. The tax environment is favorable (for now), your valuation is most accurate in the present, and meaningful transitions take time to implement with care. 

By planning ahead, you can achieve three things: 

1. Minimize your tax burden through proper use of the LCGE, 

2. Maximize continuity for your clients and team, and 

3. Preserve the legacy you’ve built in your wealth management practice. 

As wealth management M&A experts in Canada, this at the heart of what we do at Acquatio. If you’re a practice owner and would like help navigating valuation, structuring a compliant transition, or building a plan to sell your wealth management practice to a family member, connect with our team to start mapping the succession plan for your wealth management firm.