Connect Financial Service Brokers chief executive, Paul Tynan, said it was now harder for advisers to be self-employed, and only the elites of the industry ventured into it.
"I've never known a really good financial adviser at the peak of their skills who never wanted to run their own firm. All the good ones gravitate to being self-employed and running their own businesses," he said.
McPhail HLG Financial Planning senior financial planner, Anne Graham, said if advisers were coming from a corporate environment, being self-employed was the shift from being a technical adviser to being a business owner or leader.
"Advisers need to decide where they want to spend their time, think about strategy, culture, capabilities for the business to be successful, and need to spend time where it is most useful," she said.
"If your main thing is advising, then you might need to bring in an office manager; otherwise advisers who do both tend to do their jobs 80 per cent well, rather than 100 per cent well."
StatePlus general manager for financial planning, Sean Bradley, said the most important aspect when transitioning to self-employment was due diligence.
"So finding out who their licensee is and who they're aligned with is very important. When an adviser is in an employer space, they're well supported," he said.
"When moving to self-employment it's a lot more challenging as there needs to be a focus on how to attract more clients, decide what focus is needed when delivering advice, how money is being made, and how to survive.
"There is a lot to consider when moving into the adviser space. A lot of people want to build their own practice but it's a hard slog."
FMD Financial managing director, Greg Fagan, said there were many advisers who came into self-employment wide-eyed and did not see the pitfalls.
Fagan said his motivation for starting his own business, initially with three partners, was to get away from the institutions and to focus on high net worth clients.
"You've got to say to yourself ‘are you an adviser or a business manager?' Is there going to be a formal investment committee? Are you going to run a sole practitioner business or a corporate model?" he said.
"The regular problem is that a lot of good adviser businesses have never gone beyond themselves and a couple of staff. Taking a handful of staff to 25 takes a lot of the pressure off at the end with succession."
Succession from day one
Fagan said advisers needed to take advantage of firms who set up succession plans, and they should have a succession plan from day one.
"We wanted something that would be sustainable beyond the founders so we started our succession plan from day one," Fagan said.
"Advisers need to talk to people who are or have done it successfully. Go out and speak to a recently retired adviser. They need to decide to sell, or to merge with another business. If they decide to get in bed with another business they need like-minded planners.
"We had people help brand the business properly, we've been able to build products that have delivered cost savings, and have additional income streams to our business. Our good succession plan has ensured those benefits."
MAP Financial Strategies principal and senior financial adviser, Michelle Veitch, also said she had a succession plan from the very start.
"People don't think about it until somebody wants to leave and you have to ask questions like ‘How do we do this?' ‘How much is it worth?'" she said.
"My business partner and I have almost a 20 year age gap so we knew the succession plan needed to be on our radar from the start."
However, succession plans did not seem to be front of mind for many advisers. According to State Street Global Advisors' ‘The Adviser Retirement Wave' report, two-thirds of all practice owners in the US did not have a succession plan in place.
The report also found advisers who were within two years of retiring had the same low level of succession planning adoption as those who are a decade away from stepping down.
Graham said while she was aware of needing a succession plan she did not have one.
"We're trying to grow the business and my timeframe is at least 10 years before I leave the business. There are two ways we can go — the people in our team are potentially the succession plan, or we could sell the business," she said.