Hope is not a strategy, and documentation isn’t execution.
I recently read What If…? Business Health – Report May 2026 to better understand the commercial and practical considerations that small-business owners know sit at the intersection of governance, compliance and business continuity.
While the report focuses on what happens when a practice principal dies or becomes permanently disabled, the real issue is whether advice businesses can meet their obligations to ensure clients, staff and the business itself are protected if, or when, they lose key people.
Terry Bell and his team have once again taken a practical look at the realities facing advice businesses, this time focusing on what happens when the unexpected occurs.
As I worked through the report, I found myself thinking about conversations I’ve had with advisers, practice owners and Responsible Managers. Most business owners understand the importance of succession and continuity planning. Most intend to get to it. But like drafting a will, reviewing insurance and every other important business issue that isn’t an immediate problem, it often gets pushed aside for another day.
Honestly, that’s been my approach too.
The report brings that reality into sharp focus and leaves us with a question that every advice business owner, Responsible Manager and licensee should be asking themselves:
What would happen to your business if you weren’t there?
It’s an uncomfortable question. It’s also an important governance question.
Business Health found that 34% of respondents had no estate plan providing clear direction following death or permanent disablement.
The report examines how prepared Australian advice businesses are for the sudden death or permanent disablement of a principal and, while the findings are confronting, they shouldn’t surprise anyone working in risk, compliance or governance.
Business Health found that 67% of principals don’t have a documented succession, buy/sell or partnership agreement in place, 56% have never had their business formally valued, and 41% of practices rely on a single adviser.¹
Before we deep-dive, I’ll offer a warning. While the report’s findings are directionally consistent with our observations, they are based on survey responses rather than a comprehensive census of the advice profession. So, while the report provides useful insight into prevailing attitudes and preparedness levels, its conclusions are indicative rather than statistically definitive. That said, the consistency of the results across multiple risk areas suggests that the governance and continuity issues identified warrant serious consideration by advice business owners and licensees.¹
In fact, these findings expose a broader issue that extends beyond succession planning; it reveals a significant governance gap across parts of the advice profession.
A Governance Issue, Not Just A Succession Issue
It’s clear that many business owners view succession planning as something to be addressed when retirement approaches. The difficulty with this approach is that delaying succession planning can significantly reduce the options available to an owner when they eventually decide to exit. Potential successors may not have been identified or developed, internal equity transfer arrangements may not be in place, and opportunities to maximise business value can be missed. Leaving succession planning until retirement is imminent can also limit the pool of potential buyers, reduce negotiating leverage, and increase the likelihood that a sale will be conducted under time pressure. In many cases, this can result in lower sale proceeds, higher transaction costs and fewer choices for both the owner and the business.
At first glance, that’s obvious, but that perspective misses the real point.
The risk identified in the Business Health report isn’t primarily retirement risk. It’s continuity risk.
The sudden absence of a principal creates immediate operational, regulatory, client servicing and commercial challenges. Clients still require advice. Staff still need direction. Compliance obligations continue. Revenue expectations do not disappear simply because the key person is no longer available.
From a governance perspective, the question is not whether a principal intends to retire in five or ten years. The question is whether the business can continue to operate tomorrow if the principal cannot.
Business Health correctly observes that many advisers who spend their professional lives helping clients manage risk have not applied the same discipline to their own businesses.²
The inconsistency extends beyond succession planning. The report found that 34% of respondents had no estate plan providing clear direction following death or permanent disablement. For a profession built around helping clients prepare for uncertainty, that statistic is difficult to ignore.
Interestingly, preparedness appears to increase as businesses become larger and more valuable.
According to the report, all participating practices generating more than $3 million in annual revenue had formal agreements in place. Smaller firms were considerably less likely to have documented arrangements, despite often being more dependent on a single owner or adviser.
The Responsible Manager Risk
One of the more important findings in the report relates to licensing arrangements.
Business Health notes that self-licensed businesses face particular challenges because of the immediate question of who can legally service clients if the principal dies or becomes permanently disabled.³
This issue has direct governance implications.
Many self-licensed firms remain heavily dependent on a single Responsible Manager, a single adviser or a small number of key individuals. The survey found that among self-licensed businesses, 67% reported having only one Responsible Manager.⁴
While the report doesn’t analyse regulatory obligations, the practical reality is clear.
When knowledge, authority, client relationships, and operational control are concentrated in a single individual, business resilience is reduced.
Perhaps the most concerning observation is that the businesses carrying the highest concentration risk are often the least prepared. Business Health reports that among firms with a single principal holding 100% ownership, only 5% have established a succession plan. Where ownership, advice delivery, client relationships, and governance oversight all reside in a single individual, continuity cannot be assumed.
Good governance requires organisations to identify concentration risk and implement reasonable controls to manage it. And that principle applies just as much to small advice businesses as it does to large financial institutions.
Arguably, the impact is far more profound for small businesses.
Business Health found that 34% of respondents had no estate plan providing clear direction following death or permanent disablement.
Documentation Matters (but Evidence beats Intention).
The report highlights that two-thirds of respondents have no documented succession arrangement.
You’d think that would be a problem for us, but in reality, governance maturity isn’t measured by the existence of a document. It’s measured by whether the business can execute when the unexpected occurs.
A succession plan sitting in a drawer is only marginally better than no succession plan at all.
Many principals have thought about what they would like to happen. Some have even documented those intentions. Far fewer have ensured the right people know where the plan is, understand their responsibilities and have the authority to act.
In governance terms, evidence matters more than intention. A continuity plan that can’t be located, understood or executed during a crisis provides little practical protection. A succession plan that you don’t, or won’t, implement is governance theatre.
The real question is not whether a plan exists, it’s “what happens next?”. Is there a plan that will work before it’s needed (or at least when it is needed most).
The Valuation Blind Spot
The report also highlights another common governance weakness.
More than half of the respondents have never obtained a formal valuation of their business.⁶
This is often viewed as a commercial issue.
It is actually a governance issue.
Directors and business owners are expected to understand the value and risk profile of significant business assets.
For many advice business owners, the practice itself is their largest asset.
Without an independent valuation, owners may hold unrealistic assumptions regarding enterprise value, succession funding requirements or estate planning outcomes.⁷
Valuation also supports informed decision-making.
Whether considering succession, mergers, acquisitions, equity transfers or estate planning, governance decisions are strengthened when they are based on objective information rather than assumptions.
What Should Advice Businesses Be Doing Now?
The strongest message from the Business Health report is not that advice businesses are failing.
It is that many have not yet completed work they already know needs to be done.
From an Assured Support perspective, there are several practical governance questions every advice business should be asking:
Governance And Continuity
- Is there a documented succession or continuity plan?
- Has that plan been reviewed recently?
- Does it identify specific responsibilities and trigger events?
Licensing And Authorisations
- Who can legally service clients if a key adviser becomes unavailable?
- Are arrangements documented and understood?
- Are Responsible Manager dependencies appropriately managed?
Valuation And Ownership
- Has the business been independently valued?
- Is there an agreed valuation methodology?
- Does the succession plan align with ownership and estate arrangements?
Staff Readiness
- Do key staff understand continuity procedures?
- Can they access critical operational information?
- Have contingency arrangements been communicated?
Estate Planning Alignment
- Do estate planning arrangements support business continuity objectives?
- Will executors know who to contact and what actions to take?
These are not merely succession questions.
They are governance questions.
How Would You Know If You’re Exposed?
Many businesses assume they are prepared until they are forced to test their assumption. Common warning signs include:
- only one Responsible Manager
- no documented succession agreement
- no recent business valuation
- key client relationships concentrated with one adviser
- continuity arrangements that exist only informally
If any of these sound familiar, the issue may not be succession planning. It may be business resilience.
Hope is Not a Strategy
More than 90% of businesses employ at least one staff member. That may provide comfort, but comfort and preparedness are not the same thing. Too often, continuity planning exists only in the principal’s mind. Hope is not a strategy. Staff can only execute a plan if one actually exists.
As the report correctly notes, staff can assist with continuity of administration and client servicing, but only if they understand the contingency plan and are capable of executing it.⁹
Too often, business continuity planning exists solely in the mind of the principal.
When that occurs, staff become part of the risk rather than part of the solution.
A mature governance framework requires key personnel to understand:
- What happens if the principal becomes unavailable;
- Who assumes responsibility for clients;
- How key operational processes continue;
- Who external stakeholders should contact; and
- Where critical business information is located.
Continuity planning is not simply about having people.
It is about ensuring people know what to do.
The Real Test Of Compliance Infrastructure
Compliance infrastructure is often assessed during audits, compliance reviews and regulatory engagements.
However, their real test occurs during periods of disruption.
Unexpected death, illness or permanent disablement represent some of the most significant disruption events a business can experience.
The Business Health report ultimately reaches a simple but important conclusion: “If there is no plan, there is no protection.”¹⁰
From a risk and governance perspective, that statement is difficult to challenge, but a plan you can’t, or won’t, execute isn’t a plan.
Hope is not a strategy, and documentation isn’t execution.
Remember that the purpose of compliance isn’t to eliminate uncertainty, it’s to ensure organisations remain resilient when uncertainty occurs.
For advice businesses, preparedness is no longer a succession planning exercise reserved for the future.
It might not be a legal obligation, but your business will be stronger if you act as though it is. It’s confronting, uncomfortable and inconvenient, sure, but it’s also a governance responsibility that you should address today. The businesses that prepare now will preserve options, value and continuity. The businesses that don’t are relying on hope, and hope is not a strategy.
Further reading
Frequently Asked Questions
Many businesses view succession planning as something to address closer to retirement. The problem is that the greatest risk is often not planned retirement but unexpected disruption. If a principal dies, becomes permanently disabled or is otherwise unable to work, the business must still service clients, meet compliance obligations, support staff and maintain operations.
From a governance perspective, succession planning is really about organisational resilience. It requires business owners to identify key-person dependencies, document contingency arrangements and ensure the business can continue operating when critical individuals are unavailable. The question is not “Who will buy the business when I retire?” but “What happens tomorrow if I am not here?”
There is no specific legislative requirement for advisers or licensees to maintain a formal succession plan. However, many of the underlying issues connect directly to broader governance and licensing obligations.
Licensees are expected to maintain organisational competence, adequately manage risks and ensure clients continue to receive appropriate services. Where a business relies heavily on a single adviser or Responsible Manager, the sudden loss of that individual can create operational and compliance challenges that affect the firm’s ability to meet those obligations.
While ASIC may never ask to see a succession plan specifically, regulators are likely to be interested in how a business manages key-person risk, continuity arrangements and operational resilience if a significant disruption occurs.
For many smaller advice businesses, the greatest continuity risk is concentration risk. Ownership, client relationships, compliance oversight, licensing knowledge and operational decision-making are often concentrated in a single individual.
This creates a situation where the absence of one person can affect multiple parts of the business simultaneously. Clients may not know who to contact, staff may lack the authority to make decisions, compliance activities may stop, and key business knowledge may become inaccessible.
The risk is particularly acute for self-licensed firms with a single Responsible Manager, as regulatory responsibilities and organisational competence can become heavily dependent on one person. The issue is rarely a lack of capability; it is a lack of redundancy.
A continuity plan should be reviewed at least annually, but timing is often less important than relevance.
The plan should also be revisited whenever there are material changes to the business, including ownership changes, staffing movements, licensing changes, acquisitions, mergers, or significant shifts in client-servicing arrangements.
Importantly, reviewing a plan should involve more than updating a document. Businesses should confirm that key people understand their responsibilities, that critical contact information remains current, and that required documents can be accessed when needed.
A plan that has not been tested or reviewed for several years may offer little practical value during a disruption.
Many business owners have a view of what their business is worth, but assumptions are not always supported by objective evidence. A formal valuation provides an independent assessment of value and helps owners make informed decisions about succession, estate planning, buy-sell arrangements and ownership transfers.
Valuation is also a governance tool. It helps identify the factors driving enterprise value, including client concentration, recurring revenue, adviser dependency and operational maturity. Understanding these drivers can help business owners address weaknesses before a sale, succession event or unexpected disruption occurs.
Without a reliable valuation, succession decisions are often based on optimism, assumptions or outdated information rather than evidence.
