While the study found that a majority of firms prefer an internal succession, only 27 per cent of firms have next-generation owners in place and only 9 per cent of equity - across all firms - is held by those next-generation owners.

The substantial time required to find and train an internal successor may be particularly problematic for firm leaders planning to exit in six years or less, Fidelity said. Almost half of these owners prefer a merger or sale to any other succession option, signifying the importance of identifying future leaders early on to enable firm owners to choose the succession path they want.

“Strong next-gen leaders are critical to a firm’s long-term growth, ensuring both stability and innovation in meeting the future’s challenges,” said David Canter, executive vice president of practice management and consulting at Fidelity Clearing & Custody Solutions.

As in previous years, Fidelity also identified a group of “high-performing firms” - those firms which outperformed others in the areas of growth, productivity and profitability - and outlined some of their best practices.

These participants are more prepared when it comes to succession planning, it said: over half have succession plans ready for implementation compared to 40 per cent of all other firms; more have changed their approach or readiness for succession over the last three years ; they have hired, identified or begun developing potential successors in the past three years ; and they appear to be connecting the dots between succession planning and valuation, with 75 per cent having a mechanism in place to determine firm value in the event of an internal succession or ownership transition .

“As firm leaders sit down to think about their business plan for 2016, they should also consider what their five-year, ten-year, even 20-year, plan is for their business. What will their legacy be?” said Canter. “They can look at the succession plans their peers are crafting for insights on what they need to do and steps they need to take now, not later.”

The 2015 Fidelity RIA Benchmarking Study was conducted between April 21 and June 15, 2015; 441 firms participated.