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Advisor Exits: Sunset Deal vs. Independent Sale

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Advisor Exits: Sunset Deal vs. Independent Sale

2026-08-24 19:06 UTCBy AlphaScala Research DeskSource reporting: americanbanker.comEditorial standards

Advisor Exits: Sunset Deal vs. Independent Sale

With over 100,000 advisors retiring, the choice between an internal sunset deal and selling an independent practice hinges on ease versus payout — often double the revenue.

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More than 100,000 financial advisors overseeing roughly $15 trillion in client assets are expected to retire over the next decade. Many will soon face a career-defining choice: take an internal sunset deal at their brokerage or leave to sell their independent advisory business.

The decision often comes down to ease versus economics, three industry experts said. The sunset path is simpler. Selling independently typically generates a larger payout.

Jeff Nash, CEO of recruiting firm Bridgemark Strategies, said the higher price tag of an independent sale is "most certainly" better – with caveats. "Staying inside the firm and doing the sunset is the easy button," Nash told the publication. "The ideal seller is one who's doing 100% fee-based business and the assets are movable, but that may not be the case."

Nash's team published a report last month that examined each route's "complexities and benefits." Only decisions made "hastily without proper research" produce the worst outcomes for advisors, their staff and clients, according to the report.

Mitchell "Mitch" Fenimore, a senior vice president and market leader at River Wealth Advisors, said wirehouses have recognized they need to do more to retain retiring teams. Independent firm valuations are "really skyrocketing right now," Fenimore said, and an independent advisor has "the potential to really create some wealth for your family."

Jason Diamond, president of recruiting firm Diamond Consultants, said sunset deals are "almost never the optimal economic solution." He noted that while such programs have existed for years, every firm is now leaning into them.

The Bridgemark report provides a hypothetical illustration: a team generating $4 million in trailing 12-month revenue. A sunset agreement would pay about 250% of that – $10 million – as ordinary income spread over five to 12 years. The execution risk and successor selection sit with the brokerage. An independent sale, by contrast, would result from a negotiated price falling somewhere between $16 million and $24 million, paid faster and often as capital gains. The buyer and seller share the execution risk and choose the successor.

The stark difference in outcomes stems from fundamental structural differences. A sunset deal avoids client moves, a bidding process and leftover recruiting loans. But departing founders receive a lower valuation multiple and take the payout as ordinary income, taxed at higher rates than capital gains. They also leave clients to successors chosen from a limited pool.

Leaving the employee brokerage to sell an independent advisory practice usually allows a founder to negotiate more aspects of the deal structure, secure capital gains treatment and obtain "double or more the amount someone receives in a sunset alternative," the report says. The trade-off is complexity: retaining clients, finding the right buyer and losing the brokerage's infrastructure.

Custodians have developed technology to ease account migrations, Fenimore said, reducing potential headaches. Independent firms seeking to recruit teams before their founders retire can provide more flexibility in exit timing and structural terms.

The report advises advisors to approach the decision deliberately. It recommends getting "an honest practice valuation," determining how many clients would follow them to an independent firm, and obtaining the sunset offer's formula, schedule, tax treatment and financing source in writing. Then run due diligence on either option.

"A sunset program and an outright sale are not two versions of the same decision," the report said. "The trade-off is control and increased financial opportunity for certainty and ease."