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We’ve all seen the sobering statistics. The average age of financial advisors is currently reported to be 55 years old, with roughly one in 
five age 65 or older. And yet:
- 44% of advisors have no clear written succession plan;
- Even those within five years of retiring, a little more than half (56%) don’t have a plan but say that they plan on creating one at some point
- Far too many next generation advisors don’t know if or how they fit into the future firm.
Keep in mind that these are self-reported percentages, so the reality of the situation may be far worse. The lack of a clear path to transition remains perhaps the largest potential breach of fiduciary duty in our industry today – with the continuity of care and financial well-being of countless clients hanging in the balance. For most advisors (both firm owners and next generation), however, an orderly and financially agreeable succession remains a desirable but exceedingly elusive goal.
Demystifying the planning process
In an effort to create a straight-forward, step-by-step process that empowers the best leaders to develop an exit strategy, ClientWise recently launched Success in Succession™. The program involves not only successfully developing the next generation in preparation for their taking the reins, but conquering a host of other challenges – from deciding when and to whom you should consider selling equity to understanding the drivers of value, determining the optimal business structure, how and when to seek out an evaluation, and ways to secure favorable financing.
In my more than 30-year career in financial services and as a professional certified coach, this is honestly the most meaningful and noble work I’ve ever done – because it speaks to legacy and a better future not just for our clients but for the industry as a whole.
This innovative, new enterprise value program – created and presented in conjunction with the expertise of Northwestern Mutual, FP Transitions, Dahl Consulting and Live Oak Bank – has been met with an incredibly positive response from participating advisors. How positive? The following is just a sampling of the initial feedback:
“It provided a different way of thinking about a problem that we have struggled with for years. It finally feels like we are making important steps in the process.”
“A deep dive into the necessary conversations around succession planning for both the founder and the successor(s).”
“It’s critical to the success of an organization to get this work done, and to get it done sooner than you think, because it takes longer than you think.”
“If you want a roadmap for maximizing your success in succession, this is the ideal place to be.”
A successful succession and smooth transition are critical to all parties involved in your business. Clients want the peace of mind that only can come with knowing that they will be well cared for when you step away. Your next generation wants to know that there’s a clear plan with metrics, milestones and a timetable for ownership. And you want to ensure not only that you receive maximum value for your life’s work, but that your legacy endures long after you leave the firm.
Coaching Questions from this article:
- What actions have you taken to identify, evaluate and select the right next generation candidates (individuals not only capable of taking over and growing the firm, but willing to step up to the challenge)?
- Which factors do you think will have the greatest impact (both positively and negatively) on the value of your business, and what actions could you take to influence them?
- Once you’ve identified a next generation buyer and agreed on the value of the firm, how do you plan on structuring and funding a deal?
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