The ClientWise Blog

Succeeding at Succession for Financial Advisors

Posted by Ray Sclafani on Nov 17, 2015 5:48:04 PM

succession-planAs a conscientious advisor, you take your fiduciary duty to your clients quite seriously. Your entire raison d'être is to serve as their voice of fiscal reason, advising and planning to help ensure they’ll be financially well-protected. Yet when it comes to planning for your own legacy, most of you are woefully unprepared as regards to your single most valuable asset – your practice.

Far too many firm principals convince themselves that they have a succession plan in place, when in fact what they actually have is some vague idea of what they hope will happen. In my new book, You've Been Framed, I shine a light on the ultimate advisor hypocrisy I call the "The Big Fat Lie". You swear up and down to your clients that you’ll be there with them through every life transition…but truth be told, you really don’t have a plan to ensure delivering on that promise!

Even having a signed agreement with an associate down the hall or across town that “I trust you and you trust me, so if something happens to one of us we’ll serve as each other’s successors,” is not a true succession plan. Unless there is a genuine transfer of trust between you, the members of your team, your clients and even the heirs of your clients, then there is absolutely no durable succession plan in place.

Life certainly doesn’t always go according to plan. Not only do you owe it to your family to ensure they’ll receive the equity you’ve worked so hard to build over the years, you also owe it to your clients that they’ll be provided for far into the future. Your fiduciary duty mandates that you plan for the un-interrupted continuation of client service not only in the event of your death, but also in the event of your retirement.

Work back from your desired outcome 

Successions are complex undertakings that can be rather unsettling to contemplate. But the cold hard facts are that none of us will be running our businesses forever, and we need to plan for that inevitability.

The easiest way to approach succession planning is to begin with the end in mind. When do you want to retire and what type of retirement do you envision? Would you prefer to gradually pull away from running the business or make a clean break? What steps can you take to begin mitigating the impact of your future departure on your practice, your team, your clients and your vendors?

If you know where you want to end up, it’s much easier to chart a course to get there. Our newest guide, 12 Questions to Help Jump-Start Your Succession Plan, can help you consider your approach to succession planning – truly understanding where this eventual transition will leave your team, your business, and your clients, and determining how to proactively work toward your idealized vision of each of these outcomes. 

Coaching Questions from this article:

  1. What do you want as a final outcome for your own retirement as well as for the future of your business?
  2. Would you entrust your firm with the ongoing management of your family’s wealth?
  3. If not, what steps can you take to begin mitigating the impact of your future departure on your practice, your team, your clients and your vendors?

12 questions to help jump start your succession plan

 

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ClientWise is the premier financial advisor coach focused on business development and management best practices for financial advisors.

Topics: Leadership, Succession Planning