The ClientWise Blog

Is Your Kid the Right Succession Plan for Your Business?

Posted by Ray Sclafani on Jun 15, 2016, 4:17:02 PM

wealth management advisors successionPerhaps no generation is as misunderstood as millennials – the people who represent the future of our financial services business. We tend to haphazardly paint their ranks with an incredibly broad brush as self-centered narcissists, lacking all manners in social skills as a result of growing up behind a computer screen.

Spend any considerable amount of time with these 20-somethings, however, and you quickly begin to realize how socially-aware, compassionate and relationship-oriented so many of them are. They simply have a different approach to communicating and engaging than previous generations.

But what if that millennial is your own kid, and possibly the future leader of your firm?

For many practice owners, it would be the fairytale culmination of their life’s work…to someday hand over the reins of their business to their son or daughter to continue leading the firm into the future. But how do you know if an intergenerational transfer of your practice is really the best succession strategy?

When it comes to your own child, it’s a lot harder to be objective in your analysis of their skills and competencies, strengths and weaknesses than it might be with non-familial staff. Additionally, there are often the lingering questions in the back of your mind. Am I unconsciously forcing this on them? Is he/she really interested and engaged in making this business their life’s work?

When my own son, who just finished his freshman year at Baylor University, was a high school senior, I went with him to the Johnson O’Connor Research Center to have him take an aptitude test. Unlike Myers-Briggs and similar assessments that gauge interests or personality by answering questions, this test uses a hands-on approach to measuring an individual’s unique aptitudes and abilities through solving puzzles, remembering numbers, finding sequences and similar challenges.

It was an exceedingly comprehensive test and a fantastic experience – one that showed why his interest in certain aspects of medicine may not be optimal given his skills and aptitudes, and rather ironically, why one of the top recommended professions for him just so happened to be “financial advisor.” As a result, he pursued a month-long internship at Ameriprise during his senior year (an experience he loved) and is now starting a summer internship at Northwestern Mutual where he’ll not only gain exposure to all aspects of financial planning, but find out if he truly has the necessary business development skills.

When you think about the inherent value of your business, aptitude exams like this are a very small price indeed to help ensure that a generational practice succession isn’t just a desire but also the right fit.

Coaching Questions from this article:

  1. What, beyond your eventual retirement, is driving your vision for the future of your financial advisor business?
  2. If one of your children is a potential successor, how might you engage in a meaningful heart-to-heart conversation to determine if that’s what you both truly desire?
  3. What steps might you take to ensure that your successor has both the aptitude and skill set necessary to navigate your practice when you step aside?

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: Business and Operations Management, Team Development, Succession Planning