Pershing Releases Advisor Business, Succession Planning Guidebook

Guide shows how few advisors have developed detailed plans

Pershing Advisor Solutions (PAS), the RIA custody division of BNY Mellon, on Thursday released Developing a Sustainable Business and Succession Plan: An Independent Advisor’s Guide, a 30-page practical PDF guidebook that presents detailed steps advisors can take to build a business plan and a succession plan.

The guidebook, developed with Advisor Growth Strategies LLC, the practice management consulting firm led by former Schwab executive John Furey, presents stark figures on the relatively small number of advisors who have developed formal business and succession plans, including research showing that fewer than a third of RIAs have either defined or implemented a succession plan.

“Underneath those advisors are a lot of investors who have gone through a very rocky time” over the past several market cycles, said Kim Dellarocca, who heads practice management for PAS. Advisors, she suggests, “owe it to those investors to deliver not only on their financial plans, but also to be a ongoing partner in their lives.” Dellarocca further suggests that “having a business plan is part of having a fiduciary responsibility; your business better be able to be sustained without you.”

In addition to the advantages that a business and succession plan will provide to clients, there are also wide-ranging benefits for an advisory firm’s employees. “At Pershing,” says Dellarocca, “we believe healthy customers are good for everybody, and running a healthy business starts with determining why you’re in the business, what’s important to you.”

Moreover, Dellarocca (left) says, having a plan that you stick to is “fundamental” to running a good business, to engaging associates and ultimately to defining a succession plan. “The more people in a firm who understand the plan of the business–not kept as a guarded secret–the more they can contribute to the plan, It creates a level of investedness” on the part of everyone in the firm, since “the more transparency you can bring to it, the more you get associates willing to make investments, to roll up their sleeves; they understand the definition of success.”

The ultimate benefit to creating a business and succession plan, she says, is “leadership engagement–you can go through the motions of your life, or you can lead an intentional life.” At PAS, says Dellarocca, “our hope is that by writing down” those plans and those goals, and then having accountability to Pershing relationship managers, it will measure progress toward achieving those goals and increase the advisor’s chances of eventual success. 

In an March 2011 Investment Advisor cover story, Dellarocca and Jim Dario said the first thing that Pershing does with a new RIA client is work with them on a business plan and a client development plan, and highlighted the kind of knowledgeable, experience relationship manager to whom advisors would be accountable. 

The guide includes several case studies of successful advisory firms that have used the business planning process to grow larger and more successful, though Dellarocca points out that “scale and growth are the outcome of the plan, not the reason to do the plan.”

At Pershing, she concludes, “We’re saying you need all those things–a plan, awareness, time to think about your life, tools for success, and you need a great partner.”

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