There are some conversations that are just not destined to go well from the start: “Well, honey, the good news is that I did get to ride in a squad car …”
“Of course we have car insurance, son. Why do you ask?”
“No, dear, I didn’t say it made you look fat, exactly…”
As a financial planner, you probably have experience with awkward conversations, whether it’s confronting clients who splurge more than they save, mediating between divorcing spouses, or refereeing adult children wrangling over a parent’s estate. Yet some topics make even the most stalwart planners quake in their boots. Like succession planning.
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Broaching the subject isn’t so bad when you’re talking to clients; they’re paying you to bring up things like this, even when it means discussing gloomy stuff like, well, death. But let’s say you’re an associate in a firm with a single principal, and you want to talk with him about his succession plan–in fact, you want to be his succession plan. He seems to have no plans to retire, so what you really are asking about is the future of the firm after he’s played through to the Great Golf Course in the Sky. How do you bring this up? And should you even bring it up? After all, it’s not exactly the height of professional etiquette to waltz into your boss’s office and announce brightly, “So, when you kick the bucket, I’d like to have your corner office, your clients, and everything in this building. Is that going to be a problem? By the way, how’s your health?”
Planner Karen McIntyre is about as friendly and considerate as they come, yet she thinks there’s nothing wrong with initiating this conversation–albeit in a much more tactful way. In fact, she’s already done it herself.
It helped, of course, that McIntyre and the principal of the firm that employs her had already worked together for more than a decade. It also helped that they’ve built a strong professional relationship that allows them to speak freely and honestly. Still, as a former psychology major, McIntyre, 39, thought carefully about how she wanted to approach her boss, Terry Siman, the sole principal of Executive Financial Services, Inc., a fee-only firm in Spring House, Pennsylvania. She was mindful to broach the subject in a diplomatic, non-threatening way, and she emphasized how her plan could benefit not only her, but Siman, the firm, and his clients.
“I had an open conversation with him, and basically said, ‘I want to stay around. What are your plans?’” says McIntyre. “I wanted him to know that I’m here for the duration, and that that’s valuable to him and valuable to me.”
At first, Siman was “a bit taken aback,” she says, “because no one had ever asked him that before.” But after the initial shock, the interview turned into “a very comfortable, very supportive conversation,” she notes. “We’d had a little bit of [staff] turnover, and I think he was pleased to know that this is where I want to be, and I don’t have any plans or expectations to do anything but continue to work here.”
It turned out that Siman hadn’t made provisions for the continuation of the firm in the event of his retirement or death; he’d purchased life insurance that would replace the equity in the firm in the event of his death, and he’d prepared a letter that would be sent to clients to thank them for their years of patronage and assure them that the staff could help them transfer their accounts to other firms in the area. McIntyre didn’t want things to happen that way, and she said so–diplomatically, of course. “I said, ‘I want to have some equity, some interest, in the future of the firm,’” she recalls. “‘How do we make that happen?’”
Given McIntyre’s concerns, you might think Siman is an tottering old codger, but he’s a healthy, robust 51–a mere 12 years older than McIntyre herself. His untimely demise hardly seems imminent, and, for that matter, neither does his retirement. “He’s not going to retire tomorrow, and I don’t even think he’ll ever completely retire,” says McIntyre. “I think he enjoys the flexibility of traveling and playing golf as much as he wants to, but he also likes to have his hands in the thick of things. He’s an active daily participant in the business.” The two advisors are weighing succession arrangements not because they expect to implement them right away, but because “we’re planners–planning is what we do,” says McIntyre. “We want to have this in place so that whenever we need it down the road, it’s there.”
So it wasn’t Siman’s age that prompted McIntyre’s concerns; instead, it was September 11, 2001. “9/11 really got me thinking about the need for succession planning. I started thinking, ‘Gosh, what if something happens [to Siman]? I don’t want to go out and start over again,’” she says. “‘I love my clients! They’re my family. I don’t want to lose them.’”
It didn’t take much to convince Siman that McIntyre should become part of his succession plan; she was smart, qualified, experienced, and had similar ideas about how to run a firm. The harder part was “How do we make this happen?”