In Succession Planning, Do Advisors Practice What We Preach?

Financial advisors know the importance of succession planning for their clients. Foundational to completing a financial plan for any business owner is an in-depth conversation about succession management: Business continuation plans and buy-sell agreements need to be implemented and funded. But what about the financial advisor’s practice? Do we as an industry practice what we preach?

The UNIFI Companies have distribution partners who offer succession management stories from practices that span generations of service. Here, we look at two of these businesses–a family-centric operation and a mentor/apprentice practice–and explore the insights we can glean from them.

A family affair

When R. David Wentz founded Tax Favored Benefits in 1980, he had no idea of the organization it would grow to become. Headquartered in Overland Park, Kan., the firm specializes in retirement plans, employee benefit programs, risk management and investments. Today it has more than 700 corporate clients, thousands of individual clients, 8 in-house producers and 30 support staff associates.

Family members at the firm include R. David’s son David B. Wentz, daughter Audrey Wentz Chinnock and sister Cynthia Richter. There are many non-family key executives as well, and several successful young producers who joined the firm have become an integral part of the organization.

With such a dynamic team, R. David was confident his clients would be taken care of when he was absent from the office and when he died, retired or became disabled. So for several years he did not completely address the issue of succession planning.

It was his children who finally triggered the topic; David B. and Audrey needed to know more specifically what the plan was if their father passed away. So 5 years ago, the family members started with internal discussions, which then led 3 years ago to more formal planning.

They used an outside consultant, who spent approximately 8 days over two years with the family and various staff members; they also attended seminars. Today, the organization has a written succession plan that is part of the estate plan and is funded with life insurance. It consists of various milestones and continues to be a work-in-progress.

When David B. and Audrey joined the company, R. David thought it was critical they spend their first years building up their own book of business. But for succession planning, different activities were necessary. For Audrey, learning the HR and internal operations side of the business was a milestone in her preparation. David B. took over management of the sales force several years ago. Additional key milestones have been defining their roles as chief operating officer and president.

This has allowed R. David to greatly reduce his involvement in business operations. David B. now handles marketing operations and Audrey handles the day-to-day operations. Cynthia oversees the plan administration side of the business and Executive Vice President Bill Stapp is integral in business negotiations. Additional management duties have been delegated to the director of finance and office manager.

That doesn’t mean R. David doesn’t stay busy. He is still ultimately involved and maintains an intense client appointment schedule. His goal is to gradually diminish his involvement each year over the next 4 years, when he will reach his desired retirement age and will only devote time to certain clients. To that end, the leadership team meets regularly and the written succession plan is reviewed each year.

If you are considering a succession plan for your organization, Wentz’s recommendations are:

–Start sooner rather than later.

–Begin discussions as soon as it is an issue.

–Begin the process of a more formalized business operation with greater delegation early.