The succession plan

Not only is Lee Davis, founder of Colorado-based J. L. Davis Financial Corp., on the cutting edge of technology, but he’s also established something too many advisors forgo — a succession plan. As Davis tells it, his son, Jeremy, worked in the ski retail industry in the Rocky Mountains after college. One day he called and said, “I’ve been thinking I might want to change careers. I may want to look at your business.”

Davis tells me he was shocked when he first heard that news. But after that initial tremor wore off, the father and son talked it over. “I told him I wasn’t interested in training anyone; I didn’t have the time.” However, Davis was interested in having a partner in the business. “I’d tried to add partners before, but it hadn’t worked and I believe that’s very common for advisors” — they work to blend diverse cultures and it doesn’t mesh.

“What I realized from the previous failures was that they lacked a formal process. With (Jeremy) he began with Mass Mutual here in Denver and spent two to three years over there. After that, he believed he was ready to be independent.”

Davis wanted to make sure he and Jeremy were in agreement on the culture and the business splits. “When he came in and we partnered, we made a very simple arrangement, this is why I say it’s simple to replicate: We made an arrangement to split every piece of business that came in the office after he became a partner. I maintain 80 percent of the revenue for any cases that I generate. He maintains 80 percent of the revenue for any cases he generates. And the other partner gets 20 percent of the revenue on every single case.”