Hard Sell: How to Make Succession Planning Easier

Older advisors may also resist handing their clients over to someone who won’t understand or handle them as well. “We all have that fear if we are good,” Hudock agreed. “We love our clients, and we love to make them happy by taking good care of them. Our ego is very invested in that relationship.”

The solution, she believes, is to cultivate your own successors. “What I have done with all of my clients is to bring someone into every meeting who can take notes and help me follow up,” she said. “Very gradually I will let them take over a piece of the meeting. Eventually it evolves to the point where the person I brought in is running the meeting and I am there for the relationship.”

For Hudock, there’s enormous satisfaction in knowing that her clients and her firm will continue to thrive if anything happens to her. “I believe that is because we started at a minute level and very gradually [our service support people] got more and more involved.” The process, she said, has been “so easy and so simple. The most important thing is to start with baby steps. Start wherever you are, with whoever you’re working with.”

DAUNTED BY SUCCESSION TRAINING

At present, Hudock’s internal succession growth strategy is not that common. Many advisors feel they don’t have the time, energy or perhaps the coaching skills to train someone younger to take over the business.

“Coaching gives you an opportunity to see if someone will succeed or fail,” Dave DeVoe pointed out. “Many advisors acknowledge that coaching employees is not a strength they have, but they need to develop this key management skill.” The learning process may take some time, particularly for entrepreneurs who built the business on their own. “After so many years of being responsible for everything, it can be hard for them to give up control,” DeVoe noted.

Consultant Cam Marston summed up, “It may be a tremendous amount of work to train the next generation, and that can seem like a daunting task. Owners may also fear that someone younger won’t represent their legacy well. In addition, thinking about succession means confronting your own mortality, and no one likes to do that.

“These are normal, everyday emotions that anyone in their situation would feel,” he said. “However, they need to suck it up and do it anyway.”

TIMIDITY OF JUNIOR EMPLOYEES

Closely held businesses with little turnover can develop dynamics resembling those of a dysfunctional family. In practices dominated by “the boss,” younger employees may be reluctant to initiate talk about succession for fear of challenging “Dad” (or “Mom”).

Regular company retreats can breathe air into a closed system like this, helping younger employees see that their elders are simply co-workers with more experience.

Cam Marston observed, “You can’t just come in and say, ‘Here’s what I want to do.’” To build a bridge between generations, the younger person needs to validate and appreciate what the older has accomplished before encouraging them to move into the future. Marston suggested, “You need to start by saying, ‘I respect what you built, and I’m not here to change it for change’s sake. I just want to make some observations on market trends that we need to pay attention to.’”

Marston pointed out that planning for succession can also be sabotaged by a critical difference in viewpoint. “Older generations want to sell their book of business based on their hard work,” said the Generational Insights president. “The younger generation wants to buy a business based on its potential, not its history. That’s the big divide, where all the challenges come from. The older generation says, ‘Look what I’ve created,’ and the younger generation says, ‘Yeah, but what’s it going to do from now on?’”

FINDING COURAGE TO FACE THE FUTURE

Many older advisors would do well to take off their rose-colored glasses and contemplate the future more realistically. As Dick Vodra reminded me, it’s far better to actively direct the process, shaping what happens to your clients and the value you’ve created, than to let it all erode after your death or impairment.

Unless you need to exit your business very soon, consider training a successor in small, gradual steps. For younger advisors willing to practice “courageous followership” (as my friend and author Ira Chaleff calls it), begin by respecting your elders’ strengths, expertise and achievements, and valuing the company’s mission. With this foundation, you may be able to suggest some changes that will help the business stay successful, and maximize your role in it.