3 Advisor Succession Planning Lessons From ‘Tommy Boy’: When Family Is Involved

Richard Hayden: Yeah. I learned everything I know from him. I didn’t have a real father, but you, he was your real dad and you just took him for granted.

Richard Hayden [mocking Tommy]: “Hey I’m big Tom’s son, I screw things up, but it’s okay. My dad will fix everything!”

Advisor Jeff Swaim joined his father John Swaim’s practice in Louisville, Ky., in 2008 after working in sales in the shipping and home building industries. At the time, John shared office space and overhead with three other advisors who also hoped to bring their sons onboard as their continuity and succession partners. As his father’s only option for passing the business to a family member, Jeff became the “guinea pig” for the junior partner program. The Swaims, who opened their own branch, Falcon Financial Advisors in suburban Louisville, agreed on payout level, expense sharing and the client relationships Jeff would take over before he started.

“Selling yourself, and building long-lasting relationships, has been the key to success,” Jeff said. “The skills that I learned from other industries definitely translate to working with our financial services clients.”

For advisors who bring family members on board before they’ve gained much experience elsewhere, aptitude and personality tests like ProScan, Kolbe, DISC and Myers Briggs can give both parties an objective evaluation of whether certain roles in the practice are a right fit. For example, the advisor may excel at technical skills like portfolio modeling while the family member’s abilities lean more toward marketing. That combination can work well to grow a practice, provided each person understands and values the other’s role.

Lesson 3: They’ve Earned Their Stripes Elsewhere

Richard Hayden [seeing Tommy's office]: You have a window! And why shouldn’t you? You’ve been here 10 minutes.

Advisor Bob Binn always hoped one of his three sons would join the financial services industry, but he never counted on it. His son Dan, who worked in advertising sales while at UCLA, didn’t move toward financial services until he earned his Series 7 as a “resume booster.” After four years working first at Wells Fargo Securities and then at Sanwa Bank Wealth Management, Dan joined his father’s firm, Private Portfolios Inc. 

“I wanted him to come to my firm wanting to be here,” Bob said. “I told him if he ever wanted to work for me he would have to work somewhere else first. That way, someone else could fire him if he didn’t do a good job. His prior experience gave him credibility with my clients and staff; he wasn’t just the new kid with the boss’s last name. He already had the background and experience, and that is what made him successful early on.”

Father and son discussed partnering for a year before Dan relocated to Northern California in 2000, taking a hefty pay cut. In addition, the timing of his move fell right in the middle of the Tech Wreck and recession in 2001-2002.

“I naively thought my dad would ask me to take the lead with more of his clients,” Dan said. “Instead I had to build my own book of business starting with a few clients I brought with me.”

As with almost everything in our industry, putting employment conditions and continuity and succession plans in writing helps avoid conflict and confusion later.

In a future blog, I’ll cover the types of agreements—physical and philosophical—between family members that help a business thrive and survive.