It seems to me that all the preaching about succession planning is having the opposite effect on those we hope will get the message. It’s kind of like when your parents forbade you to hang out with “so-and-so”—and then you went out of your way to have a clandestine encounter with that person, even though you knew he or she was bad for you. To add emphasis, your rendezvous took place in the most disreputable location you could find.
Defiance is an adolescent trait that many boomers have carried over to adulthood. This defiance thrives in a hazy alternate reality where advisors don’t need to consider the future of their business. In this world, advisors choose to live in the moment rather than plan for the end. How else can we explain that less than 30% of the advisor population of a certain age has developed or implemented a succession plan for their business, as found by Moss Adams/InvestmentNews’ study, “Financial Performance Study of Advisory Firms”?
Well, after all, why would an advisor want to think about leaving something that provides them with income? Forget the money for a moment, what about his or her self-esteem? The business has defined them in their community. What will happen to their identity and status after retirement? Further, and even scarier, executing a succession plan might force them to focus on things they’ve never done well, like hiring and developing staff, managing to profitability, replenishing their client base and reducing dependency on themselves—all to make the business more transferable.
Think about it:
- Most advisors have no interest in working with other people. It may be no coincidence that the feeling is mutual.
- Most advisors aren’t emotionally or financially ready to retire; they have a lot of wood to chop before they get to that point.
- Most advisors have been implanted with a chip that ensures their immortality until the end of time.
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Furthermore, most advisors are not appreciated by their family (who just use them for money), so they intend to stay alive just to spite them.
Add to this the fact that most aging practices have little to no value because their aging client base has entered the decumulation phase. Why would anybody pay for a practice that is dead or dying?
Perhaps we should call for a moratorium on the subject of succession planning. Let’s just say no to the seminars, white papers and webcasts that exhort aging advisors to start taking care of business.
It doesn’t make sense to preach change and commitment to a group of immortal robots, unencumbered by family needs, sitting on a worthless asset while trying to milk their business for current income. All this talk of transitioning the business, taking care of heirs and ensuring that clients will be cared for once they pass is just a giant annoyance. Clearly, the message lacks allure for the average advisor.
Instead of succession planning, advisors could turn their attention to exploiting newly-minted financial planners from the likes of Texas Tech, paying them a pittance and having them do all the work. Advisors could limit their efforts to assist clients who pay them a lot of money but are too infirm or addled to demand attention. This would allow advisors to extract maximum income while minimizing their costs and time demands. It would also free them up to attend seminars and conferences where they could instruct their peers on the keys to success.