Succession planning is a hot topic on every advisor’s mind these days, whether they’re looking at retirement or considering a merger or acquisition. In this series of blogs (Greg Friedman on Business Development), I’m covering the four biggest hurdles facing financial advisors today. Last time I shared some tips on how to manage changing technology; in this blog we’ll talk about all of the factors involved in planning for succession.
2014: Implementing that Succession Plan
If 2013 was the year financial advisors started thinking about their succession plans, this is the year to start the actual planning. One of the biggest (and possibly most common) missteps in succession planning is procrastination. While the average age of the advisor continues to rise (mid-50s and counting) the competition for talented young planners has become fierce and the idea of M&A seems more and more attractive. But how does one get started on a plan for succession, and who has time for that anyway?
Trust me when I say that advisors need to make time, because putting off until tomorrow what should be done today means less and less time to make a smart, sound decision about one of the most important components of their lives.
Mapping Out Your Goals
Just what are your goals, anyway? Is it to absolutely maximize the dollar value of the firm to you? Is it to take great care of your clients consistently in the manner in which you have done in the past? Is it to provide for an internal succession plan to provide stability for your clients and employees?
The first step in planning for succession is to assess and clearly refine your goals. Aside from considering what’s best for your future, what’s best for the future of the business? Advisors need to envision what their own lives will look like once they’ve passed the torch to a successor or merged with another firm. Advisors should ask themselves: Do I intend to stay on in a merged firm as an advisor or mentor? Am I looking to leave my firm in the hands of capable internal partners while I sail across the globe?
An advisor’s personal goals for the future after succession play a key role in deciding the firm’s optimal path.
Mining for the Right Successor
Many advisors look internally for their successor, and in this scenario, a great deal of time and attention should be spent on the hiring process.