Editor’s Note: Dan Skiles is one of our 2014 IA 25 honorees. Read his profile from the May issue of Investment Advisor here, and look for his extended profile on ThinkAdvisor.com on May 13.
Succession planning: Without a doubt, this is one of the most important topics for our profession. Attend any conference or workshop and the succession planning session is often standing-room-only. There are a number of important variables that factor into any succession plan, but it should come as no surprise that your firm’s technology is one of the most important.
The first question to ask is what products or systems your firm actually owns versus systems that you rent or that others provide to you. For truly independent firms, chances are you own all your technology. The role of these systems in the valuation of your firm varies depending on other factors that you may or may not be able to change, such as where your accounts are held, the various investments that you implement, the ease of exporting the data and the types of clients you serve.
For advisors whose technology is owned by their broker-dealer or custodian, it is very important to understand the technology systems and underlying data that you can take with you. For example, if your performance reports are provided exclusively by your BD or on a system that is not widely available, this could create an issue when you decide to leave.
Every firm should understand which systems and processes are critical to their business. Examples of critical systems could include your CRM system, performance reporting programs, and trading and rebalancing systems. Critical processes might include how you implement and monitor investment recommendations. Regarding succession planning, technology systems and processes that are deemed critical should be relatively easy to transition or convert for use in another firm or business environment. It is even better when your critical technology systems are also widely used by other firms. It is certainly easier for two firms to merge (from a technology perspective) when they share common systems and processes.