Best practices for working with family members

Almost 10 years ago, my business partner of many years exited the practice, prompted by some unexpected personal events. In the midst of her transition out of the financial planning business, she told me that if she could go back in time and do one thing differently, she would have planned her exit much sooner than she did.

Her hindsight was the wake up call I needed to begin thinking about my own succession plan. As a financial advisor for many small business owners, I frequently work to craft their exit plans. Although I constantly remind my clients to prioritize their retirement plans and to think early and often about their succession plans, I had not really been thinking much about my own exit strategy. It can be easy for financial advisors to get so wrapped up in our work and helping our clients create a plan that we forget to nail down the details of our own retirement and business exit strategies.

As the advisory industry ages, it is critical for advisors to think about possible successors. I always advise my clients that a good succession plan takes years to develop. This is perhaps even truer for financial advisors, in order to provide continuity for existing clients. If you think it is a little too soon to begin thinking about your plan, it’s probably not. Advisors should begin thinking about a succession planning strategy about a decade before they want to retire. It takes clients a while to get used to a new face, especially when this new person will be trusted with many of their most important and personal financial decisions. Clients want to feel completely confident that their money and their plans will remain in good hands no matter what.

Once I knew that I needed to get serious about my own succession plan, I realized that I had a few young people in my own family who might be interested in financial planning. My son and two of my sons-in-law all had educational backgrounds in business and relevant work experience. I presented the idea to them and determined their interest. I then began introducing them to the financial planning industry through weekly phone calls for six months. Their obligation in our arrangement was to introduce me to individuals whose business they hoped to obtain. So, over the next year, I travelled to see each of them twice a month. I helped them to make the connections and begin building their books of business little by little. 

Eventually, my son Brandon made the move to join my practice in Denver. For the past seven years, Brandon and I have worked together to grow the practice and provide excellent service to our clients. Working with my son has been an incredibly rewarding experience. Arriving at the office each day and getting the opportunity to work with him, spend time with him and watch him grow and excel in this business that I love is immensely fulfilling. Looking back on our first several years as business partners, I realize that we made many good choices as we established our working relationship, in addition to many valuable lessons learned.

For advisors looking to groom family members to be their succession plan, the following are several best practices Brandon and I have learned for a successful working relationship.

Setting ground rules and boundaries can prevent problems down the road. (Photo: iStock)

Establish the rules of the game

Recognize that working with a family member is going to be different from other working relationships. Acknowledge that this relationship requires a bit more definition than others. Work together to establish boundaries and outline what the relationship should look like. When Brandon began working with me, we agreed that we would not be parent and child while in the workplace. Instead, our relationship would be that of equal business partners.

We wanted to make sure that Brandon developed the skills and tools to be successful on his own. Success in this business requires hard work and commitment, and I knew that making things too easy for him would only hurt him in the long run. We decided early on that Brandon would begin his career working his way up from an unsalaried advisor bringing in his own business, the same way many other established planners started out. This has allowed Brandon to learn — from the ground up — everything he can about financial planning and become a knowledgeable and skilled advisor in his own right.

We have worked hard to maintain that level of professionalism and mutual respect throughout our years of working together, and it has benefited our work and the way we are able to serve our clients — as a unified team of professionals.

Family members should avoid relying too heavily on each other for feedback and advice. (Photo: iStock)

Find other mentors

I knew I did not want to be a direct coach over Brandon, so I enlisted the help of other financial advisors to help coach him. These senior planners helped show Brandon the ropes. He provided them with status reports and they kept an eye on his progress, while I offered him guidance in a less formal way. 

When working with a family member, things often run much smoother when someone else is his or her direct supervisor. While Brandon and I treat each other with complete professionalism and respect while at work, it makes it easier that he does not report directly to me. We are equal partners. While he was learning, he reported to other knowledgeable advisors.

This system allowed Brandon to benefit not only from my expertise and experience, but from the wisdom of other advisors that he could relate to in a different way. Having this well-rounded bank of insight has helped Brandon develop his own unique methods of working with clients. 

Working with family can feel like a collective effort, but it’s important to celebrate individual achievements. (Photo: iStock)