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Best practices for working with family members

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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.

Craig McIlroy and his son, Brandon

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)

Build your own success

When working with a family member, it can feel like your collective success overshadows your individual achievements. While it is crucial to work together to grow the business, it is also important to build your own success.

Like most people, Brandon had no desire to live under his father’s shadow. Since day one, it has been important to both of us that he develop independently. He operates with the mindset that if I were to leave and take all of my clients with me, he would still be okay. When you are the succession plan, you must work hard to ensure that you are capable of growing the business that your predecessor has built. This is ultimately in the best interest of the business. 

When I began thinking about my succession plan, I knew that I needed to find a successor who could not only maintain my business, but also grow it. All advisors know that if your business is not growing, it will not last.

At this point Brandon is capable of running the business on his own, something that would not have been possible had he settled for simply riding my coattails. Instead, he has a book of business that he can be proud of and I have a successor that I know I can count on to run my business wisely and skillfully once I retire.



Working with with family can provide opportunities to learn new strategies from each other. (Photo: iStock)

Learn from each other

Even with its challenges and learning moments, working with my son has been an unbelievably rewarding experience. It has challenged me to question my own methods and has ultimately improved my business. We both have different approaches, and that diversity of thought has strengthened the work that we do for clients.

Brandon has helped me to see what my strengths and weaknesses are and I think I have done the same for him. Having a business partner that can give you honest, meaningful feedback is incredibly valuable. Brandon and I share staff and we share the process that we use when working with clients, but we run two separate books of business and we each bring our own unique style to the way we approach our work.

At the end of the day, working with a family member is an incredible opportunity. I am so grateful to be able to work with my son everyday and am proud of the ways in which we have helped each other grow. Above all, I keep in mind how fortunate and rewarding our working relationship is. I have a business partner that I trust and respect, and I am able to see my child excel every day.

For those advisors beginning to build their succession plan, do not overlook your family members as possible successors. Even if you have no experience working together in the past, working with a family member can be immensely rewarding both personally and professionally.

Craig McIlroy is founder & CEO of The Financial Group in Denver, Colorado, and a registered representative of Lincoln Financial Advisors Corp.

See also:

Retirement planning for small business owners

3 reasons you need a succession plan — now

Succession Planning: Just be SMART

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