How to Start Your Succession Plan

When you’re ready to retire from the advisory firm you’ve spent your life building, you usually have a few options. You can sell to a larger organization, or you can try to find a successor to continue your firm’s independence. 

Replacing the owner or CEO of a firm can go very well with the right preparation, or it can go poorly with the wrong approach. Succession can look different for every firm, but there are some commonalities every advisor should consider before they decide to take on an heir to the business they created and built.

Options for a Successor

Choosing an heir to a business is a crucial decision. If you choose well and the hand-over can be smooth, but choose poorly and your entire retirement plan can be derailed.

When it comes to finding a successor, advisors have two options: Look for someone like yourself, or find someone with a different skill set.

If you’re a builder, it may be hard to find another young advisor who’s also a builder and entrepreneur at heart. It’s likely they are already building their own firm. In other words, choosing someone very similar to you in skills and personality may lead to clashes you’ll have to learn to overcome, and getting along with your successor is often an overlooked part of many advisors’ succession plans.

The alternative is to find a successor with a different skill set. A successor with the skills to maintain and enhance your firm are going to be very different from the skills you already have. Instead of finding someone to build, we often recommend the easier route; find someone who can help scale, enhance, and increase efficiency in your firm.

But, like anything in life, the relationship-building and perspective it takes to find someone different than you takes the greatest amount of effort.

Managing the Exit

Leaving the business you’ve built and cared about for decades can be an emotional time. In a way, retiring forces us to confront our own mortality and relevance. It’s important to face these emotions head on.

The way to face them is with someone and that someone, before you hire your successor is you. Identifying how much time you need to give yourself not only to properly hand off the business to your successor, but also to let go of your business emotionally, is the key.

Many business owners have to ask themselves what they want their legacy to be, and what legacy they want their business to have. This is an intensely personal question that involves hard questions about where they want their future business to go?

Iconic organizations that stand the test of time and extend beyond any one individual. This means you have to let go. Understanding this fact, is critical to managing emotional difficulties as well as enjoying your future retirement.

There is no right or wrong way to go about succession planning but it is only as good as the communication you have between yourself, your successor and people you have. Holding back details or keeping control away from your chosen heir will lead to disaster; being open, honest, and collaborative will create the best results. 

Your clients, and the next generation of clients, want stability and trust with you in order to preserve your legacy. If you can show and communicate your trust to them, you have a greater chance of retaining current clients and continuing to bring on new clients as your business goes into the future, without you.

Jarrod Upton is Chief Operations and Senior Consultant at Herbers & Company. He brings over 16 years of experience in management strategy, client experience and operations consulting to advisory firms. He can be reached at jarrod.upon@herbersco.com.