In a classic movie line from “Ferris Bueller’s Day Off,” Ferris says: “Life moves pretty fast. [If ] you don’t stop and look around once in a while, you could miss it.”
That sentiment is bigger than a teen comedy. When it comes to succession planning, many advisors come to the end of their career and find that it flew by them — and worst of all, they don’t have a succession plan.
As you build and grow your firm, you must be intentional about your succession planning. Good succession planning, just like the retirement planning you do for your clients, begins years in advance.
If you don’t work with intention when building your succession plan, you’ll arrive at the end of your career without options to capitalize on what you have created, and a legacy for your business to carry on without you.
Too often, advisors are like the proverb of the shoe cobbler whose own children have no shoes. Advisors frequently create succession plans and develop legacies for their clients but ignore their own.
Make a Plan
For succession to work, you need to be focused about it. This means you need to put time and effort into determining how to handle it. In general, there are three primary questions to answer when starting a succession plan:
- Are you building a company to eventually sell?
- Are you building a company to incentivize someone else to take it over?
- Or, are you simply building a company for yourself — your lifestyle, etc.?
As you think about the answers, let’s explore the options you have with succession planning. I am oversimplifying here, but in general there are two basic types of succession plans: internal and external.
In an internal transition, you’re transitioning to a family member or the second generation of talent you’ve hired and trained in your firm.
Internal transitions take the most time, because they involve bringing together and finding the right people who are technically and strategically skilled, and who share your same values enough to take over and run your firm without hurting the brand.