Financial adviser Kathleen Rehl has devoted the end of every client meeting so far this year to talking about something she's never discussed with clients before: her impending exit from the business.
And her unique approach to succession planning and valuation could pressage a wave of other customized plans, as large numbers of aging advisers look to leave the industry.
Ms. Rehl, 66, has spent much of the past three years preparing herself for a new career in public speaking, At the same time, she has put together a plan for how to transition her clients to other advisers by the end of 2013 in a unique way that's best for them and profitable for her future.
She's recommending to her clients, most of whom are widows, that they move their business to one of three female advisers. She's also promising that Rehl Financial Advisors' paralegal will help with a smooth transition to any of the advisers. In return, Ms. Rehl will receive 50% of the fees that her clients pay to the new advisers over the first two years.
“I had actually begun introducing clients to the principals I'm recommending they go with two years ago when they came to a party to celebrate the firm's 15-year anniversary,” Ms. Rehl said.
Valuing a practice per each transitioning client is a fairly novel idea. Traditionally, advisers have taken other routes in getting out of the business. According to a recent report from Accenture, some advisers monetize their client relationships and sell the full book to an adviser in or outside the business. Others merge their businesses with a similar practice. In some cases, they groom an individual or several people to take over clients.
Ms. Rehl began to focus her Land O Lakes, Fla.-based practice on helping widows after the death of her husband — and business partner — in 2007. In thinking about her exit from the firm, she wanted to find a solution that met the needs of all her clients, some of whom received full-service advising and others for who required only annual reviews.
David Goad, president of Succession Planning Consultants, said Ms. Rehl's “internal-like” succession plan illustrates the type of solution that takes into consideration qualitative information about the adviser's practice, not just the numbers. That step is more important to the valuation process today because adviser relationships with clients have become much stronger over the past decade, in some cases because of the dour economic times.
Next year, Ms. Rehl plans to do more speaking engagements, both to widows about how they should approach their finances and to advisers about how to work with widows. “After I became a widow and experienced that crushing grief I really got it,” Ms. Rehl said. “I felt like I was going to be a bag lady.”
Other than widows, the adviser stopped taking new clients in 2009. She also set out to write “Moving Forward on Your Own: A Financial Guidebook for Widows” (Rehl Financial Advisors), which came out in 2010. It helped turn Ms. Rehl into a regular speaker on the topic.
“I'm a very good planner," said Ms. Rehl, who will close the firm in 2014 after seventeen years of operation. "But I can ultimately reach many more women through speaking, writing and teaching than I can by working one-on-one with clients."