3 Obstacles to Smooth Successions

Good succession planning takes time. Don't get derailed by these obstacles.

May 1, 2017 @ 12:01 am


The first step of succession planning is recognizing you have a problem: you are not going to live forever. Advisors often think they will work until they die, ignoring the high probability that an illness or disability could cause them to leave the business before they leave this earth. Succession planning is like retirement planning for clients: the longer you wait, the fewer options you have for transitioning the business when you need or want to.

Good succession planning takes time. You want to sell your practice at its peak value, not out of desperation. Ideally, you should start planning at least 10 years before you think you will retire.


Succession plans don't happen in a vacuum. Employees, spouses and children will be impacted. Your spouse needs to be comfortable with your plan and your successor, especially if you die and the succession plan is activated quickly and unexpectedly.

Children involved in the business also get high priority on your communication list. Assumptions about who will inherit what, when and with what strings attached have pulled families apart when an owner retires or dies. As uncomfortable as the conversations may be, taking an honest, direct and business-focused approach now will make things easier later.

You own the business, but your staff depends upon it for their livelihood. Be clear about your long-term plans for the business, including who will succeed you and when. If you expect certain employees to become owners or have key roles in the transition, don't keep those plans a secret. Uncertainty and incorrect assumptions can quickly destroy even the most tightly knit teams, which can in turn decrease the value of your business when it's time to sell.


Advisors who have started to let their practice wind down as they age may not recognize the decline in value. They may base their expectations for the sale on what the practice was in its heyday. In addition, valuations may go up, down or remain level, depending on the number of buyers and the number of practices for sale.

Create your own market with a buyer by using a long-term succession plan that incorporates younger advisors into your business, to keep new assets coming in. Make sure you maximize opportunities to retain assets after your clients die by engaging their heirs now. Your marketing outreach should include the adult beneficiaries on the accounts in your top two client segments. Deepening those relationships now keeps new assets coming in and preserves future cash flow.

Download our Succession Plan Guide to help you maximize the value of your practice today.


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