3 moves advisers can make now to stair-step their succession

Many advisers lack a written succession plan, including 60% of those who will be retiring within five years

Oct 23, 2018 @ 12:39 pm

By Ron Carson

These last two months haven given me unique perspective, both personally and professionally. In September, I was hunted by a mountain lion while scaling Crestone Peak in the Rockies, and it taught me a valuable lesson about how to be more cognizant of the competitive landscape in financial services today.

Throughout October, I have found myself in more than a dozen cities across the country and heard from thousands of advisers about how we can better articulate our value with clients.

Personally, looking back on these last two months has also made me more keenly aware of what lies ahead. How will we infuse the next generation of talent into our profession? How will we serve a growing client base as advisers exit the business at a record pace? And what effect does all this have on planning our succession?

While many of us shrug off the idea of retirement or selling our business, I'm going to ask a favor: Remove that ego and your laundry list of excuses for a moment.

Earlier this year, the Financial Planning Association revealed that 73% of financial advisers don't have a written succession plan. The more surprising fact to me, however, is that 60% of the advisers who didn't have a written plan are within five years of retirement.

This unveils a more unsettling truth about advisers today. Most of us are either avoiding the inevitable question of how we will exit the business, or we simply don't know where to begin to tackle such a life-changing transition.

(More: Why saying goodbye to your clients and business is hard)

1. Self-examine your role as Adviser CEO

As your firm scales up and continues to grow, so will your role as the leader within your firm. Our industry is maturing into a profession, and advisers have a larger responsibility to their to firm to embrace a CEO mindset. Some of us feel we need to remove ourselves from "the weeds" to focus on vision and strategy. Others fear losing touch with clients and still have a passion for sitting across the table from those they serve every day.

The reality is you need to be both a practitioner and an owner, a leader who knows how to build processes, teams and solutions while also maintaining that "founder's vision." Without this dual perspective and skill set, you're not an Adviser CEO.

Ask yourself where you most enjoy spending time within the business. Surround yourself with those who complement you well, and build out a true leadership team the business can depend on, even without your being there.

Think about what you want for yourself, your clients and your team. Whatever gaps you uncover, and you should uncover a few, should be the beginnings of what you look for in a succession solution.

2. Introduce equity for key stakeholders

Every adviser needs key "founding members" who reflect the values of the firm and carry out its mission as though they were the CEO. Identify those team members, hold a team retreat before the year-end and develop a growth path that provides each of them with clarity on how they will play an integral role in the firm's future.

In some cases, this will involve offering an equity option in your firm. Stakeholders who are invested in your future will want to invest in the company itself, so feed their desire to take on a bigger role by offering equity in the firm or something like a profits interest plan.

Surprisingly enough, advisers often spend their time looking outward for a successor when the best option lies right in front of them, with a team that already knows their clients, lives out the firm's values and takes extreme pride in the future of the firm. If an associate adviser has expressed interest in buying the practice, don't wait to have the conversation. He or she would like to have as much time as you would to help make the transition, usually over the course of several years.

(More: Adviser's consultant: Building a flexible succession plan)

3. Start sharing with your clients

The reason this decision around succession is so difficult, time-consuming and, at times, avoided altogether is because there are lives depending on it, outside your own. It's a life-altering decision and often one that can paralyze advisers. Your clients will be there long after you leave, and you have a responsibility to give them the best service possible.

So embrace the elephant in the room. Start sharing how you see the next five, 10 and15 years, and how the company will be positioned for the long term, beyond you.

The faster you introduce your clients to the idea, the more comfortable they will be when the transition happens — and the more empowered your team will be in building something bigger than themselves.

Twitter CEO Jack Dorsey put it best when he said that "companies have multiple founding moments." See your succession as another "founding moment," one that will carry your firm into its next phase of life. One that your clients trust, your team believes in and your successor can carry forward.

(More: The struggle is real: Why our profession needs next-gen talent now)

Ron Carson is CEO and founder of the Carson Group, which serves advisers and investors through its businesses: Carson Group Coaching, Carson Group Partners and Carson Wealth. Follow him @RCHusker.


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