Let the journey begin

As the debate regarding holding brokers to a fiduciary standard was once more thrust into the sphere of public consciousness last week, via President Obama’s address to the AARP, and the financial advisory industry lit up with commentary from every corner, the noise was deafening as pundits and politicians clamored for position. It was within that context that I settled in to watch the preview of the latest season of Practice Makeover, which focuses on Succession Planning. Like the fiduciary debate, this is a topic that has been well covered by the financial advisory media – I’ve written about it and CLS has published a whitepaper on it. I wanted this to be good – I needed it to be good. The issue is so crucial for independent advisers. And as I watched the first episode, I felt an overwhelming excitement – because for all of the writing, all of the talk about succession planning, what you are about to witness is a plan actually unfolding before your very eyes.
My succession planning takeaways, as showcased by the Lapito’s:
1. Take your time.
Leo didn’t hand Gabe the keys to the kingdom on the first day. They took their time to allow for the building of relationships with the staff, clients, and partners. Gabe didn’t walk in the first day expecting to own the business or run the business. He was willing to come in and roll up his sleeves, get to work. This type of transition and time are often overlooked and under-appreciated. I’ve seen many advisers try to make this transition with a flip of a switch only to find there’s a short circuit. It appears Leo and Gabe have done a marvelous job of timing this transition and giving it time to succeed.
2. Delegate, but don’t abdicate.
One of the greatest things that my Dad did for me on my first day was give me the responsibility to do a job. At first, that job had relatively low impact on the overall business – but he truly delegated the authority to me to get it done. I knew the budget, the timeline, and the desired outcome because he clearly communicated that to me. But more importantly, I knew he trusted that I could get it done my way; which may or may not have been the way he did it. I had the authority to deviate from the way it was done “back in the day”, but I knew I had to get it done within budget and on time. As the months and years passed, he continued to delegate more and more to me. And truly empowered me to get it done my way, while offering counsel as needed.
For business owners, in particular for founders, this can be a painful thing. The process of delegation to another person who is younger, less experienced, and hasn’t been through the bad times – is really challenging. It is much easier to simply tell them how to do it and then hover over them like a mother hen, holding their hand along the way, and telling them exactly how to do everything. True delegation takes courage. Leo knew that to be able to truly step away he needed Gabe to be his own man and do things his way.
3. Define your own retirement.
Leo, like my Dad, seems to be OK with letting the day to day duties of running the business go. Now, I guess we will see in future episodes whether or not Leo steps away. It appears that Leo is going to stay involved with clients and engaged in the business. So, he appears to be following my Dad’s definition of retirement – “doing what you want, when you want”. Leo seems to have found a perfect balance of letting go of the business; the day to day operations by giving that to Gabe. However, it appears that Leo is going to stay engaged and not simply ride off in the sunset. He may slow down, he may only work with certain types of clients – but having the ability to do what you want when you want is the true definition of retirement.
4. Independence is a beautiful thing.
At one point, Ackermann asks, pointedly, “did you consider your other options?” Selling your book to a wirehouse, an aggregator, joining another firm? To which Leo replies, sure they knew about the other options, but this was the one true path – one that fit them perfectly and embodied the spirit of independence the firm has held dear for nineteen years. In fact they have taken clients in who had a taste of wirehouse life and found it wanting. Independence, and doing what is in the best interest of your clients dictated that this plan was what was best not only for Leo and his son but also for the clients that have become so integral to the firm’s approach to wealth management. There simply was no other path.
Nothing drives home a point better than experiencing it for yourself, but the next best thing is being invited in to an adviser’s practice to join them on their journey. If episode one is any indication, this is going to be one heck of a ride.
Todd Clarke is the chief executive officer of CLS Investments and can be reached at [email protected]
Watch episode one of Practice Makeover, Season Three: