One adviser’s takeaway on the importance of planning

Lessons learned at his father’s side in the practice

Let’s dispense with the discussion about whether you need a succession plan, as it would be a waste of everyone’s time. Take it from me, it’s not “if” but purely a question of “when” you need to have it in place.
(More: Why not having a continuity plan in place is reckless)
I had the opportunity to work with my dad, who died in a plane crash in 2012, in his financial planning business for over 20 years. As we worked side by side, we had the good fortune to see the business flourish, growing from a financial planning firm to a financial services business that includes asset management and asset servicing companies. We watched it expand from seven employees to more than 500. We guided it from $50 million in assets under management and advisement to $200 billion.
Along the way, I’d ask my dad when he was going to retire. I was very curious about his plan and how, or if, I fit into it. His answer was always the same — “I am retired.”
He didn’t act retired, though. He showed up to work almost every day with the energy of a recent college grad. When I’d challenge his answer, he would further explain that “retirement is doing what you want, when you want.”
CHOICE AND CONTROL
So I guess in his own way my father was retired. He had the freedom to work 80-hour weeks or take an extended vacation to South America. That’s why he started the business he did: It gave him control, freedom and the independence he enjoyed. He was the quintessential entrepreneur.
I’ve learned firsthand the importance of having and executing a succession plan. Succession planning isn’t necessarily limited to selling your business. It is the process of immortalizing your business so it can continue to serve your clients and the next generation. To do that, you must think of ways to reinvent your business so that you can focus on things you like. The items to consider include defining your clientele, outsourcing noncore competencies, and determining appropriate growth and continuation plans.
Communicating your succession plan with your clients is paramount. Let’s face it: Advisers are aging, and clients are wondering, “What if?” Communicating your plans will reinforce their confidence in you. It also will help attract the next generation of investors.
In the end, your answer to succession planning may be to sell your business. If you want to stay active in it, your plan may be to reinvent your business. Either way, it is absolutely crucial to the success of our industry that advisers define their plans and inform clients about them.
So, again, it truly is a matter of “when” you need to have your succession plan in place. And the time is right now.
Todd Clarke is the chief executive officer of CLS Investments and can be reached at [email protected]