Women advisors’ take on succession planning

Several unique elements affect women advisors' planning, including a greater focus on the established relationships between staff and clients and on the maintenance of culture within their practice.

One in four financial advisors who expect to transition their business in the next 10 years are unsure of their succession plan.

For women advisors, the number is even higher. Since shifting much of my focus toward supporting succession planning in the advisory space, every woman I’ve spoken to about this process is concerned about this transition for reasons well beyond the bottom line.

It’s been said that women financial advisors bring different skills to the table when compared with the men in the industry — “more intuitive,” “more empathetic” and “better listeners” being some oft-mentioned attributes. These very relationship-centric traits are among the reasons woman investors gravitate toward working with women advisors.

However, according to a recent Nationwide Retirement Institute survey of employer-sponsored retirement plan participants and sponsors, 62% of women are delaying retirement — or don’t believe they will ever be able to retire — because of inflation, compared to 47% of men.

Why the double-digit disparity? Look no further than the usual suspects: the wage gap, less time in the workforce, a generally more conservative approach to investing and a longer average life span.

As women financial advisors work to ensure a secure financial future for each of their clients, do they compromise their own? Women financial advisors build bridges, using both hard and soft skills. Far too often, they neglect, or delay, building one for themselves — one that will take them into the next chapter of their lives once they’ve decided to leave the financial services industry.

Several unique elements affect their succession planning, including an increased focus on the established relationships between staff and clients and the maintenance of culture within their practice. Additionally, ensuring that the groundwork they’ve laid for the next generation of women advisors is protected is important. That’s not to say a successful monetization of their practice doesn’t matter to these advisors as they work toward retirement. It’s just one of many things that matter.

Frankly, some of the traditional industry services that bring together advisors for this purpose don’t value the softer skills and services many women advisors work so hard to foster throughout their careers.

Succession planning is, at its core, strategic transitional wealth planning. For many advisors, their business is their retirement nest egg. There’s a lot of risk and uncertainty surrounding both the idea and actual execution of a succession plan, and “kicking the can down the road” is not an uncommon response for busy advisors focused on their clients’ financial planning needs. In recent years, various platforms, programs and support have been made available, some of which ease the transition by transforming it into a multiyear event.

For example, AmeriFlex’s SuccessionFlex allows advisors to establish a succession and continuity agreement – with no equity changing hands at the time of the agreement. Such a succession and continuity agreement option mitigates some of the uncertainty of succession planning and lets the advisor maintain control of their practice while also providing liquidity in return for a portion of the advisor’s income. For women who place a higher value on the cultural and relationship impacts of the transition, this kind of arrangement allows them to step away incrementally, ensuring the infrastructure and team are in place that respect what matters to them the most.

The truth is, advisors looking to exit the business in five years or so have a relatively short runway, and many stakeholders to consider. It’s an emotional process, replete with hard financial realities and difficult decisions. The needs of the financial advisor, their family, employees and clients, and the successor advisor are all in play. The right process is one that gives the exiting advisor options, without sacrificing values or value.

Hannah Buschbom is chief transitional wealth planner at AmeriFlex Group.