Succession planning requires a plan

Succession planning is becoming an increasingly important and timely topic in the financial services space. An estimated 111,500 advisers will retire over the next 10 years, representing more than one-third of the advice industry’s workforce and assets. Robust recruiting, retention strategies and succession planning are needed now more than ever — before it’s too late.

My mother, Mary Ann Blair, entered the financial services industry in 1982. She started in the life insurance business but gradually evolved into a comprehensive financial planner, and she did it as one of the very few women in the field. She was a trailblazer, in ways that I didn’t fully understand until I was older.

I took a different path. I started as a teacher, but my mother began to plant seeds in my mind about the possibility of becoming an adviser early on in my career, right after I graduated college.

Then a life-changing opportunity popped up. The University of Delaware began offering a program that would allow participants to learn the seven education modules required to sit for the certified financial planner exam. The program was taught by practicing financial services professionals, and the opportunity was too good to pass up. I enrolled and took classes once or twice a week in the evenings for more than a year. I balanced that program with continuing to teach during the day (and raising a three-year-old).

I’d always wanted to help people and make a difference in the world. At first, that meant teaching. Then, in 2009, it meant a whole new career. I made the switch; I joined my mother in her practice. Over time, as she mentored me and helped me learn the business, she added me as a 50% partner to more and more clients, until we were 50-50 on every client.

She also agreed that any business I brought in on my own would be mine, 100%.

In 2016, after six years of working together, my mother announced that she was going to retire at the end of the year. As we started to inform clients she was retiring, almost all of them commented that they had been wondering when that was going to happen! None of them were surprised or upset. Because we had been working together for so long, the clients felt confident that they were still going to be taken care of in the same manner that they had been by my mother for many, many years.

This was all because we were open and honest not only with them, but also within our own relationship.

For any adviser looking to retire, I’d suggest taking the same approach my mother did:
• Bring on a junior adviser at least five to seven years prior to retirement. This gives the adviser (and your clients) time to acclimate to the role and those important relationships.
• The retiring adviser should be willing to compensate the junior adviser for their work, time and effort, whether that’s with a split on commission or a salary contract.
• Allow the clients to get to know and trust the purchasing adviser.

Succession planning doesn’t have to be difficult. But it does include one important word: a plan.

[More: A plan for yourself is a plan for the future of your firm]

Emily Woodson is a partner at Financial House, a comprehensive wealth management company in Centreville, Delaware.