Develop the preamble to your succession plan

MAY 30, 2012
One of the crowning achievements of American democracy is the peaceful and orderly transfer of power from one leader to the next. When the term of one of these leaders is over, there is another waiting in the wings to accept the same responsibilities and to carry on the continuity of the office. However, this time-honored progression did not just happen; rather, it was the product of the thought and deliberation of our forefathers and was ultimately rigorously defined and protected by the Constitution. With many advisers approaching retirement age and starting to eye an exit from the business, it is clear that their own terms as owners of their firms are nearing an end and that someone else eventually will have to take the reins from them. But, with just 10% of these owners' having developed succession plans to this point, it is evident that not many advisers have taken the time to develop and implement their own “Constitution” to facilitate this transfer of equity and control, while also ensuring their own financial future. RELATED ITEM Steps for building a succession plan Without a dedicated succession plan, your firm could face a tumultuous hand-off to your successor and even a significant decrease in firm value. However, if you do adopt a succession plan in preparation for your exit from the business, you will not only realize a better value for your practice, but you will also provide for the long-term stewardship of your firm, including its employees and clients. Before you anoint your successor in your head and begin drafting your exit letter to your clients, you should ensure that your firm is in need of a succession plan at this time. If your firm is among those that would benefit from a plan, you then should consider whether an internal sale to employees or partners, or an external sale to a third party, fits into that plan. These steps will facilitate your decision making as to which transition option might be best for you.

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave