Financial Advisor Succession Planning

Preparing clients for retirement is what you do best. Have you made provisions for your own? Succession plans are often overlooked by financial advisors, yet a transition strategy should be a component of any growth or marketing plan. This is particularly true for older advisors. More than $2.3 trillion in assets are managed by financial advisors aged 60 or above. Clients need to know there’s a plan for when their advisor retires. The expert consultants at Bridgemark Strategies can assist you with financial advisor succession planning to help you increase the value for your business and ensure stability for your clients.

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What is Your Vision for Retirement?

When we do what we love for a living, retirement is the furthest thing from our minds. The first step in a succession plan is to envision what retirement means to you. Does it come at a certain age or when you’ve reached a specific goal?

Do you want to retain some ownership of your firm?

This option is more semi-retirement, but it could be the catalyst for triggering your succession plan. A senior partner steps away to take on more of a consulting role and a junior partner steps in to handle active asset management.

Do you have a financial goal for your retirement?

Perhaps you have a specific financial goal that determines when you walk away from the business. You’ve earned that right, but what about your clients? Leaving them to fend for themselves puts a damper on your life’s work. There needs to be a plan for them as well.

Succession Plans Turn a Practice into a Business

A succession plan can make the difference between managing a practice and running an actual business. As an active financial advisor, you accumulate assets under management (aum) throughout your career. That book of business can be kept intact after you retire. Choosing a successor and having a plan in place to smoothly transfer those assets to another advisor will preserve all assets under one roof and provide opportunity for the firm to continue to grow.

Know Your Succession Options

Consider your options for your succession plan carefully. They all take time to implement, so it’s important to start the investigatory process now—even if retirement is still many years away. Some of the most common options for financial advisor succession planning include:

  • No documented plan and its consequences
  • Transitioning to an internal partner
  • Grooming a junior advisor for succession
  • Combining a partial external and internal sale
  • Selling your practice before retiring

No Documented Plan?

For advisors who do not have a documented plan, if they should pass away, the firm they are affiliated with, at their sole discretion, will dictate who manages the clients’ accounts. This leaves the advisors’ estate without fair compensation.

Selecting an Internal Successor

In some cases, a financial advisor succession plan is dictated by the structure of the company. One partner retires and another takes over, or maybe a father passes the practice on to his son. Those are simple scenarios. What if you don’t have any qualified candidates?

Focus on Client Needs

The choice should be based on the services you provide and the needs of your clients. Synergies in client approach is critical in selecting a successor and client retention.

Preserve What You Have Built

Of course, the popular choice isn’t always the right choice. You’ll also want someone who is not only capable of preserving what you have built but also able to grow the practice further. Maintaining and growing is critical to a successful plan. Who is best capable of preserving that?

Grooming a Junior Advisor to Succeed You

This can be a good option if you can find the right candidate. A junior advisor who has been mentored by the principal of the firm is more likely to run the practice the way they have been taught. Unfortunately, you may not know if they’re the right fit for several years, and investing your time and future on this uncertainty introduces significant risk.

Larger Firms

Larger firms hire a number of junior advisors and have advancement criteria in place. When a senior partner retires, larger firms provide continuity by always having someone available to assume their role in the company.

Independent Advisors

Independent advisors with no partners don’t have the same succession plan as these larger firms. Establishing the right succession plan is a critical move for the advisors, employees and clients. You’ll likely need help in the identifying and evaluating process. As a leading financial advisor recruiting firm, Bridgemark Strategies can help you find the right solution.

Selling Your Practice

Selling an advisory practice can be highly profitable. This also classifies as a succession plan, and it is a viable option for many.

A Seller’s Market

According to the most recent numbers, the ratio of qualified buyers to sellers for an advisory practice is roughly 15:1. That means there’s no shortage of offers out there if you choose to sell your practice. Don’t wait too long, though. These deals take time.

Improve Your Sale

Are you ready to sell your practice? Our experienced consultants at Bridgemark Strategies can help you understand your options, provide advice to improve valuation, and get you in touch with vetted buyers who are ready to make a deal.

Let’s Get Started

The best time to begin financial advisor succession planning is now. Contact Bridgemark Strategies today to discuss your options and make a plan for your future that upholds the best interests of you, your practice, and your clients.