Succession Planning Tips That Tip The Scales In Your Favor

Four Executives Discuss Early Preparation And Client Continuity During Advisor Succession
Authored by Jeff Nash – original article publication found here.

We’ve got a succession crisis in the independent wealth management space. Our current predicament cannot be traced to one source, but the most often cited culprits are demographic trends, insufficient formal planning by firms and current advisor‑owners, an inability by the industry to effectively sell itself to college students and career transitioners and the high price of entry for second‑generation advisors.

Many rightly believe advances in technology have muted some of the negative impacts of these trends. Crisis averted? Not really. The narrative has not reversed course completely: Even the most innovative technologies have limitations within a relationship‑centric business such as ours.

The succession planning process is integral to the continuum that keeps wealth management stable and dynamic, and it is incumbent upon us all to take steps to ensure the long‑term viability of the advice industry. At the enterprise level, firms that proactively devote time and resources to the succession planning process are reaping the rewards and will remain ahead of the curve in terms of long‑term business success. Others that follow suit can do so as well.

Below, four executives shared their firms’ succession planning best practices. A common thread runs through each — a focus on people, purpose and preparation:

• Thomas Goodson, Founder and CEO of hybrid RIA The AmeriFlex Group.
• Kosta Tanglis, Founder and Managing Partner of Chicago-based wealth management firm Genesis Wealth, which is affiliated with LPL Financial.
• Micah J. Kelley, Partner at The Kelley Financial Group, a wealth management practice offering advisory services through Stratos Wealth Partners.
• Jason Hanavan, CEO, VestGen Wealth Partners, a Chicago‑based RIA.

I asked each of them: How does your firm approach the succession planning process? From initial conversations to execution, what have you found to be the most impactful element of your methodology?

Goodson: In our experience, the step that makes a succession plan successful is identifying and starting a new advisor to take over the practice well ahead of the transition, so clients have time to get to know that person before the handoff. And that requires significant, coordinated long‑term planning across nearly every aspect of this process.

We start with the advisor’s goals and timeline, then take action to execute each aspect of this plan together. Each advisor considering retirement has one AmeriFlex team that supports them from the very early planning stages to the final days of their career. This approach mitigates much of the execution risk when different providers support a range of critical components of a succession plan.

Tanglis: At Genesis, succession planning starts and ends with the client. When an established advisor is ready to transition out of the business, our goal is to ensure the client experiences the same level of trust, expertise and personal attention they’ve come to expect. We are intentional about identifying the right successor, preserving relationships and maintaining continuity. The most impactful part of our process is designing the transaction around the client experience, not simply getting a deal closed.

Kelley: At The Kelley Financial Group, we have approached succession as an evolution of the firm rather than a single transaction. The objective was never simply to transfer ownership from one generation to the next, but to preserve what made the firm successful while building an organization capable of continuing to grow.

The most impactful element of our methodology has been starting early and recognizing that succession is ultimately about people, not just ownership. You can create an agreement that transfers shares, but that alone doesn’t create a sustainable firm. You have to develop people, share knowledge, build processes and give the next generation meaningful responsibility well before a transition needs to occur.

Our goal has been to make succession gradual enough that clients don’t experience it as a disruption. The names and roles may evolve, but the service philosophy and commitment to the client should remain constant. To us, that is what successful succession looks like.

Hanavan: The success of an advisor succession starts with ensuring clients’ needs are met – without clients, there is no business to transition. Identifying what works in the current advisor/client relationship and finding similar traits, service styles and personalities with the NextGen advisor who will take over that relationship is critical. These relationships are personal and cultivated over many years.

Through our new Transition Path Process, we leverage the experience of retiring advisors to methodically transition clients to handpicked NextGen advisors, minimizing attrition by building meaningful relationships. Clients’ needs are met when relationships are strong, which enhances the value of the business and the retirees’ legacy.