Practice Management

4 Questions that Drive Successful Succession


Written by Kronos Technologies on April 13, 2018

When most advisors look at succession, they are really thinking about retirement—their ultimate exit from the business. While understandable, this can create a restricted view of the future that disregards the many possibilities open to advisors when considering their future.  

That’s why we reframe the issue of the advisor’s future away from the narrower point of view created by thinking only in terms of an exit strategy, and towards the more robust set of options available when we start thinking about transition. Thinking about transition means anticipating any change that could occur in your practice in the future. Those changes can include a wide variety of options, including: retirement, selling a part of the book of business, partnership, hiring junior advisors or family succession.

A useful transition plan should start with a vision for the future you want. That vision should include, not only a description of what you want your life to look like, but when you want your transition to happen. Working backwards from your vision your plan should then lay out the steps necessary to reaching your goals.

When creating your plan there a number of key questions to be answered.

Question 1: When will I be ready to leave the business completely?

This is not always an easy question to answer. For many advisors the knee-jerk reaction might be, “Right now!” For others, the excitement of helping others and running a thriving business may make them say, “I never want to stop.” The reality is usually somewhere in between. And it’s up to each advisor to take stock of their situation (including family, finances, enthusiasm for the practice, and some sense of what they want to do after they leave the business) and make a sound choice. Whatever the answer is, it gives you a timeline and a target to work toward. You may discover you have twenty years left to plan for—or it may be five, or even one.

Question 2: Will my transition be gradual or sudden?

The timeline for transition greatly affects HOW the transition will happen. The longer the lead-up, the more planning you can do, the more flexibility you have in terms of whether you want to make an outright sale or gradually disengage from the business over a period of years. For some advisors it makes sense to plan to hand-off increasing amounts of their book of business as they age—choosing to retain and work with the clients who most interest them. For some, perhaps those who want complete retirement now or who want to transition to another career, the goal is to find a buyer at the right price as soon as possible.

Question 3: Do I want to partner-up or manage junior advisors?

Sometimes advisors make transition decisions without considering their ability and willingness to work effectively as part of a team. In many cases advisors have spent most of their career working on their own or with an assistant. They are not necessarily ready for the time commitment and emotional effort involved in managing or working in partnership with others. For some, sharing the workload with others and cutting back on their involvement in the business may be a great transition solution, for others it may create unanticipated stress and complications. Factor in your desires and abilities when deciding whether training, managing and co-running your business is the right step for you.

Question 4: What steps need to be taken to ensure a successful transition?

Identify which systems need to be put in place to ensure a buyer can easily take over your practice. Consider how you can plan and utilize technology to optimize your operations, client relationships, marketing and sales processes. The more defined and efficient you can make your workflows the more value your practice will have when it comes time to make the transition.

Wrap up

The concept of transition planning can open up a brand new idea of the future. The idea can be transformative. Some advisors get re-energized by plans to buy blocks of business and grow their practice. Others are excited by the opportunity to work with partners or even bring family into the business. No matter what your vision for the future, when you think transition rather than exit you dramatically increase your options.

Want to put these tips to work? Download our Ebook to create your own transition plan.

Download the Ebook

Refer us

Share the benefits of Equisoft/connect with your colleagues.

Introduce a new customer to us and get a one-time discount of $50 on your monthly subscription for each new Equisoft/connect user referred.

Your information

Oops, this field is required!

New user information

Oops, this field is required!