We all know we should have a succession plan in place – for now, for next year, or next decade – but why is it so difficult to find the right successor for your practice? In our discussions with numerous advisors over the years, we’ve heard many reasons, among them:
It’s Hard to Let Go
First let’s acknowledge that, especially for sole practitioners, your practice is your baby and no one is ever good enough to look after your baby except you! But at some point you will need to hand over your book of business to someone else and that “point” is coming sooner rather than later for most financial advisors practicing today, many of whom do not have a family member or associate who is willing to take over. So where can you turn?
The process of transitioning your practice can be complicated and hard. Add to that the fact that many advisors truly enjoy the work and their clients, and it’s no wonder that planning for succession and retirement is often relegated to the back burner.
But we all know that leaving it to the last minute could mean the difference between a smooth – and lucrative – transition, and a disastrous mess that leaves your clients and heirs in the lurch.
Finding The Elusive “Right Fit”
Selling your practice is not just about the numbers; it’s about the soft stuff like culture and “fit”. Only you can know the right fit for you and your clients in order to be able to assure them that:
- Their interests will be protected throughout the transition
- Their new advisor has the necessary understanding and knowledge to protect their best financial interest
- Their new advisor shares similar values
If your only consideration is getting the most money for your practice, you can sell to anybody. But most advisors truly care about their clients, in fact, they are often friends and one of the most important ingredients for a successor is creating that personal atmosphere.
This is one we really get! “We want to have that human interaction,” said Bill McCance, Trust Advisory Group, Inc. chairman and president. “One of the great things about having boutique firms is getting the opportunity to know and meet every one of our advisors. We want to work with people who believe in our morals and our philosophy, and we want to have friends that work with us. That’s what makes us a great business.”
Can I Trust Them to Look After My Clients?
When transitioning your practice to a new advisor, you don’t want to hand it over to someone else who’s about to retire; you want to bring in new blood and energy and enthusiasm, someone who is able to connect with the next generation and bring them into the practice as well.
The thought of handing your clients over to a younger advisor fills many advisors with trepidation. Many sole practitioners struggle to find RIAs who have the same approach to financial planning and investing, and who share their values and the way they treat clients. Questions understandably arise:
- Will they understand my business as well as I do?
- Will they treat Mrs. Jones with the same respect?
- Will they help the Smiths reach the goal of buying their first home?
You’ll need to find a successor who prioritizes getting to know your clients and their hopes, dreams and financial goals. Ideally, you should have the chance to not simply get to know your successor but to work alongside and mentor them to train them in the ways your clients have come to know and trust.
How Will I Manage The Transition?
Finding someone with a similar style will go a long way towards maintaining your clients’ comfort levels during the transition phase. Assure clients that their new advisor won’t make changes to an existing portfolio unless it’s in their best financial interest and that he or she will have clearly communicated their recommendations and gotten their approval.
A personal introduction to your successor will help put clients at ease. To help put you at ease, choose a successor who will let you be part of the transition process for however long it takes. When you communicate your formal exit plan to your clients, let them know you care about them and fully intend to provide continuing service excellence. One of the best ways to do this is to work closely with your chosen successor for a period of time to mentor them to grow into the role. This will help you be sure it’s the right person and allow you to personally introduce them to your clients with confidence.
In our experience, there are many great next-gen advisers out there who are interested in buying into an existing business – but where to find them?
A New Approach: Built-in Succession Planning on Your Terms
Over the past few years we at Trust Advisory Group (TAG) have seen an uptick in demand for succession solutions that allow the advisor the control they desire as they exit their business. It’s hard to find a good successor for your advisory business, but at TAG we believe you can find a firm that’s both profitable and built on strong principles. We always put the client first, advisor second, and the firm third. We’re here to help clients—and that mission starts at the very top of the company. It’s how we run our business.
We understand how hard it is to find the right successor and would like to introduce you to Trust Advisory Group’s TAG 2.0: an innovative approach to managing the future of financial advising.
TAG 2.0 offers a built-in mechanism — the proprietary TAG TEAM model — that develops fresh talent and seamlessly transitions senior advisors, their clients and their assets to the next generation to ensure business continuity and peace of mind for everyone involved.
Whether you’re thinking about retiring soon or still have a decade (or more) to work, TAG allows you to customize your journey as you transition away from your practice. Under this model, you will personally select your successor from our team of younger TAG-trained wealth associates (or from your own team), mentoring them as you work together to transition client relationships – all on your own timeline. Choose either the Full– or Semi-Retirement Program to begin your retirement journey – or just work with us on a Business Continuity Plan to safeguard your practice for the future.
Moreover, you participate in all incremental revenue generated from your book for the duration of your transition period.
TAG 2.0 is a new take on financial advisory services that combines the best of all worlds: the fresh thinking, creativity and enthusiasm of a start-up division with no minimum AUM requirement; the friendly, family atmosphere of a small firm, and the security and stability of a 30-year-old institution (TAG Group, Inc.). TAG 2.0 infuses old-world morals and ethics into the next generation of financial advice.
Find out if succession planning with TAG 2.0 is the right fit for you and your transition.