How to Make a Graceful Departure

March 10, 2015

by Beverly Flaxington

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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

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Dear Bev,

I’m 72 years old and in excellent health. I have an advisory firm of five people. Four are in separate functions serving clients. The fifth is a relatively young advisor who has worked with me for two years. I readily admit that I am a control freak, which is how I grew this business to $225 million under management. I can’t seem to find the magic conditions to make it worth my while to create a succession plan and retire. What advice do you have that might push me to finally figure out how to make a graceful departure?

Viv B.

Dear Viv,

The beauty of this business is that as long as you can talk with clients, can sit at a computer and have all of your faculties in place, you can keep doing this work. However, I’ve personally witnessed a handful of situations where the advisor became incapacitated or died unexpectedly without a plan in place. Every time this happens, a mess ensues, and the clients are the ones stuck in the middle.

Given your self-admitted controlling nature and the size of your firm, I’m going to guess you have very good relationships with your clients. If they aren’t asking you about succession planning, I have to believe they are thinking about it. They may not want to introduce you to grandkids or other younger family members if they harbor a concern about your longevity in the business.

You don’t have to get out of your seat to put a succession plan in place. There are several options:

  1. Identify another advisor who shares your values. Sometimes your custodian or broker-dealer can help you do this. When you find someone you are comfortable with, put an agreement in place that gets executed only if something happens to you.
  2. If you work well with your younger advisor, get him or her more deeply involved with your clients. This way if anything happens to you, the clients know and trust this other person.
  3. Work with organizations that help make matches. One I am familiar with and can recommend is RIA Match. With no obligation, you could see who is in the market in your area or who seems to have share your interests.

One or a combination of these options might work to get you thinking about what that next phase could look like to you.

Of course you could continue to do nothing, but if you want a catalyst to move, I would encourage you to consider this: every day that you don’t have a plan in place, you are being unfair to your clients. It’s great that you are healthy and love the business, but — as you probably advise your clients — you must be prepared for contingencies.

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