A Beginner's Succession Plan for Your Advisory Firm

DEAR ADVISORS, 

Congratulations! If you’re reading this, you’re starting to get serious about planning your exit. While a continuity plan provides for emergencies, a succession plan allows you to control the contingencies. The Beginner’s Succession Plan is like having all your estate documents done, except for a Revocable Living Trust. It’s ideal for established businesses with an owner actively planning to exit within the next few years. A Beginner’s Succession Plan includes:

• All features of the Beginner’s Continuity Plan and Advanced Continuity Plan apply here as well.

• Confirm your Personal and Financial Readiness - 

  • Be your best client. If you truly want to exit, begin by hiring your own financial planner. An objective third party professional can help you be honest with yourself about your exit timeline and what you plan to do with your significant other in retirement. Update your plan with a recent business valuation and determine the sale price you need to retire on your terms. 

  • What type of exit strategy is going to achieve your goals? External Successions usually give you a faster exit and potentially a higher price, but less control over the business and your client relationships. Internal Successions usually give you more time with your clients, more control over the business as you exit, and more stability for your clients. 

• Prepare your Advisory Firm for Your Exit - 

  • You may be ready to exit, but is your business ready? The transition will go much smoother once you clarify and update your service models, processes, marketing strategy, and get the right people in the right seats. For solo firms, that means outsourcing some things and leveraging technology. This should help you get the best sale price as well. These are the types of projects we do with our exit coaching clients. It’s important that your firm is able to run without you making your job role easily transferable to your successor.

• Personality Fit 

  • Finding the right fit is possibly the most important factor, but it’s also the most difficult to identify. The optimal buyer will be a good fit with you, your team, and your clients. As you begin thinking about criteria for a potential buyer, think about the personality of your book. This is especially important for small & mid-sized firms. The Kolbe A test can help identify the right fit for your team. To find the right person to work with you, I prefer the Enneagram and the StrengthsFinder tests. These lay the groundwork for strong communication built on understanding, trusting, and respecting one another.

• Looking for a Buyer - If you prefer an Internal Succession Plan, it can be difficult to find the right successor. For best results, develop a career track and minimum requirements to become a partner. Finalize a list of the non-negotiables in your exit strategy to help you match with the right successor. Once you’ve done this, hire an advisor and spend time getting to know each other. It may take a few tries before you find the right person.

Stay tuned for next week’s post about the key components of an Advanced Succession Plan! It’s our fiduciary duty to have an exit plan in place for our clients. It goes a long way to securing the future of your family and business as well!

Warm regards,

Brooklyn

P.S.

At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Click here to schedule an initial phone call with our team today or get to know me on my bio here!